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Northwest Airline's Strategy Lessens For Business Owners

Nov 7, 2007
Northwest Airlines made a big leap a quarter after they emerged from bankruptcy protection earning $244 million in profit. The amount of money this company was able to earn when they were so far down on the airline food chain is amazing. They had a lot of problems but it seems that they have successfully used their strategy to succeed.

There might be a lesson in all of this for companies and businesses. The strategies applied to Northwest Airlines and can be attributed to the Company's success could very easily be applied to other businesses and their concept of service or product offerings. Take the following as an example:

Strategy #1 (Smaller Fleet): A smaller fleet means that NWA or any other business should focus more attention on what actually makes them money. It is a matter of perspective to believe that you can't be everything to every customer. The further you get away from your core services the more risk you take in terms of non-competitiveness and rising costs.

Take for example a Casino that has both table games and slots. If the table games department isn't making any money and the majority of the wealth comes from slots the processes and procedures should be changed to encourage people to go to slots. The more people you put in the slot chairs the more money the company makes.

Strategy #2 (Fuller Seats): Facilities, personnel, utilities, etc... all cost a lot of money. Simply because we offer these large and grandioso items and they are enjoyed by our customers doesn't mean that the company will earn a profit. A small theater that is 90% full but costs little to operate is much better then a large theatre that is only 50% full but costs a lot of money to run.

The key concept to learn is that companies can often do more with less. They can maximize use, decrease costs and have a higher profit margin by ensuring that they are maximizing their capacity. For example, a great production process is only as good as the amount it is used.

Strategy #3 (Cutting Costs): Companies and businesses often have a lot of waste associated with them. There is often a reciprocal relationship between the size of the company and the amount of the waste. However, even small companies can often be havens for lost productivity, expensive vendors and mediocre results.

Cutting costs is often one of the easiest ways to increasing profits. The cost cutting should be so bold that in affects the marketability and quality of your product or service but it should minimize any waste within the system. For example, you might be over paying for supplies, might be overlooking some efficiency issues or simply might be not considering alternatives.

Strategy #4 (Assets): NWA owns most of its airplanes and since they are assets they don't cost the company very much to run. Many businesses do not own their assets and instead continue paying hefty interest, fees and other loan penalties for not owning their assets. Consider buying those items that are most essential to your service or product.
About the Author
Murad Ali is a three time published author who teaches part-time as a professor, works full-time in hr/labor relations, and runs the Blog Publishing & Marketing Company and NBW Blog .
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