Generic strategy in Southwest Airline

Essay by kiteUniversity, Bachelor'sA, October 2006

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Generic strategy

The three generic strategies identified by Michael Porter, namely cost leadership, differentiation and focus are all options available to small businesses. cost leadership requires a tight set of interrelated tactics that include aggressive construction of efficient-scale facilities; vigorous pursuit of cost reductions from experience; tight cost and overhead control; avoidances of marginal customer accounts; cost minimization in all activities in the firms value chain. Differentiation is the strategy of differentiation consists of creating difference in the firm's product or service offering by creating something that is perceived industry wide as unique and valued by customers. Focus is based on the choice of narrow competitive scope within an industry.

The success reason for SWA's is because of their low-cost model. First of all, there is no paperwork of ticket reservation and collection procedure; a ticket gives out in under 20 seconds by automatic ticket dispensers which can process a credit card, this can subtracts commission to hair a travel agent, and save paper and printing expending.

Second, SWA using only of Boeing 737s and just offers coach seats and does not offer in-flight meals. Boeing 737 just has four versions of that spares and maintenance routines; thus, it can be standardized, cutting down still further on costs. In-flight meals and luxury seats, which have been seen as unnecessary for SWA that provides a short-haul trip from city to city at the lowest cost, most of its customers who are willing to forego in-flight meals, because the direct routes and fancy seats means for a cheaper ticket. Third, SWA has removed many of the "luxuries" that competitors have offered, SWA enforce a rule for passengers who could not fit into the seats to purchase an additional seat by its purpose-get passengers from one point to another. Because to have...