7/19/2015

Strategy and Implementation of Southwest Airlines — Medium

Strategy and Implementation of Southwest Airlines
Introduction
The airlines industry is one of the best industries to analyze in terms of strategy, ethics, and organization because every company in the airline industry relies on the transportation market alone for revenue as compared to other industries that diversify products and services or enter new markets to increase profits. In the airline industry, each company must outperform its competition through the maximization of profits using the same set of criteria, which rarely changes over time. These criteria may include choice of airplane, types of passenger meals, availability and style of seating preferences, customer service, and flight routes. Based on these circumstances, the airline industry is a red ocean, but Southwest Airlines has proven historically that through organizational innovation, a blue ocean can be achieved through competitive advantage. More recently, Southwest
Airlines defied expectations once more and disrupted the airline industry through a technological innovation by implementing the Boeing 737–500 into their fleet (Raynor, 2011). The Boeing 737–500’s cost efficiency became the backbone of the organization’s strategy, ethics, and business platform.
This paper will analyze Southwest Airlines’ strategy, ethics, and business platform as a distributive innovator through organizational structure and technological implementation.
Strategy
Strategy is similar to a red ocean strategy in that it pertains to the competition within an established industry or group. Strategy is used to push a company above and beyond its competition by creating an action plan to maximize profitability (Capella University (Ed.), 2013). The strategic action plan a company choses is what distinguishes them from their competitors. The differences themselves are the components of strategy, and it is what a company chooses to do differently that will make them better (Capella University (Ed.), 2013).

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7/19/2015

Strategy and Implementation of Southwest Airlines — Medium

Identifying Strategy
Moving from an administrative business to a competitive company requires strategy. Identifying the company’s strategy within the business, market, and industry allows the company to innovate and advance. An effective strategy should be composed of objective, scope, and advantage (Collis and
Rukstad, 2008). These three elements can be elaborated on and defined according to the company, and the company will distinguish itself and set itself apart according to how they identify the strategy and take action on it. Beyond identifying the current state of the organization and its place within the business, market, and industry, the forward-looking element called advantage, is crucial to the company’s success over its competition.
The advantage element works backwards to the other elements and supports them and reshapes them. For instance, by implementing a distributive innovation, the company’s objective can be changed to align with the innovation and employees can better understand their role in helping to reach the company’s objective (Collis and Rukstad, 2008).
Southwest Airlines
Southwest Airlines has historically been successful through organizational innovation consisting of a well-structured and consistent strategy (Raynor,
2011). Southwest Airlines acquired AirTran in 2011 for $1 billion as a strategic advantage move to maximize profitability (Díaz, 2012). The strategic outlook for Southwest Airlines changed with this acquisition and therefore the objective, scope, and advantage elements need to be reidentified in relation to the strategic move. Specifically, Southwest Airlines is considering how to utilize AirTran to maximize profitability by evaluating all their routes and redesigning their flight plans (Díaz, 2012). The process
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