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Southwest Aircrafts Expense Administration System Discussion

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Mini Case (Southwest Airlines) Southwest Airlines has the highest-profit margins in the airline industry in the USA. Southwest Airlines grew 4,048 percent in the 1990s. Its no-frills strategy has been highly successful in the U.S. domestic market. Its strategy is based on a narrow but well-defined market niche. Southwest concentrates on short-haul routes with high traffic densities and offers frequent flights throughout the day. Efficiency has been improved by eliminating costs associated with “hub” routes involving large major U.S. airports. Southwest limits the number of U.S. states and cities of operation, and it targets secondary airports because of their less expensive structures. Southwest’s fundamentally different operating structure allows it to charge lower fares than more established airlines.
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A typical flight, which lasts 1 hour on average, has no assigned seats; in-flight service consists of drinks and snacks only, and the company does not offer transfer of luggage to other airlines. Southwest’s fleet consists of 284 Boeing 737s, which make more than 3,510 flights per day. Having one type of aircraft allows for greater efficiency and easier turnarounds. All Southwest 737s use the same equipment, thereby keeping training and maintenance costs down. Finally, high-asset use, reflected in a turnaround time averaging 20 minutes, which is less than half the industry average, reduces its operating expenses by 25 percent. Refer to the mini case above, answer the following questions: a) What would you think the business strategy of Southwest Airlines (in terms of Porter’s Generic Strategies). Explain why? b) What are the advantages and disadvantages of this strategy? c) Is this strategy sustainable? What would you recommend that the management of Southwest Airlines should keep an eye on in the industry competition? Explain Southwest Aircrafts Expense Administration System Discussion.

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a) Southwest Carriers' business methodology can be delegated an expense initiative technique under Watchman's Nonexclusive Procedures. This is on the grounds that the carrier centers around offering minimal expense trips to clients, determined to accomplish high piece of the pie in a limited market portion. Southwest Carriers accomplishes this through different expense cutting measures, like utilizing a solitary sort of airplane, working out of optional air terminals with lower landing charges, and restricting in-flight administrations to beverages and snacks as it were Southwest Aircrafts Expense Administration System Discussion.
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b) Benefits of Southwest Aircrafts' expense administration technique incorporate the capacity to offer lower costs than contenders, which can draw in cost delicate clients and increment piece of the pie. By working out of auxiliary air terminals and offering regular flights, Southwest Carriers can likewise give more prominent accommodation to clients. Notwithstanding, the drawbacks of this procedure incorporate restricted income open doors because of the low costs, and the gamble of being undermined by contenders who can likewise offer low costs.

c) While Southwest Aircrafts' expense administration system has been profoundly effective previously, it may not be reasonable in the long haul. Contenders might have the option to imitate Southwest's expense cutting measures, or may present new developments that proposition better worth to clients. To stay serious, the administration of Southwest Carriers ought to watch out for industry patterns and mechanical improvements that might affect the carrier business, for example, the development of extraordinary failure cost transporters, changes in fuel costs, and progressions in airplane innovation. It might likewise be essential for Southwest Aircrafts to differentiate its contributions and investigate new income streams to keep up with productivity Southwest Aircrafts Expense Administration System Discussion

Expert Answer

Southwest Aircrafts Expense Administration System Discussion

Question

Mini Case (Southwest Airlines) Southwest Airlines has the highest-profit margins in the airline industry in the USA. Southwest Airlines grew 4,048 percent in the 1990s. Its no-frills strategy has been highly successful in the U.S. domestic market. Its strategy is based on a narrow but well-defined market niche. Southwest concentrates on short-haul routes with high traffic densities and offers frequent flights throughout the day. Efficiency has been improved by eliminating costs associated with “hub” routes involving large major U.S. airports. Southwest limits the number of U.S. states and cities of operation, and it targets secondary airports because of their less expensive structures. Southwest’s fundamentally different operating structure allows it to charge lower fares than more established airlines.

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A typical flight, which lasts 1 hour on average, has no assigned seats; in-flight service consists of drinks and snacks only, and the company does not offer transfer of luggage to other airlines. Southwest’s fleet consists of 284 Boeing 737s, which make more than 3,510 flights per day. Having one type of aircraft allows for greater efficiency and easier turnarounds. All Southwest 737s use the same equipment, thereby keeping training and maintenance costs down. Finally, high-asset use, reflected in a turnaround time averaging 20 minutes, which is less than half the industry average, reduces its operating expenses by 25 percent. Refer to the mini case above, answer the following questions: a) What would you think the business strategy of Southwest Airlines (in terms of Porter’s Generic Strategies). Explain why? b) What are the advantages and disadvantages of this strategy? c) Is this strategy sustainable? What would you recommend that the management of Southwest Airlines should keep an eye on in the industry competition? Explain Southwest Aircrafts Expense Administration System Discussion.

Expert Answer

Step-by-step

1st step

All steps

Answer only

Step 1/1

Please follow the below answer

Final answer

a) Southwest Carriers' business methodology can be delegated an expense initiative technique under Watchman's Nonexclusive Procedures. This is on the grounds that the carrier centers around offering minimal expense trips to clients, determined to accomplish high piece of the pie in a limited market portion. Southwest Carriers accomplishes this through different expense cutting measures, like utilizing a solitary sort of airplane, working out of optional air terminals with lower landing charges, and restricting in-flight administrations to beverages and snacks as it were Southwest Aircrafts Expense Administration System Discussion.

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b) Benefits of Southwest Aircrafts' expense administration technique incorporate the capacity to offer lower costs than contenders, which can draw in cost delicate clients and increment piece of the pie. By working out of auxiliary air terminals and offering regular flights, Southwest Carriers can likewise give more prominent accommodation to clients. Notwithstanding, the drawbacks of this procedure incorporate restricted income open doors because of the low costs, and the gamble of being undermined by contenders who can likewise offer low costs.

c) While Southwest Aircrafts' expense administration system has been profoundly effective previously, it may not be reasonable in the long haul. Contenders might have the option to imitate Southwest's expense cutting measures, or may present new developments that proposition better worth to clients. To stay serious, the administration of Southwest Carriers ought to watch out for industry patterns and mechanical improvements that might affect the carrier business, for example, the development of extraordinary failure cost transporters, changes in fuel costs, and progressions in airplane innovation. It might likewise be essential for Southwest Aircrafts to differentiate its contributions and investigate new income streams to keep up with productivity Southwest Aircrafts Expense Administration System Discussion

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