I’m stuck on a Business question and need an explanation.
1. I have lost some points as using outside source. See the comment image I attached below. PLEASE Use only the information from the case. Do not incorporate any outside information. I have attached the reading and the guideline again!
2. Please use the part 1 paper below since I made some adjustment based on your writing.
Use the ‘Strategy Analysis template’ to recommend a cost or differentiation strategy for Southwest Airlines.
In your analysis be sure to:
Incorporate all your prior insights from prior modules (eg: resources, capabilities, industry analysis, etc)
Use the SWOT matching approach in section 3 to justify your recommendation of a cost or differentiation strategy
Provide at least 3 key areas of execution needed to implement the strategy you recommended. You may find the value chain useful in thinking of execution areas.( I HAVE ALREADY ATTAHED THE VALUE CHAIN BELOW)
I think it’s pretty clear already based on the guideline and the requirement above.
Answer preview
The bargaining power of customers is relatively low.
The customers have no direct influence on the prices in the airline market. The organization explores low prices and good customer care services to achieve a competitive advantage. The provision of high-quality services at a low price is a critical strategy for Southwest Airlines (O’Reilly, 1995). Since customers can explore alternative services, it has promoted the need to have an airline- within-an-airline initiative (O’Reilly, 1995). Since the California corridor was most traveled, Southwest Airlines’ response to competition and not buyer’s power increased its competitiveness. Indeed, while the United’s share decreased from 38 to 30 percent from 1991 to 1993, Southwest market share rose from 26 to 45 percent for the same period (O’Reilly, 1995). Therefore, buyers usually have only a small bargaining power in the airline industry because this industry is monopolized and has high costs.
