As a result of the highly competitive market today, companies seek ways to add value to its customer. Having the best “hardware” is no longer the ultimate goal, instead, better “software” are what companies pursuing nowadays. Take airline industry as an example, every airline can have the best planes, but not all airlines can offer fantastic service to customers. Let’s look how Southwest Airline add value to its customer.

Southwest Airline is not a huge airline comparing to other airlines in the United State. However, Southwest has the lowest number of complaints among all U.S. airlines, it consistently received the fewest ratio of complaints per passenger boarded of all major U.S. carriers since 1987. How is it possible for a middle size airline company achive such big success? The answer lies on the value that the company delivered to its customer.

People who travelled a lot will notice that no matter which airline you flight with in U.S., when you pay a fee to check a luggage. However, Southwest decided not to charge customer for luggage when they flight with the airline. In addition, Southwest offers free in-flight non-alcoholic beverages to customer who flight with the company. More importantly, flight attendent of Southwest have their unique way of announcing safety information by making them into songs, jokes or raps, which can entertain their customer. Lastly, Southwest offers a frequent-flyer program to benefit customer who flies a lot with the company, this program helps the company to maintain its customer loyalty.

As a conclusion, the reason why Southwest Airline was able to achive its success because they add value to its customer by offering free luggage check-in, free non-alcholic beverages, entertaining way of announcing safety information and reward program to benefit frequent flyers.

Southwest Airline rap

The term “Franchise” is not an unfamiliar term to most of us, because it is one of the well known model of operation. Huge companies like McDonald, KFC and Coca-Cola all use some sort of franchise techniques in their operation. However, the reason behind it might not be as clear as it seems to people. Now let me explain it in detail.

There are several reasons why a company wish to employ the franchise model as a part of their operation. The first is that by using the franchise model, it allows the company to expand faster than opening company-owned stores. The model is also cheaper to operate, because it cost the parent company less when new stores are owned and operated by a third party. As a result, the parent company have much more money to invest on other stuff, such as advertisement.

Another reason is that the franchise model allows the company to understand its customer in different regions better. Let’s take Coca-Cola as an example. Coca-Cola actively looking for bottling partner(s) in the particular region that the campany wants to expand its market in. By choosing a local bottling partner(s), it saves a lot of time, effort and money as well for Coca-Cola to try to understand the local customer. As we discussed in class, failing to understand the local customer, may result in a total failure in expanding the market in that region.

However, there are also pitfalls in the franchise model. One pitfall is that, the model limits the company’s potential growth, because the parent company will only earn a percentage of the revenues of each franchise store. Despite the fact the model restricts the company’s growth, but in the long run, I think it benefits the company more than it costs the company.