Running head: Business-Level and Corporate-Level Strategies

Business-Level and Corporate-Level Strategies (SOUTHWEST AIRLINES)

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Business-Level and Corporate-Level Strategies

Introduction

When a commercial or corporate-level strategy is chosen, it sets the tone for success or

failure. As a result, to be successful, a corporation must first understand what sort of customer

they are dealing with and their competition out there. A competitor's strategy may typically

indicate what a company should do. The Company that was chosen to be researched is Southwest

Airlines. Southwest Airlines is a well known significant airline in the United States and the

world's largest low-cost carrier.

The airline was founded on March 15, 1967, by Herb Kelleher and Rollin King as Air

Southwest Co., and changed its name to Southwest Airlines Co. in 1971, when it started flying

between Dallas, Houston, and San Antonio. It started regional interstate service in 1979 and

expanded countrywide over the next three decades. Southwest presently covers 45 states as well

as several Central American destinations. Southwest's business strategy differs from those of

other US airlines in that it operates on a rolling hub and point-to-point network and offers free

checked baggage. Its fleet is entirely made up of Boeing 737 planes.

1. Analyze the business-level strategies for the corporation you chose to determine the

business-level strategy you think is most important to the long-term success of the firm

and whether or not you judge this to be a good choice. Justify your opinion.

From early on, Southwest Airlines' business strategy was built on highly efficient

operations, low-cost pricing, and cutting-edge logistical solutions. In addition, its approach puts a

strong emphasis on client experience and foresight. Southwest acquired many competitive

advantages due to this good approach, allowing it to remain relevant in a fast-changing market.
Running head: Business-Level and Corporate-Level Strategies

2. Analyze the corporate-level strategies for the corporation you chose to determine the

The corporate-level strategy you think is most important to the long-term success of the

firm

and whether or not you judge this to be a good choice. Justify your opinion

Any company's business strategy takes time to develop. The Company will be interested

in learning about the Company's growth and stability goals. Corporations will also be there; thus,

the primary goal is to figure out how they will obtain their resources and what they'll do with

them that they have at their disposal. Southwest Airlines implements a cost leadership business

strategy that focuses on competing for a broad spectrum of consumers based on the price of the

goods or services delivered. Southwest Airlines is steadfast in its commitment to this strategy, as

seen by the Company's low-cost push. Southwest Airlines has been able to sustain its price

strategy by managing several internal efficiencies. Throughout its destinations, the Company

maintains quick, no-frills service. Passengers will not be provided with any meals by the

Company. It makes it able to keep costs under control during economic downturns and mitigate

rising operational costs as a result.

Southwest airlines also use a global level approach by treating the entire globe as if it

were one market and one source of supply, with slight variance on a local level. Likewise, this

gave it a competitive advantage established worldwide (Southwest, 2015). Southwest Airlines is

one of the country's top domestic carriers, and it just bought AirTran to expand its worldwide

reach. Consequently, this made it more attractive to importers and exporters as the airline

became more convenient than its competitors. As a result, Over 75% of all sales are now made

through the airline's website.

Southwest Airlines believes that excellent customer service begins with its personnel. It

has been ranked among fortune ten employers to work for. The happy and non-rigid working

environment has resulted in its employees having a sense of ownership and pride in the airline

(Southwest Airlines Co., 2014). The Company's esteem is reflected in all of its personnel, and it

is passed on to its consumers, who cherish and regard the Company's services in return. In turn,

the Company can achieve its mission by having employees dedicated to the greatest level of

Customer Service, giving a feeling of warmth, friendliness, individual pride, and Company

Spirit.

The airline has also enabled passengers who participate in the program to redeem their

points for free flights at any time and to any location, except on blackout days. Furthermore, if

the consumer is a frequent flier within 24 months, the collected points do not expire. While other

airlines offer comparable incentive systems and loyalty programs, their systems are more

sophisticated and limit prizes. On the other hand, Southwest Airlines has concentrated on

creating a flexible incentive system for its passengers. Customers can earn reward points by

using other credit cards. As a result of the incentive program, Southwest Airlines has been able

to gain new consumers, earn income from existing customers, and form beneficial partnerships.

The organization has been able to exceed its growth expectations in recent years.

