Business Model Building Blocks

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Table of Contents

Introduction
Key Partners
Key Resources
Channels
Elements of Building Blocks
Southwest Airlines Key Partners
Southwest Airlines Key Resources
Southwest Airlines Channels
Conclusion
References

Introduction

The Business Model Canvas is a useful tool for developing and presenting a company’s business idea. This approach allows you to visualize various building blocks of the business model for the most detailed consideration of key aspects of the business. Canvas includes nine key elements of interaction that ensure the functioning of the company. This paper covers the three most important building blocks present in canvas including key partners, key resources, and channels. These blocks were chosen because the consideration is based on the example of Southwest Airlines, for which these elements play a critical role.

Key Partners

The building block of key partners is the most significant for Southwest Airlines, as the main activities of the company involve interaction with partners. As stated by Urban et al. (2018), companies within the air transportation industry are prone to active collaboration. Key partners building block describes relationships with suppliers, as well as with non-competitor companies. Companies can participate in partnerships to acquire particular resources to minimize risks, as well as optimize their operations (Osterwalder & Pigneur, 2010). Additionally, partners can perform various activities that can be used to both reduce costs and expand operations. For Southwest Airlines, this block is especially important since the company receives a significant part of sales, as well as resources, from partners and members of the alliance.

Key Resources

The building block of key resources is also defined for Southwest Airlines. This block describes what resources the company has for the production of services, maintaining relationships with customers, collaborating with partners, promoting its products. Most importantly, key resources may be owned by the company or provided by key partners (Osterwalder & Pigneur, 2010). For Southwest Airlines, again, this aspect is the most significant, as it allows you to reduce the cost of your operations and offer services at the lowest prices for customers. Key resources may differ in type but are used by the company for earning revenue through the sale of their services. Additionally, key resources differ depending on the business model and activities of the company.

Channels

The building block of channels is also significant for Southwest Airlines. This block describes what channels the company uses to sell and distribute its services, as well as to attract customers. Currently, in many industries, these activities are increasingly carried out through online channels (Ramdani et al., 2019). However, there are companies that distribute services through physical interactions that are relevant to Southwest Airlines. However, companies are also actively using the online environment to raise awareness of their brand, provide an opportunity to purchase company products and services, and ensure customer support. Companies can use their own or partner channels, as well as mix them to convey their value proposition to the audience.

Elements of Building Blocks

One element of the key partner block is what key activities the partners perform. In the case of Southwest Airlines, these activities include the purchase of the company’s services, as well as the provision of resources necessary for operations. The characteristic of the block of key resources is what resources are required by the company value proposition. Southwest Airlines requires a vast array of resources, both physical, financial, human, and intellectual, to carry out its services. A characteristic of channels block is a description of how a company integrates channels for effective customer reach. Southwest Airlines uses both its own and partner sites for sales, which allows both the direct distribution of services and expanding customer reach.

Southwest Airlines Key Partners

Key partners of Southwest Airlines are Lyft, Hertz, Best Western Hotels and Resorts, NRG, eMiles. They fulfill different roles:

Affiliate partners (websites and travel agencies ensuring market reach and driving customers to the company’s booking portal);
Rewards partners (travel, retail, hotel, dining companies providing services within the frequent flyer rewards program);
Service partners (service companies providing discounts for Southwest Airlines customers);
Joint venture and alliance partners (air service companies helping in joint venture projects and resources sharing).

The key resources received from partners are technical capabilities, market reach tools. Partners are involved in such key activities as attracting new customers and, maintaining loyalty through affiliate programs, providing services to maintain the fleet and crew.

Southwest Airlines Key Resources

Southwest Airlines receives its key key resources from its partners who provide technical support and also engage in customer acquisition. Value proposition of Southwest Airlines requires the following key resources: aircrafts fleet; service and maintenance infrastructure; sales channels; partners network; IT infrastructure; consumables (fuel and oil); rent and utilities; personnel. For the distribution purpose the key resources are aircraft fleet, service, and maintenance infrastructure, IT Infrastructure, rent and utilities, consumables, personnel as well as sales channels. Customer relationships management requires from the company such key resources as sales channels, personnel, partners network. Thus, the main resource of the company is the partner network, which provides all aspects of its activities.

Southwest Airlines Channels

The audience wants to be reached through online channels based on a website with detailed information and the opportunity to purchase the company’s services. The website currently offers a flight booking portal through which customers can search for flights, book tickets, and manage their interaction with the company. Additionally, the company offers a mobile app and corporate travel website. It is also important that the company has a network of offices where customers can also use the services of the company. Partner network also offers company websites and sales channels, increasing customer reach. Channels are integrated as different ways to reach customers with different needs. The company’s website works best with its flight booking portal, as well as booking providers’ websites, including Saber, Apollo, and BookingBuilder. The most cost-efficient are partner sites and booking providers, as they do not require the company’s own IT infrastructure. As part of the customer routine, the company’s channels offer customers the opportunity to interact at all stages of using services, which can also be done through a mobile application.

Conclusion

The Business Model Canvas contains the nine elements of an effective business idea. As part of this presentation, three of them were considered, including key partners, key resources, and channels. These building blocks were chosen because they are the basis for Southwest Airlines. This company relies in its activities, including attracting and retaining customers, on interaction with partners. Thus, Southwest Airlines receives key resources from them, as well as interacts with customers through partner platforms. The main channels for the company are its own website and resources provided by partners. The interaction of these blocks is the basis of the company’s business providing its value.

References

Osterwalder, A., & Pigneur, Y. (2010). Business model generation. John Wiley & Sons.

Ramdani, B., Binsaif, A., & Boukrami, E. (2019). Business model innovation: A review and research agenda. New England Journal of Entrepreneurship, 22(2), 89-108.

Urban, M., Klemm, M., Ploetner, K.O., & Hornung, M. (2018). Airline categorisation by applying the business model canvas and clustering algorithms. Journal of Air Transport Management, 71, 175-192.

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