Strategic Management

The first alternative strategy is differentiation. A firm following a differentiation strategy attempts to convince customers to pay a premium price for its good or services by providing unique and desirable features. The message that such a firm conveys to customers is that you will pay a little bit more for our offerings, but you will receive a good value overall because our offerings provide something special (Mastering Strategic Management, 2014, p. 148). Consequently, Southwest Airlines can charge premium prices based on features of the differentiated product or service. Elements that a firm can use to achieve product or service differentiation include innovation, improved quality, reliability, dependability, excellent customer service, improved availability, and image to mention just but a few. For example, in order for Southwest Airlines to achieve this strategy, the company can provide excellent customer services so that customers will consider its services to be superior to those of its rivals. Although this strategy will imply additional operational costs, Southwest Airlines will benefit from increased revenues arising from premium fees charged and customer growth. Southwest Airlines can also use focus strategy, which involves focusing on a specific narrow market, known as a niche market. The company can compete in the niche market using cost leadership or differentiation. The former approach is known as focused low cost while the latter is known as focused differentiation (Hubbard, Rice, & Galvin, 2015). Focused differentiation strategy is specifically an excellent possibility for Southwest Airlines. The company can pursue focused differentiation strategy by providing innovative services to the business customer segment. This strategy is a good possibility for Southwest Airlines because it will enable the company to narrow its focus to the niche market. If properly selected, the firm will benefit from improved customer satisfaction, market growth, and revenue growth. • Learning Activity #1 The best strategies often fail not because they weren’t good strategies, but because they weren’t implemented properly. One of the most important aspects of implementing a good strategy is ensuring that the organization is designed in a way that will properly support the plan. You identified a generic strategic direction for a selected organization; you then narrowed down that strategic direction and identified possible alternative strategies and then narrowed those alternatives down to ONE specific strategy to implement for Southwest Airlines. Using that specific strategy, identify what type of organizational design would best support that strategy. Provide a high level overview of the organizational design – be sure to fully explain the design and why it was selected to support the strategic direction and, more importantly, the specific strategy to be implemented. Learning Activity #2 Vince Lombardi was quoted as saying “The best game plan in the world never blocked or tackled anybody”; strategist often believe their work is done once they’ve identified the right strategy to be implemented, but in reality the strategy implementation phase is often far more difficult than the strategy formulation phase. In addition to organization design, there are several other factors that can cause a good strategy to fail: management, operations, marketing, finance, R&D and MIS issues. Review your response to Learning Activity #1 and determine which ONE of these additional factors could cause that specific strategy to fail. Clearly identify the factor, explain why it could cause the strategy to fail – fully support your response.