Southwest Airlines makes a big deal out of promoting its services. The business

straightforwardly interacts with consumers, making their own decisions. For example, the

corporation highlights that "bags fly free," displays its knowledgeable workers, and criticizes

rival airlines for charging too much. Southwest Airlines has distinguished itself from its

competition as a consequence of its advertising approach.

3. Analyze the competitive environment to determine the corporation's most significant

competitor. Compare their strategies at each level and evaluate which company you

think is most likely to succeed in the long term. Justify your choice.

Any firm that is not prepared to compete can be made or broken by the competitive

climate. The airline industry is a global market with a diverse range of service suppliers.

Choosing an airline company is primarily based on personal taste for style but also on cost.

Furthermore, this is what distinguishes Southwest Airlines from its rivals. Southwest airlines can

provide its services at a meagre price. Based on this, American Airlines is their most significant

competitor.

With 19.3 per cent of the domestic market share in 2020, American Airlines led the

pack, followed by Southwest Airlines with 17.4 per cent. It flies to more than 350 locations in 50

countries on an average of 6700 flights every day. Its global network and extensive commercial

and corporate accounts in its key regions provide it with a competitive advantage against

Southwest. American Airlines is the more expansive version of Southwest Airlines. Although

they are more expansive, they have still done very well in this type of market.

To stand out, Southwest Airlines strives for vertical integration, which means it has

complete control over all aspects of its operations, from manufacturing to service. Similarly, this

gives the Company the upper hand over clients by providing lower prices and a better user

experience than American airlines. While Southwest Airlines receives new planes regularly,

planes are a one-of-a-kind item that cannot be mass-produced. The bulk procurement of raw

materials and components results in acquiring them at reduced prices. (Hill, Schilling and Jones

2017). Southwest has a significant edge here since an aeroplane requires many items. Even
Business-Level and Corporate-Level Strategies

though Southwest Airlines does not manufacture the planes themselves, they buy in bulk helps

their manufacturers keep their costs low.

Southwest's only sales method is via them directly. Southwest has refused to pay travel

brokers a 10% commission from its inception, despite the fact that they were directly competing

with big airlines like American Airlines. Most of their tickets were sold over the phone, at the

airport, or in the office, but all of them were sold directly by Southwest. Ticket distribution

expenses push up prices, and Southwest seeks to keep these costs to a minimum to maintain its

low-cost travel reputation (Kuebler, 2010). As a result, the Southwest website is the primary

source of airline tickets. American Airlines, however, still uses travel brokers to sell their tickets.

4. Determine whether your choice from Question 3 would differ in slow-cycle and fast-

cycle markets.

As long as there are rivals, the market will always be competitive. Moreover, this makes

the thought of running a successful firm all the more appealing. Two kinds of marketplaces will

influence whether or not your company succeeds (Hitt, 2013). When the market does not

produce creative items promptly and changes take a long time to occur, it is said to be in a slow-

cycle market. The fast-cycle market is the polar opposite. Consequently, this is a market where

items are constantly changing, and new inventive products are created in a short period.

In a slow-cycle market, my preference for Southwest Airlines would not alter. Because of

its cheap pricing, the airline would find minor difficulties in surviving in a slow-cycle market.

There would be no reason for customers to choose a more expensive choice because the market

would not be searching for anything fresh to come out. The majority of customers would rather
Running head: Business-Level and Corporate-Level Strategies

stay and take advantage of the convenience that Southwest has traditionally given. As a result of

its cheap costs, Southwest Airlines would face less competition.

In a fast-cycle market, however, Southwest Airlines' options would shift. Despite its

higher pricing, American Airlines is quite clever in keeping its passengers on their feet. As a

result, they are a direct rival to Southwest Airlines. American Airlines' investment in technology

offers them a competitive advantage, especially regarding innovative technologies.

Southwest Airlines must be highly inventive to be competitive in this industry, offering new and

improved routes, services, and goods to its customers.

Conclusion

Anyone might find it challenging to organize their firm to be the finest in the industry. It

would help if you first choose who you are attempting to reach and determine where these things

will be distributed. Most importantly, this necessitates excellent corporate and business-level

strategies. Similarly, knowing your business's goals is an excellent place to start to succeed with

a strategy. To get started on your adventure, when you've finished that assignment, the firm may

start putting together the rest of the project—putting these methods to work and attempting to be

highly effective at it.