Question

In: Finance

1. What is Southwest Airlines business model? 2. How has Southwest Airlines tailored their business model...

1. What is Southwest Airlines business model?

2. How has Southwest Airlines tailored their business model to existing conditions and different industry environments?

3. How does Southwest Airlines stand out from the crowd? Distinguish Southwest Airlines from other airlines.

3. In your opinion, how important is tailoring the business models?

5. How important is it or is not to tailor the business models?

Solutions

Expert Solution

Answer 1: Southwest Airlines Business model based on attracting the low Budget Customers, who are price sensitive and make their decisions based on the price of the airline ticket. Overall if we see It offers the customers a cheap and quick service from Point to Point Locations.

Answer 2. Along with improving operational costs, Southwest Airlines has taken many steps to make Customers journey hassle free and Rewarding and through this have tried to develop competitive advantage to stay ahead in the evolving landscape of the airline Industry.

1.Flexible Policies in terms of cancelling the flight by Customer: A customer can cancel its flight up to 30 minutes before the departure and the funds are available for future flight. helping in building brand loyalty and fan base of their own in low fare segment.

2.Rewards points: They have one of the best reward point program in the Industry. These reward points could be used for future flights and again targeting its user base of low fare.

3. No Hidden Fees to the Customers.Free baggage up to 2 bags are some of the changes which has helped the Airlines to stay ahead of the competition.

Along with this they have taken many steps to improve operational costs which is one of the biggest issue troubling the Airline industry worldwide.One type of fleet, Less amenities inside the plan, more fly time, high capacity are some of them.

Answer 3.Operational efficiency, focus on customer experience, low cost pricing and some really smart decisions on the logistics model front.

1. Single type of plan (only have Boeing 737) in their fleet has helped them in saving a lot of money in maintenance and operational costs. Along with this helping them in setting a clear core message for their customers

2. Point to Point Flights: its flights are mostly destination oriented in one single go meaning non stop direct to customers destination. in contrast other Airlines follow hub model which wastes time and have less flight time for their pilots increasing operational costs

3. Quick turn around time of the planes, as Southwest does not offer too many amenities in terms of food and drinks which helps them in quick replenish of stock leading to improved TAT and more flight time.

Answer 4. Tailoring the Business model according to the Industry needs is really important as it helps the company in staying ahead in the market.In today's fast paced environment it is really important to understand the customer needs from time to time and tweak your business models based on them.Otherwise your competitor will do it and you will be left wondering.

It may also help you in attracting the Customers from your competitors (if tailored correctly) resulting in increasing the top line and ultimately an impact on the bottom line

Answer 5. Answer to this is almost similar to the previous question it is important to assess the needs of the customer and scenario of the market. At the end of this exercise, you may decide that your current business model is good enough but continuously keep getting feedback from the customers. We have numerous examples where competitors have out staged the market leaders because they were too much sure of their model and didn't feel the need to work up on them.


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