Question

the company is Southwest airlines

identify strategic alternatives that create value for the company. which ones are focused on internal growth and what do they offer to the company? what are the drawbacks of these strategies? which ones are focused on external growth and what do they offer the company? what are the drawbacks of these strategies?
how would you use a decision matrix to identify the leading alternative? explain how you determined the values used to distinguish between each option. what about the matrix, if anything, may be limiting in its use value to an analyst or decision maker?

Answer 1

Q.1.Identify strategic alternatives that create value for the company.

Strategy Drivers :

• Identification of the strengths of the company and using it to leverage the market position of Southwest Airlines
• Ample Cash Flow: The free-flowing cash flow for the company ensure that all the initiatives and the projects are financed.
• A Strong Distribution System(Network): This strong network enables the company to consolidate its position in the market
• Automation: Southwest airlines have ensured consistency in their overall organization by investing in automation and technology.
• Customer Orientednedness The CRM( Customer Relationship Management ) of the company has enabled a brand value in the minds of the customer as the company provides a high level of customer satisfaction
• M&A ( mergers and Acquisitions ) with various companies, including a lot of technology companies that have enabled Southwest to make their operations more streamlined and efficient.
• Reliable Supply Chain: A considerable focus on technology has enabled Southwest to build a reliable and strong Supply Chain.
• Market Expansion: A successful strategic driver is the ability of the company to successfully venture into newer markets and establish their market position thereby building superior performance as compared to their counterparts.

Q.2.Which ones are focused on internal growth and what do they offer to the company?

The ones which are focused on Internal Growth are :

• Focus on technology through heavy automation: This will enable strong interlinking of the various departments of the company and make the internal processes faster.
• Making the Supply Chain more reliable and efficient: This will also allow a more efficient and faster means of achieving internal growth by minimizing errors and ensuring quality.

Q.3.What are the drawbacks of these strategies? ( Internal Growth )

The drawback of some of the above strategies are :

• Cost Intensive: A considerable amount of investment is needed for automation and technological improvement in the company operations, this is very cost-intensive and involves a certain level of risk.
• Heavy reliance on automation and supply chain restructuring can cause some bottlenecks in the short term which can cause technical problems and pose risks like cybersecurity threats.

Q.4. Which ones are focused on external growth and what do they offer the company?

• Market Expansion can create a strong position for the company in the newer markets which have not yet been ventured and thus can lead to new revenue streams for the company.
• Focusing on M&A can provide the company with a strong position overall as some of these M&A can allow them to eliminate competition and acquire a stronghold in terms of technological innovation.

Q.5.What are the drawbacks of these strategies? (External )

• M&A Risk's: SImilarly acquiring various companies is also cost-intensive and can create a risky position for the company in case of the ROI ( Return on Investment ) is endangered.
• New Market Expansion: Ensuring the success of Southwest in newer markets depends on a variety of factors which also include the Political and Legal factors. In the case of any impediment, there can be a considerable loss to the company.

Q.6.How would you use a decision matrix to identify the leading alternative? explain how you determined the values used to distinguish between each option. what about the matrix, if anything, may be limiting in its use value to an analyst or decision maker?

We can use a simple decision matrix to evaluate various alternatives depending upon the specified criteria.

Weighted Decision Matrix			External Drivers		Internal Drivers
	Alternatives		Market Expansion	M&A	Automation	Supply Chain Improvement
Criteria
Cost Investment			1	1	2	3
ROI			5	4	4	4
Risk			1	2	3	3
Innovativeness			2	4	4	4
Revenue Improvement			5	4	3	3
			14	15	16	17
Here 1- 5 is the scale where
1- Very Poor	Total		External Driver	29
5- Very Good			Internal Driver	33

Notice that the alternatives are: 1. External Drivers ( I.e external improvements for Southwest ) and 2.  Internal Driver ( i.e Internal Improvements ) and the various criteria are 1. Cost Investment ( How much high is the cost investment, the less the cost investment, the better . 2. ROI ; 3. Risk;4. Innovativeness and 5. revenue improvement.

The alternative with the highest score is the one we should go for: In this case Internal Strategic drivers i.e Internal Improvement.

Since this is a simple decision matrix, it does not incorporate the weights for the various criteria which will provide a better and more mathematically logical solution.To get a better solution we should use a weighted decision matrix.