Southwest Airlines Value Chain Analysis Essay
Southwest Airlines Value Chain Analysis
Southwest Airlines (SWA) is consistent in their culture, business model, and customer interactions and engagement, all collectively reducing costs and enabling their point-to-point, efficient, low cost, friendly service. Their culture favors personal connection, community, recognition, support, and love. This “luv” has been the central theme of SWA for decades, especially with regard to their customer interactions.
Luv fortifies the SWA value chain, spanning across corporate vision, operations, marketing, cost control, people, and corporate culture, thus creating value in reducing costs and growing bottom lines, maximizing (minimally spent) marketing dollars, capturing customer interest, sustaining customer loyalty, and maximizing work output of all employees. SWA’s primary resources are its people / employees. Its material goods such as airplanes are valuable, but not rare.
Its business model, strategy and ability to implement phenomenal customer and people-centric visions are also its key resources and capabilities. Its people and business model are extremely valuable, rare, costly to imitate, and organized to capture value. Creating and sustaining the SWA culture internally and externally is extremely difficult to reproduce, for this is an organic production that begins with a loving, personable, and wise management team who understand people, business, and execution.
Such human beings are rare. Moreover, these people and business model and strategies are organized to capture value, in that they operate within the thriving function of the profitable business that is SWA. SWA returned a profit in 1992, when no other airline was able to do so, in addition to receiving the “triple crown” of the airline industry many consecutive years, a testament to SWA’s ability to consistently control costs, produce excellent service, and make money while being joyful, genuine, and loving!
Wow. No competitor has been able to reproduce the below key resources in tandem; many competitors have attempted and failed. Assume that resources not listed, e. g. , airplanes, skilled pilots (the skills to fly, not the personality), etc. are valuable, but not rare. Most difficult to imitate, rare, and organized to deliver value are SWA’s HR & Operations because the entire firm is constructed to support SWA’s low-cost, point-to-point, friendly service focus.
Imitating all below actions & capabilities requires reorganize entire firm (extremely difficult & costly). Firm Infrastructure: basic, only buys Boeing 737 jets minimize costs & maximize passenger loads. Human Resource Management: Internal recognition, hire personable people-oriented staff, peer hiring, and profit sharing ? loyal employees decrease turnover. Encourage family culture loving, better service Operations: their product is their outstanding customer-centric service.
Does own ticketing, non-stop flights, flies to uncongested airports ? educed flight time (15-25%), less in-air waiting. doesn’t transfer baggage directly to other airlines, flies only Boeing 737s, low avg age of planes, lowest industry aircraft “turn” time. serves only drinks and snacks, labor relations are excellent. Procurement: To offer great service at low cost, “must watch every penny. ” (Kelleher) Even pilots are asked for ideas on how to save fuel; no man is left out of watching costs; this led to new procedure for takeoffs and landings that saved fuel and thus money.
SWA shops fuel, purchasing from cheapest vendor in the cheapest regions low costs. Technology & Product Development: Everyone participates in generating new ideas Marketing: early was based on airline’s low prices, convenience and level of service, stressing underdog and Texan home-grown image. Direct Sales cut costs. “smart campaign” emotional bond, consistent & personal message. Difficult to imitate because competitors would look like they’re “copying” marketing.
University/College: University of Arkansas System
Type of paper: Thesis/Dissertation Chapter
Date: 7 October 2016
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