Problems due to 9/11
The major problem facing the airline after the 9/11 attack was thechanging security guidelines issued by the government. This challengemade it hard for the airline’s employees to convey the Southwestspirit. Built around the airline’s founder, the organizationalstructure in this company was among its top competitive advantages.With the new security measures, the organization found it extremelyhard to maintain its culture, hence giving away a crucial competitiveadvantage in the process. For instance, the increased security checksincreased the time spent for passengers to board their flights.Initially, passengers would receive a plastic pass card and proceedto assume any seat they deem fit, without much security checks. Themeasures increased the airline’s turn-around-time.
The bailout of the airline industry by the US Congress only served tohelp Southwest Airline’s competitors who were in a criticalfinancial status. Although the industry was facing a looming crisis,the company was still ahead of the pack. However, with the Congressbailout, the company could no longer enjoy the market leader positionthat it previously held after the terrorist attack.
The last minute flight bookers that the airline had grown to attractwere now a target for random searches as directed by the U.S securityagencies, FBI and the CIA. Most of the passengers in this categorywere flagged down. Since this category of passengers formed a largerportion of the target market, the number of flagged passengers was atSouthwest was 15% higher than that of competitors. This meant thatmore time would be wasted.
Porters Five Forces
Supply power is low, Buyer power is medium, competitive rivalry ishigh, threat of substitution is low, and the threat of new entry ismedium.
The 9/11 attack took away the Southwest’s major competitiveadvantage- short turnaround time. With the new turnaround time,relatively same as that of competitors, the industry has become morecompetitive. The company no longer holds a commanding presence in theregion hence making the industry more prone to new entrants.
Competition has also become high because the new security measuresdrove away the firm’s major competitive advantages such as latebooking, and swift services. Although the market is not as lucrative,the threat of substitution is still low because Southwest Airlines isalready a favorite among many interstate travelers. Before theterrorist attack, the Southwest Airline brand was already apowerhouse and the current organizational culture is unlikely toalter that.
The major strength of the company lies in its organizational culturethat precludes being nice to customers. No matter the delays, acustomer will always feel valued if the staff at the airline arefriendly and treat them with respect. The organizational culture issomething that is unique to the airline because it runs down from thecompany’s leadership to the lowest ranking employees.
The team spirit at the company is motivated by its CEO, somethingthat the competitors do not have. In addition, the airline has a goodreputation among travelers and it has therefore garnered quite asignificant number of loyal customers. Although there are securityconstraints in place, the operations of the airline will still beable to be quick. This is because it has eliminated some of thetime-consuming bottlenecks such as connecting flights, which arecharacteristic of many airlines.
The major weakness is the company’s presence in few locations.Although it has been increasing destinations over the years, thenumber is not yet enough to cushion it from the losses it is about toincur due to the terrorist attack. The current economic situationwill not allow it to expand any further.
Opportunities are plenty for the airline if it will circumvent thehurdles created by the new security measures. The directives by FBIand CIA mean that other competitors are also experiencing timewastage. If the airline comes up with strategies that willconsiderably reduce the time spent by passengers, it will be ahead ofthe pack once again. The company needs to set strategies that willsee it through the difficult times.
Among the major threats is the loss of a competitive advantage. Theswiftness of service with which the company was famous for is now athing of the past. The turnaround time is almost the same with thatof competitors. There is also the threat of new entrants due toincreased competition.
The company should hire more staff members to address the issue ofincreasing security demands. The high number of security searcheswill need a bigger team of employees.
In order to keep up with the increasing competition, there is needfor more incentives and products. Currently, the only incentive isshort turnaround time and low prices. The company can offer bonusesto loyal clients.
Southwest Airlines can outsource the entire function of airportsecurity to specialist providers. This move will give the companytime to focus on creating strategies to fight the looming stagnation.Through outsourcing, the company will provide fast and efficientservices.