The RBV analysis of Southwest Company Limited
The Resources-Based View (RBV) is a management tool that is used by the management team of an organization in order to determine the strategic resources that an organization applies. Thus from determining these resources that are owned by an organization, the company will be in a point of having an improved competitive advantage over the other companies that trade in the same business. The competitive advantage of this organization will be fulfilled as a result of the company’s top management team transforming its original operation ways in order to provide the competitors with stiff competition. This will ensure that the company is able to meet the demands of the customers which is constantly changing as a result of increased needs and wants (Information, 2010).
Economic Value Added (EVA) is noted as the amount of capitals that a company generates above its daily business operations costs; thus it is where a company manages to make extreme profits that it expects to ensure that the company has accumulated a lot of profits before the expenditure of the company deducted.
Southwest Airline company relates to the code 481111 according to the statistics that is provides North American Industry Classification System (NAICS); this description is as a result of the company being classified as a scheduled passenger air transporter. Thus the company’s Economic Value Added is found as the difference between the net operated profit and the capital change time the net operation assets employed by the company (Information, 2010). This makes it easy for the company to evaluate its expenditure and thus determine the best measures that will ensure that the company will be in a position of making it decisions that will ensure that the company succeeds in business.
The North American Industry Classification System (NAICS), also stated that Southwest Airline Company was ranked fifth; this is because the company made an Economic Value Addition of about $3.378 billon in the past 10 year, this showing that the company is in a position of providing its shareholders with an average scale of $32 million as other airline companies failed to offer their shareholders with dividends (Banstetter, 2008). Thus making Southwest Airlines remain profitable, as a result of earning $511.1 million on revenues of $5.55 billion.
Southwest Airline Company has ensured that it is more effective in its operations, as a result of accountability, a strong business understanding to its employees and clients, encouraged communication in decision making process across all the levels of management and developing of a high performance business team (Banstetter, 2008). Southwest Airline Company has managed to succeed as a result of diversifying its activities, in order to enable the company gains the intended returns that will ensure that the company is successful in its incomes that includes Primary and Secondary activities also known as (tangible and intangible resources). This will ensure that the company is in a position of being more successful in the industry.
Primary /tangible resources that Southwest Airline Company indulges in includes Production, this basically entails the services that Southwest Airline Company offers its customers, Southwest is a good provider of air transport to clients who travel short distances. Thus, they are in a position of operating between the destinations in the country (Information, 2010).
The other primary activity that ensures that the company uses to succeed as a carrier is the use of good marketing and sales strategies; this is when the company used a lot of advertisements through media publications that ensured that the company will be in a position of reaching out to its customers. In this they express to them their services and advantages of using the airline in order to enjoy the high quality services it offers (Banstetter, 2008).
Research and Development this is where the southwest airline company will be in a position of offering new set of services to its clients; this is by diversifying its services which in this case Southwest airline company opts to expand its service delivery. This is by increasing its routes and at the same time starting to operate in unexploited routes that will enable company yield extra income that will ensure that the company earns more (Information, 2010).
The supportive /intangible resources; this is where the company is involved in is the Human Resources that has ensured that the company is in a position of succeeding. This is through the company implementing on the internal practices that will ensure that the company implements factors that will ensure that the employees are more productive. This is through training, motivating and compensation of the employees hence the employees enjoy and are competent when offering services. This ensures that there is customer and employees loyalty as company offers its services. The firm also has profit-sharing and stock ownership plans for all employees and by decentralizing decision-making authority the ensure employees are involved at all times.
The company has also boosted its operations this is because of improved information system, the company has been able to succeed in its services; this is when the company has been able to effectively improve its IT system. For this reason, they improve the interaction between the customers and the company, thus reducing the cases of miscommunication between these concerned parties (Information, 2010).
