Southwest Airlines’ Generic Competitive Strategy, Growth Strategies

Southwest Airlines generic competitive strategy, competitive advantage, Porter, intensive growth strategies, Ansoff, aviation business management analysis
A Southwest aircraft arriving with military personnel at Terre Haute Regional Airport in Indiana. Southwest Airlines’ generic competitive strategy and intensive growth strategies optimize competitive advantages, profits, and market share based on low costs and low fares. (Photo: Public Domain)

Southwest Airlines’ generic competitive strategy (Porter’s model) ensures product/service attractiveness and competitive advantages for successfully implementing intensive strategies for growth (Ansoff Matrix). With a strategic position as one of the main competitors in the commercial aviation industry in the United States, the company is popular for its low fares and high accessibility. These variables relate to Southwest’s intensive growth strategies and generic competitive strategy. In Michael E. Porter’s model, competitive advantage is developed through generic competitive strategies that the airline company can apply. On the other hand, based on Igor Ansoff’s matrix, Southwest Airlines can use various intensive growth strategies. These corporate strategy frameworks are considered in this business analysis of the commercial aviation company and its approach to growing despite strong competitors. Southwest’s success indicates effective implementation of its generic strategy for competitive advantage and intensive growth strategies suited to the business.

Southwest Airlines uses its generic competitive strategy to counteract the competitive power of other firms, such as Delta Air Lines, United Airlines, and American Airlines. These competing commercial aviation companies possess resources and the operating scale to grow despite the competitive landscape. Southwest’s intensive growth strategies facilitate the operational scale needed to maintain the corporation’s generic strategy, thereby also strengthening its competitive advantage and competitive positioning in the industry.

Southwest’s Generic Competitive Strategy (Porter’s Model)

Southwest Airlines’ generic competitive strategy is cost leadership, which creates competitive advantage based on low costs and correspondingly low prices. To address competition, the company’s strategic objective in this generic competitive strategy is to minimize operating costs, optimize profit margins, keep low prices, and offer its airline services to the mass market. The large-scale operations linked to this generic strategy for competitive advantage supports the fulfillment of Southwest Airlines’ mission statement and vision statement, which aim for global leadership in the industry. The commercial aviation corporation’s success depends on effectiveness in implementing the generic competitive strategy of cost leadership.

Cost leadership as a generic competitive strategy is observable in Southwest Airlines’ service offerings as a low-cost carrier. The company’s advertising campaigns frequently emphasize low fares as a selling point, in contrast to other firms that use the focus strategy or the differentiation strategy, such as Delta. In a way, Southwest has a best-cost provider strategy, as the company continues to minimize costs while also maintaining a high level of customer satisfaction through service quality. Based on its generic competitive strategy, the enterprise presents itself as a major commercial aviation contender in terms of price and in terms of warmth and friendliness in its customer service.

Southwest’s Intensive Growth Strategies (Ansoff Matrix)

Market Penetration. With its generic competitive strategy, Southwest Airlines applies market penetration as its primary intensive growth strategy. The company’s strategic objective in this intensive strategy is to grow its revenues by providing more of its current air transportation services to more passengers in markets where it currently operates. Southwest’s generic strategy of cost leadership ensures low costs that translate to across-the-board low prices that are a competitive advantage for keeping a large share of the commercial aviation market, in support of market penetration as an intensive growth strategy. The price sensitivity of customers in the transportation sector is one of the factors that make cost leadership and market penetration effective strategies in this case. The business strengths and competitive advantages identified in the SWOT analysis of Southwest Airlines Co. attract customers and support the success of market penetration. The strong airline brand and attractive prices enable this intensive growth strategy. Also, Southwest Airlines’ marketing mix (4P) determines how the company penetrates the target market.

Product Development. Product development is a minor intensive growth strategy in Southwest’s organizational development. The corporation’s competitive advantage depends mainly on cost leadership as its generic competitive strategy, and market penetration as its intensive strategy for airline business growth. Southwest’s product evolution has already stabilized, which means that the business has been aiming its product development efforts mostly at enhancing its current offerings. Thus, product development, as an intensive growth strategy, minimally contributes to growing the airline company. Changes in current products require corresponding changes in Southwest Airlines’ operations management, which manifests the applied intensive growth strategies and generic competitive strategy for competitive advantage in commercial aviation. The organizational culture (corporate culture) of Southwest Airlines is also a factor integrated into product development, as the company relies on organizational cultural variables to optimize its service quality and customer satisfaction and loyalty.

Market Development. The growth of Southwest Airlines minimally depends on market development. This intensive growth strategy aims to offer current services to new commercial aviation markets. When applying market development, the generic competitive strategy of cost leadership ensures competitive advantage in new civil aviation markets. However, Southwest continues to focus on its limited multinational operations in the United States and a few other countries. Thus, market development is not a significant intensive growth strategy for the airline business.

Diversification. Diversification is an insignificant intensive growth strategy for Southwest Airlines. The objective of this intensive strategy is to grow the company through new operations, such as service businesses related to air travel operations. Southwest focuses on growing within its current markets, with minimal emphasis on using the generic competitive strategy of cost leadership for competitive advantage in diversifying its business. Thus, diversification is an insignificant intensive growth strategy in the airline business. The addition or expansion of business operations requires accompanying changes in Southwest Airlines’ organizational structure (business structure).

Key Points – Southwest’s Generic Competitive Strategy & Intensive Growth Strategies

Southwest Airlines applies cost leadership as its generic strategy for competitive advantage, along with intensive growth strategies to maximize market share and move toward its long-term goal and strategic plan of becoming a global industry leader. The intensive strategy of market penetration provides support for the airline company’s generic competitive strategy of cost leadership, and vice versa. Southwest’s brand image and service quality reflect these strategies and associated competitive advantages. For example, customers know the company for low airfares, which are a consequence of cost leadership as a generic competitive strategy that leads to cost-based and price-based competitive advantages. Also, Southwest is known for its large-scale operations, which are a result of market penetration as an intensive growth strategy.