Swa Strategy

Industry Analysis Case Study B: Southwest Airlines Strategy (Captain Marvel)

The Success of the Southwest Airlines Strategy

Whiteboard

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“How successful has Southwest’s strategy been?” o Southwest market cap > total of all other airlines § By being UNIQUE!

Notes

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Southwest has been the only consistently profitable airline since deregulation, and it has implemented none of the standard tactics. If the answer to its success is not the industry, it must be the strategy.

Industry Analysis Case B

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Southwest Generic Strategy

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“What is Southwest’s strategy?” Low Cost • • • • • • 737 only No amenities 2nd tier airports 15 min turnaround § High productivity Short haul / point to point Culture Focus • • Underserved markets Family customers

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“Why do people fly Southwest? What is the value proposition from the customer perspective?” o Convenience (vs. buses / trains) o Low price!

Notes

Southwest focuses on underserved markets (ie. a geographic focus) and offers a low price to customers.

Industry Analysis Case B

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Low Cost vs. Low Price

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“Is Southwest’s strategy low cost or low price?” o Need low cost position to enable low prices!

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The generic Southwest strategy is focus, low cost

Notes

Low prices and costs are two sides of the same coin. However, we think of them as low cost strategies.

Industry Analysis Case B

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Low Cost Position – Activity Alignment

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“How does Southwest have the low cost position? What choices has it made that enable it to be low cost?”

Notes

We will analyze the various aspects of Southwest’s configuration of activities in order to understand how each and every thing it does contributes to its cost advantage.

Industry Analysis Case B

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One Type of Plane - 737

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Using only 737s saves on: o Training o Maintenance o Fewer spare planes

Notes

Flying one type of plane –