Debate; Agree or Disagree
Question: Identified the generic strategic direction for Southwest. Now identife specific alternative strategies for implementation. Based on the strategic direction that you identified, create 2-3 strategic alternatives, i.e., actual strategies that the organization should pursue.
Strategic Alternatives The product development strategy is the most critical for Southwest Airlines future success. According to the QSPM I produced, the product development strategy has a Total Attractiveness Score of 5.31. That score is much higher than the market penetration and horizontal integration scores of 4.36 and 4.78, respectfully. This strategy is critical to Southwest’s future success because its strengths, opportunities, and their attractiveness significantly outweigh its weaknesses and threats. All of Southwest’s strengths attractiveness scores are four except for its good safety record. Southwest had an IFE score of 3.01. When you break down the difference between its internal strengths and weaknesses, the internal strength weighted score comprised 2.42 out of the total weighted score of 3.01. Southwest’s culture, its employee skills and teamwork, 44 years of profitability, use of one aircraft type (Boeing 737’s), efficient operations, and quick boarding times all rate very attractive to Southwest (Southwest Airlines Reports Fourth Quarter and Record Annual Profit; 44th Consecutive Year of Profitability, n.d.). The product development strategy falls under the umbrella of the cost leadership strategy I identified in week four. According to Mastering Strategic Management (2014), companies that follow this generic strategy offer “products or services with acceptable quality and features to a broad set of customers at a low price” (p. 143). Many airlines face similar opportunities and threats like new markets, increased air travel, increased fuel prices, and increased competition. The threats leave them little room for profit. According to Morello (n.d.), the airline industry typically sees a profit margin of five to six percent; the significant costs of airplanes, maintenance, operations, and fuel are the reasons for the little room for profit (Transportation sec.) While Southwest focuses on their weaknesses and threats, its significant strengths can be used to increase its market share through the product development strategy. These strengths play well into its product development; its previous programs and products such as Business Select and Early Bird Check In have resulted in a “double-digit” growth in its corporate bookings (Bhaskara, 2014).