Wednesday, April 12, 2017

Adopting strategy fitting characteristics of the company best

The Southwest Airline and GR cases show us two totally different strategies for growth of the company, and both have been succeeding. Therefore, from the comparison of the two companies, it can be concluded that only adopting the strategy fitting the exterior environment and interior company structure could a company be successful. Simply imitating others do not work.

The Southwest Airline was founded late, in 1967, which means that the pie of market had already been shared. Therefore, the strategies Southwest adopted were low fare (even cheaper than driving cars for the same trip), high utilization of airplanes and staff, trips in short distances, and providing no beverage or meal during flight. Actually, some of these strategies are related. For example, to reduce cost, the airline has to optimize its labors and planes utilizations to maximization. The opening seat strategy is also one of the solutions to cut waiting time for boarding.

On the contrary, the initiatives GE adopted were much more aggressive. To consistent reliability of GE's growth, GE acquired a lot of corporations, such as NBC broadcast business and BetzDearborn in any area profitable as it believed. In addition, as one of the biggest corporation in the world, GE has enough budget capital, which supporting the company spending a lot of money on long-term research which may be profitable in several years later. GE has also built a lot of branches, including factories and research centers all around the world, believing the globalization strategy could help earning considerable revenue from many developing countries.

Another interesting comparison is the methods two companies used when they met bottleneck of growth. Southwest tried best to broaden its market and attract more passengers. The related decisions Southwest made were adding flights, code-sharing, developing supporting technology, and entering into more cities, especially large cities such as Philadelphia and New York. On the other side, GE could easily improve its financial performance and reduce cost by introducing new operating system and standards, such as Six Sigma and Lean Six Sigma and divesting subsidiaries non-profitable.

The differences between the two corporations in both growth and recession stages are actually based on the different core target and principle strategy. Methods to reduce cost and fare in order to sell more tickets dominates the decisions and plans in Southwest Airline, while considering itself as a growth leader, GE puts money into lots of industries seeming profitable and spends a huge amount of capitals in research and development of new technology.

From the comparison, we can see that no matter what position a company is in the competitive market, it should adopt reasonable strategies, fitting its size, capital, advantages in the market, and culture of the company. I think the strategies Apple and Coke adopt are representative. They do not produce many kinds of product. Apple has only one type of cell phone and one type of laptop while Coke has been focusing on beverages for more than one hundred years. On the contrary, Alibaba Group, the giant E-Commerce company,  keeps acquiring and merging startups since Alibaba was founded. All the great innovations and technologies are amplified and spread out by Alibaba's business advantage— information transmission platform with fast speed and a huge amount of views. Therefore, as a good manager in one company, what he should do is to know the company deeply, and design strategies according to the situation of the company all the time.

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