Term Paper on "Strategic Choice and Evaluation"

Term Paper 3 pages (1092 words) Sources: 2

[EXCERPT] . . . .

Business

Strategic Choice and Evaluation

In today's airline industry that has seen hard times over the last several years, Southwest has been flushed with achievement. In 2009, it transported 86 million travelers, more than any other carrier in the United States. It runs 3,200 flights daily, has a fleet of 544 planes and operates in sixty nine domestic cities. When competitor carriers were loosing a lot of money, Southwest was turning out consistent proceeds as a low-cost airline, even when the price of gas went through the roof. And in September of last year, in its greatest corporate move since it began operating outside of Texas, Southwest proclaimed that it would purchase AirTran Airways, augmenting both its income and its capability by almost twenty five percent. Yet Southwest finds itself at a key point. Its achievement has always been founded on a philosophy of low expenses, low prices, regular flights and a fast development into new cities. But with high gas prices, growth has been harder to come by, and experts have questioned whether the carrier can maintain its current operating approach (Mouawad, 2010).

Experts have said that Southwest has become too complacent in their current thinking about their airline and that maybe they have become a little too contented in their position. They haven't valued that the world around them has altered. Southwest points out that over the last year, they have been in discussion with its pilots in order to increase their fleet of planes with Boeing 800's. These new airplanes are thought to provide forty more seats than the carriers present 737's and will let Southwest to fly greater distances. This move is important for the reason that it assists to pave the way for the carrier to fly to Hawaii, and, for the first time, to places external of the United States. But getting abroad is going to necessitate an incredible quantity of work for Southwest. Pilots will have to support the move for the reason that it would represent an alteration to their contract. Flight attendants have already approved this change. Southwest will also need to bring up-to-date its software so it can sell global tickets and offer passport data to federal authorities, which is something that its current software cannot do (Mouawad, 2010).

While Southwest has ridden out rising oil costs, it's still an expense that could impede growth, particularly as gas prices go above eighty dollars a barrel again. At first, the corporation negotiated the rise superior than most. It purchased complex monetary hedges planned to lessen the shock of high gas costs, and added a valuable benefit over its opponents as gas costs soared. But that plan failed in 2008, when the economy slowed down and gas prices collapsed. Because of its low operating expenses and an engrained attitude not to furlough or lay off workers or cut wages, Southwest found that it could not price cut its way out of the predicament. As an alternative, it had to augment proceeds while keeping its capacity stable. So the corporation followed a broader industry tendency, by trying to draw more business flyers with additional perks and by getting travelers to pay for new things, such as precedence boarding. In the midst of all this, Southwest saw an occasion to… READ MORE

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