This firm has been experiencing challenges in maintaining competitiveness with the market. External environment has a great impact on the competitiveness of the firm and this is why a clear understanding of this environment isessential for a firm. This analysis has divided Southwest Airlines external environment into the macro and micro environment.
By assessing the Political, Economic, Social, Technological, Environmental and Legal factors, the Opportunities and Threats can be faced by a company can be identified.
Future trends and requirements for change based on these trends can be identified through this analytical tool Johnson, et al, Political and Legal factors Southwest Airlines domestic operations are significantly influenced by government bodies; primarily Federal Aviation Administration FAA see www.
Recently, a law has been passed to repeal the Wright Amendment to be in effect in Thompson and Gamble, Southwest Airlines has on numerous occasions won legal battles against rivals in the US courts Thompson and Gamble, Economic factors Airline industry is severely affected by fuels costs.
A rise in the price of oil has a major impact upon Southwest Airlines profitability Mouawad, Social Factors Southwest Airline has a strong commitment towards customer service Thompson and Gamble, Campbell, Technological factors Technological developments have both created new opportunities as well as threats for Southwest Airlines.
Emergence of information and communication technologies has enabled robust communication and subsequently provided customers with an alternative for frequent travelling. It has also enabled Southwest Airline to expand its outreach directly to consumers through e-commerce.
For instance, Southwest Airlines was able to introduce ticketless travel through the use of technology Thompson and Gamble, Southwest Airlines reservation system is considered to be outdated.
It needs to update so that the company Southwest airlines internal analysis sell international tickets, provide passport information to federal authorities, and better handle customer relationships, along with other services Mouawad, Aircraft emissions cause significant damage to the atmosphere Penner et al.
The community noise is another major environmental concern. Noise from the air traffic is not only the reason for irritation and an unpleasant experience and has serious health issues.
The Five Forces analysis is as follows: Competitive Rivalry The competitive rivalry in airline industry has been increasing especially through mergers and acquisitions.
They are offering their passengers access to numerous cities throughout the US and connecting them to four continents of the world which Southwest Airlines does not do Mouawad, Moreover, new rivals have emerged following the footsteps of Southwest. Entry Barriers There are high barriers to enter this industry as it requires a large initial capital investment.
In conjunction with the price wars and low profit margins, it has become difficult to make profit in this industry. It is very common for airlines to project losses in their financial statements. Therefore a new entrant must be able to handle losses at the beginning.
Another barrier to entry is the limited availability of landing slots at the US airports. The slots are already reserved by established airlines and are difficult to obtain especially in airports with high passenger demand Czemy Threat of Substitutes There are many substitutes in terms of long distance travel such as cars, trains, ferries; and these are usually cheaper.
However, air travel has the absolute advantage in terms of time.
Hence, the threat of substitute is relatively low. Bargaining power of suppliers Boeing and Airbus are the main aircraft suppliers for large airlines.
Boeing is the supplier of aircrafts to Southwest Airlines. During the last few years, Southwest Airlines has renewed some of its aircrafts with Boeing aircraft and plans to completely switch over to them in near future Southwest, Since there are high switching costs for Southwest Airlines from Boeing to Airbus — related to the training costs of pilots and training engineers to adapt to Airbus aircraft — the bargaining power of Boeing is high.
Also, Southwest Airlines is heavily depended upon on the price of oil for its profit margins, which implies high bargaining power of oil suppliers.
Additionally, Southwest Airlines primarily uses regional airports and avoids large and expensive international airports. Hence, the bargaining power of both these suppliers is high Thompson and Gamble, Bargaining power of buyers Consumers have high bargaining power which is mainly attributed to their price based preference.
Receiving the same service, the consumers will select the airline which offers them best value for their money. Since the switching costs for customer is very low, the bargaining power of buyers is high. Internal Analysis Southwest Airlines gains its competitive advantage through its strategic capabilities that are gained from its resources and competences.
Resources are the unique tangible and intangible assets of the company while competences are the ways that the organization uses its competences to gain competitive advantage Johnson et al.
It is through these resources and capabilities that the company can respond to its external environment and succeed. The following is an evaluation of Southwest Airlines internal resources and competencies.Internal Analysis of the Southwest Airlines RBV Framework Southwest Airlines (NYSE:LUV) has a market cap as of September 12, of $B, the most profitable and valuable American-based airlines there is .
Macro Analysis. To assess the macro-environment of Southwest Airlines, a PESTEL analysis will be used. By assessing the Political, Economic, Social, Technological, Environmental and Legal factors, the Opportunities and Threats can be faced by a company can be identified.
Strategy Execution: Managing Internal Operations Best Practices at Southwest As a vital key to this strategic analysis, I have had the pleasure of interacting with Southwest Airlines employees and gleaning their perspective of working for such a remarkable company.
“The paper focuses on the internal analysis and SWOT analysis of Southwest Airlines.” Introduction Southwest Airlines is the largest local Airlines of United States that mainly offers facility of point-to-point and inexpensive fare services. The Southwest Airlines SWOT analysis is a good example to illustrate how a SWOT analysis can be a helpful tool for any business.
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. A SWOT analysis is a strategic planning method that helps a business understand itself better and make plans to move forward. Internal Analysis and SWOT Analysis of Southwest Airlines Internal Analysis and SWOT Analysis of Southwest Airlines Thesis Statement “The paper focuses on the internal analysis and SWOT analysis of Southwest Airlines.” Introduction Southwest Airlines is the largest local Airlines of United States that mainly offers facility of point-to-point and inexpensive fare services.