Running head: STRATEGIC CHOICES Strategic Choices

The importance of strategic choices should not be underestimated. Within a company, they define everything from the general developmental direction to the gist of work of an ordinary employee. Thus, it is critical to make informed strategic choices. This paper contains a summary of strategic options to improve competitiveness of Southwest Airlines and their impact on the company. Evaluation of Strategic Options of Southwest Airlines Table 1 represents a summary of various tactics available to Southwest Airlines within the SWOT matrix and a variety of competitive strategies. It highlights the multidimensional nature of solutions in the context of competitive strategies, as the current strategy to keep things simple and consistent strips the company of many opportunities (Brancatelli, 2008). Regardless of the current state of the companys internal and/or external environments, there are always various options available in terms of which strategy to adopt. Moreover, these options are based on using the companys strengths and opportunities to mitigate weaknesses and minimize the impact of threats with the focus maintained on remaining a competitive business. Importantly, the low cost, differentiation, focus, and preemptive strategies are industry-independent (Porters generic strategies, n.d.). For instance, if Southwest Airlines were to choose a focus strategy for future development, it could choose any of the positioning advantages to enhance its competitiveness (Competitive advantage, n.d.). Consequently, the entity could respond to the bargaining power of customers, as a factor of Porters Five Forces analysis, with commitment of all resources (strengths) to a narrow market segment, which would result in outstanding service and enhanced value proposition. In fact, Thompson and Martin (2005) point out that the concept of adding value is an essential part of the Porters model. Customers within this particular

STRATEGIC CHOICES Table 1 Strategic Choices of Southwest Airlines

Low cost Offering a low price for a product of high value strengthens the companys market position, as it reduces potency of the bargaining power of customers Effective tool to maintain business competitiveness, as few rivals, if any, will be able to offer (copy) the same price range and work with similar effectiveness and/or efficiency Meeting expectations of the various population groups in terms of pricing and, consequently, having a diverse customer base to rely upon in the future Differentiation Mitigating price sensitivity among customers through building strong brand loyalty and highlighting the companys appeal, which lessens the bargaining power of customers Via building a unique image of the airline the customer base will be expanded, as well through attracting clients of other low-cost and legacy carriers Strengthening customer loyalty across various population groups and reaching enhanced effectiveness through focus on uniqueness and details Focus Highly skilled workforce and extensive history of operational excellence will help mitigate pressure from the customers and develop products per expectations of specific customer groups Concentrating resources on a specific target (market segment or population group) is a source of solid competitive advantage and allows being a step ahead of competition A history of strong and effective management ensures correct identification of the most lucrative market segments and thorough preparation of responses to changes in the socio-cultural environment Narrow branding translates into fewer marketing costs and an overall enhanced cost management, while brand recognition among specific customer groups is a solid survival tactics

Strengths: Bargaining power of customers (Porters Five Forces analysis)

Weaknesses: Intensity of competitive rivalry (Porters Five Forces analysis)

Opportunities: Socio-cultural trends (PEST analysis)

Pre-emptive Realizing thorough marketing research to determine future customer needs and expectations trends accurately and altering the companys proposition accordingly Monitoring competition closely and counteracting to their activities prior to their realization (if possible) and/or creating unfavorable conditions for rivals to operate in Creating or strengthening favorable trends in the sociocultural milieu

Threats: Economic instability (PEST analysis)

Keeping operational costs at the minimal level enhances business stamina, which also allows to continue operations through difficult times

Customer loyalty based on unique value proposition and effective branding reduce negative impacts of the economic environment

Enhanced execution of the planning function and evaluation of the various scenarios and proactive marketing to beat competition even during the hard times

STRATEGIC CHOICES

market segment would undoubtedly be satisfied. This strategy would allow counteracting to the companys weaknesses as well. For instance, knowing the specifics of the aforementioned market segment would give Southwest Airlines a clear and substantial advantage over its rivals, as well enabling it to react to any move from the competition. After all, the focus approach allows a company to adjust its strategy so that it would lead to the exclusion of others (Porters generic competitive strategies, n.d.). The focus strategy would also require the carrier to concentrate on certain opportunities in its external environment rather than be torn apart among them. On the one hand, this would imply effective use of resources and greater return; on the other hand, it would provide a source of quality information about the socio-cultural trends that the competitors would not be able to gather in a timely manner. The focus strategy would also help mitigate the effect of such a factor as economic instability, which is always a threat to a business. Knowing a narrow market through and through makes a company less dependent on the external factors altogether. Moreover, brand loyalty is one of the most important factors when customers are forced by the economic situation to cut down on their expenses. Conclusion Strategy is the key to success of a business. Regardless of the conditions of internal and external environments of an organization, there is always an abundance of strategic choices to make. Evaluation of competition and the way the company reacts to it gain critical importance in this context. Southwest Airlines operates in a highly competitive industry and choosing the right strategy to fight competition is imperative. Whatever the choice is made, the companys strengths and effective seizing of the existing opportunities together with taking into consideration the impact of the current weaknesses and threats comprise a solid platform for it.

STRATEGIC CHOICES References Brancatelli, J. (2008). Southwest Airlines seven secrets for success. Retrieved from http://www.wired.com/cars/futuretransport/news/2008/07/portfolio_0708 Competitive advantage (n.d.). Retrieved from: http://www.quickmba.com/strategy/ competitive-advantage/ Porters generic competitive strategies (ways of competing). (n.d.). Retrieved from http://vectorstudy.com/management_theories/porters_competitive_strategies.htm Porters generic strategies. (n.d.). Retrieved from: http://www.quickmba.com/strategy/ generic.shtml

Thompson, J., & Martin. F. (2005). Strategic management: Awareness and change (5th ed.). London, England: Cengage Learning.