Differential advantage ( International Operation)

Company

International Markets To Take Center Stage In 2016
Until 2014, Southwest was known to be a domestic carrier with negligible international exposure. However, with the completion of its merger with AirTran in 2014,  initiated international flights to Aruba, Bahamas, and Jamaica. Following the success of these flights, the airline decided to further expand its presence internationally by building an international hub at Houston Hobby Airport, where the airline has a significant domestic presence. In this effort, the airline invested heavily on the first international terminal at the Hobby Airport consisting of five gates, of which four will be operated by Southwest. The new terminal will allow the airline to offer flights to new international destinations, particularly in Central America, Mexico, and the Caribbean.
According to the update provided by the CFO, the new terminal, which drew an estimated investment of $156 million (southwest.com) is on track for its launch next month. She also highlighted that the airline will be dedicated towards establishing its footing in the international markets in the next year, while enjoying the benefits of the robust capacity in Dallas. The airline has announced its plans to add flights from Hobby to Cancun, Mexico City, Puerto Vallarta, Los Cabos in Mexico, and Belize City, Belize by the end of this year. Apart from these six new flights, Southwest also aims to expand its services in 50 new international markets through the Baltimore Airport, the carrier’s second-busiest hub, and the Fort Lauderdale Airport. Over the next few years, we can anticipate Southwest’s international operations to contribute a larger and more significant portion of its revenue growth.
Source(http://www.forbes.com/sites/greatspeculations/2015/09/25/southwest-airlines-will-focus-on-expanding-its-international-operations-in-2016/#67ec5d25581f)

Three Important Factors facing Southwest Airlines on the other 4 c's.

What are the 3 most important factors facing your firm on the other 4 c’s?

Competition

When it comes to Competition the three most important factors facing my firm are the competition from other low cost airlines means they have seen little market share growth, Competitors have an international presence, while Southwest is mostly domestic, and Southwest has experienced issues with their internet services that other companies haven’t experienced.  While Southwest airlines has the largest market share in their chosen segment stronger competition is slowing their growth and if the trend continues Southwest may even start losing market share.  I believe this is happening because of the international presence that the competitors have that Southwest doesn’t.  Finally, during the crisis Southwest faced when their operating system failed the competitors were quick to take advantage, and if that ever happens again it could ruin the company.

Company

When it comes to Company the three most important factors are the continued growth of their domestic network, how their brand appeal is being affected by online services, and that increasing operating costs will push Southwest’s fares to increase.  Which could affect the number of customers that use their airline.  Their domestic network is thriving, but in contrast they have a very small international presence.  This is a major concern because being dependent on one sole thing is never a good idea when running a business.  If the American market begins to dwindle it could spell trouble for Southwest.  Their brand appeal is being affected by its online services because on July 20, 2016 the company experienced an extensive system-wide operational meltdown which left the company to handle customer, employee, and collaborator complaints.  It took them many days to return to normal operations.  If something like that were to ever happen again their brand could be irreparably harmed and cause the company to fail.  The final important factor is that operating costs for Southwest airlines is increasing and if it gets too high then it may cause them to adjust their prices.  If that happens then their reputation for being the lowest cost for the greatest value could disappear, and cause customers to choose competing airline services.

Collaborators

Unlike all the other sections it is my belief that collaborators only has one important factor and that is its rapids rewards program.  Through that program they are partnered with credit cards, car rental agencies, hotels, restaurants, and many other industries.  So for Southwest to continue to succeed and appeal to collaborator investment they must continue to make the program attractive to current and future customers.

Context

When it comes to context the three most important factors are Transferancy, Customer Service, and Customer Perception.  Transferancy is important because it is their policy that has helped them succeed the most.  By removing hidden charges and having greater transparency than competitors they have been able to maintain a larger portion of the market share of their industry.  The second factor is their customer service.  They have developed and maintained more caring relationships with their customers than any of their competitors.  Their customer service skills are also what allowed them to survive their system outage crisis.  Which leads to the final point of Customer Perception.  Customers perceive Southwest Airlines as the most honest, caring, and affordable airline.  From the heart that is their logo to their policy of Transferancy it all shows customers that they truly care about them.  Maintaining this context is and should always remain a key factor for my company because with the customer’s goodwill they can survive and thrive in any situation.