Southwest Airline Company has emerged to be most influential and a successful carrier in the United States of America; it is highly recommended for its great success in the Short haul air transportation in the country. Thus the airline company has succeeded in its transportation business. The paper highlights on the internal structure and alignment of Southwest Airline Company, it will also conduct a through research that will specifically help the reader understand the economical value added of the Southwest Airline Company. In this case it is measured in millions, these current amount is found when the company engages in other activities that has helped the company to achieve the extra income that have facilitated the company’s success in the air transportation industry (Madanoglu, Chang, & Chu, 2004).
The internal management of the southwest airline company has ensured that the company to be a successful carrier in United States of America; as a result of the company proper engagement in tangible and intangible resources. Southwest has implemented the use of tangible resources that has ensured the company to be more effective in airline transportation, one of the most tangible resources that the company implements in order to be in a position of succeeding includes the use of improving of its products in form of service delivery to its customers. This is when the company is in the position of extending its services in transportation in America (Brown, 2006). At the present time Southwest Airline is involved in the transportation of customers through the different cities of America this means that the company is a service provider of short haul air transpiration. This is where the company has also tried to improve its service delivery as a result of including accommodation bookings; cab transportation and car hire services to its customers. This is as a result of the airline company collaborating with other business organizations to offer its customers with improved services; this in the other hand has made the company succeed in the market as it had avenues where it would be able to get extra income that will push the company through the challenging times (Harper, 2011).
Another tangible resource that southwest airline company has put in place is the use of good marketing and sales strategy; this is when Southwest Airline Company used a lot of its resources in order to become more appreciated and mostly used by the customers. The use of advertising of the company by the use of the electronic, print and interactive social media has also made the company attract more customers into using the services of the airline company offers. This includes the implementation of the new services like car hiring services, accommodation and fare promotions (Madanoglu, Chang, & Chu, 2004). Thus it has resulted to the company attracting many customers due to the improved new and innovative services that will ensure that the customers will enjoy the new benefits that the airline will offer them.
The other resource that is used by the airline company in efforts aimed at ensuring that the economical value addition (EVA) of Southwest Airline Company is the use of Research and Development. This is where the company will evaluate its services and products and at the same time improving the services that it offers its customers, this is where the airline company will be diversifying its service delivery, thus the company will strive at increasing the operation routes that the airline operates (Brown, 2006). The other services that the airline company provided included the increasing of sits operation routes; this is when the company will opt to indulge in the long haul transportation. This is by the airline company operating in distances that are designed to reach out of America; thus providing the loyal local customers of the airline company who opt to travel to other destinations out of America to enjoy the benefits of the services that are provided by the Southwest airline company. This increase in the distance will to some extent improve the income that is generated by the company other than the company relying on the short haul operations alone (Harper, 2011).
The company has also succeeded in its service delivery as a result of the company implementing the use of intangible resources; for this reason the company has became dominant and consistent in its operations. This is by the company maintain and improving the relationship between the company and its employees; this is when company introduces measures that will make its easy for the employees of the company to become loyal to the company as the company will offer the employees with sufficient compensations incase of injury (Brown, 2006). The company has also introduced measures aimed at motivating the employees; this is by offering them with a chance of profit sharing and stock ownership plans. This will ensure that they enjoy the profits and hence improved performance.
The other intangible resource which the company internal management has implemented is the use of an improved information technology; this is when Southwest Airline Company has implemented an interactive information system. This will make it easy for the company and its customers to interact and exchange information much easier (Harper, 2011). And as a result of these system the airliner has opted to improve the interaction of the between the customers; this is when the company introduced its interactive website. The customers are able interact freely and source for information and make online bookings and inquires of the flights; this will ensure that the company is able to maintain its customers. This is as a result of the availability of information that the company offers to them; thus resulting to the customers to opt into being loyal to the company thus improving the income that the company achieves from the increase in customers (Madanoglu, Chang, & Chu, 2004).
In conclusion Southwest has managed to maintain its success in the air transportation hence; the company takes great concerns that are aimed at good use of its resources and not concentrating on its competitors. This has resulted to the company monitoring its internal structure and this has led the company into improving its internal operational structure; this is by implementing state-of-the-art technology, concentrating in “every day low prices” strategy, implementing of superior logistical operations and establishing a reputable company brand.