Company Strengths

Richard Strehl

Southwest airlines prides itself in its outstanding service which I believe is the top strengths for our company. It is strengths like these that help Southwest achieve the status of one of the top airlines in the nation. Southwest airlines has been consistently profiting and has become the second airline to achieve investment grade status since Alaska airlines in 2014. During the financial downturn of 2008 to 2009 it still recorded profits of 754 Million which was the highest of any domestic airline. Along with service making our company profit another strength was the popularity of the website. With technology advancing customers find using the website to book tickets extremely easy and not time consuming. The last strength that Southwest airlines provides is the fleet of planes that customers travel with. Southwest airlines has the youngest fleet in the flight industry keeping customers up to date with the latest security and safe travel. One of the weaknesses that has affected southwest airlines is not being the leader in the low far travel fees. Spirit airlines and frontier airlines have lowered their overall cost of tickets causing Southwest airlines fees to raise 7%.

Source: (http://centreforaviation.com/analysis/southwest-airlines-swot-financial-strength-is-mainstay-but-cost-and-culture-challenges-loom-large-187714)

Rocketmiles

In April of 2014, Southwest agreed on a partnership with Rocketmiles.  This Chicago-based agency not only assists customers in booking hotel rooms at discounted rates, but cooperates with Southwest's Rapid Rewards program so that customers can earn miles while booking hotels.   This collaboration has enabled Southwest customers to earn thousands more miles than they typically would booking through other entities.  Thus incentivizing customer loyalty toward Rocketmiles as well as Southwest Airlines. 


(source: http://www.bizjournals.com/chicago/news/2014/04/18/southwest-airlines-inks-partnership-with.html )

Transfarency

Southwest pulls no punches in regards to their competitors' shallow fee accumulating policies.  This is displayed by their "Fees don't Fly" campaign, which differentiates Southwest not only from a particular competitor, but from the field of competitors.  Southwest certainly stands apart due to their unique policy of allowing up to two checked bags per customer.  A more subtle edge in regards to the competition is gained through their insistence to not charge fees for special seat assignments, re-scheduling, or simply printing a boarding pass.  By promoting their belief in "tranfarency", Southwest is creating a differential advantage in one of the customers' most valued categories-cost. 






(source: http://www.usatoday.com/story/todayinthesky/2015/10/08/southwest-airlines-zings-competitors-fees-in-new-ads/73613386/ )

Terrorism's effect on Market Context

The potential reduction in passenger demand due to safety concerns is a real issue facing airlines.  This isn't necessarily due to inherent dangers of flying, but external factors which can leave passengers vulnerable.  The fear instilled in customers from the 9/11 attacks is a prime example.  When the federal government reopened airports, the majority of airlines experienced upwards of a 30% reduction in passenger booking for the next several months.  Thus, congress created the Air Transportation Stabilization Board, prompting nearly $10 billion in loans for faltering airlines.  Interestingly, this decision negatively impacted Southwest, as US Airways and United Airlines (competitors) were the two most prominent airlines assisted by the government bailout.




(source: http://traveltips.usatoday.com/effects-911-airline-industry-63890.html )

Collarborators of Southwest Airlines

Firstly, the most important factors facing the Southwest Airlines is collaborators.
Southwest Airlines Co. today announced a collaboration with Lyft that will offer first-time Lyft Customers who are also Rapid Rewards Members a one-time reward of 1,100 Rapid Rewards points for their first ride. The offer is available for a ride anywhere in the following 11 Southwest® markets where Lyft has an operating agreement in place through the end of 2016. A separate offer is currently available to Southwest Customers who are not Rapid Rewards Members in the markets listed above, offering $15 off a first-time ride with Lyft. The offer took effect on Mar. 22 and runs through the end of 2016. The two offers cannot be combined. ( SOURCE Southwest Airlines Co )

Customer Segmentation Assignment #1

The various customer segments Southwest Airlines targets is the frugal, no-frills traveler that wants the best value for their money.  To categorize them it is normally business people, leisure families, and frequent flyers.  They currently service 97 destinations around the world.  Even though they are a low fare airline they don't sacrifice service.

Business people value the low cost and consistent arrival times Southwest Provides.  Leisure families value the great customer service and low cost.  Frequent flyers value the low cost, personal touch, great customer service that Southwest provides, and the discounts they offer.

Most customer segments learn about the market and market offers online.  During 2015 76.5% of passengers were booked using Southwest.com and Swabiz.com.  More than 20 million people subscribe to Southwest's weekly Click 'N Save emails.  61 % of Fortune 1,000 Companies are enrolled in Swabiz.

*Note information and statistics were found on http://swamedia.com/channels/Corporate-Fact-Sheet/pages/corporate-fact-sheet#services