SWOT Analysis of Southwest Airlines

Paper Type:  Case study
Pages:  5
Wordcount:  1247 Words
Date:  2022-03-19

Introduction

SWOT analysis refers to the process by which the organization researches to discover the following, strengths, weakness, opportunities, and threats. Every company is faced with some challenges, which are the weaknesses and threats. It also has its competitive advantage characterized by its strengths and weakness. For an organization to succeed, it should learn how to take advantage of its powers as it tries to fix its shortcomings. Southwest airlines are a company that has its strongholds as well as its weakness.

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The greatest strengths of Southwest airlines, according to SWOT analysis, are, point to point services. It provides flights directly without connecting to hubs and spoke system as many airlines do. The direct flights help the organization to utilize its resources to the maximum and save a lot of time for customers. The other strength is price leadership, where Southwest has the lowest price in the whole airline industry (Dang, 2019). It is achieved since there are no costs incurred for turnaround and fuel at hubs. Short turnaround time is the next strength of Southwest as it uses the least time, thus helping the company utilize its aircraft with more flights per day. Lastly, it has the most reliable network of the fleet in the U.S therefore, making it advantageous than its competitors.

The significant weaknesses facing Southwest airlines as a result of SWOT analysis are, being over-dependent on Boeing. Boeing is the sole supplier of aircraft and its parts; thus, it has a high bargaining power as a supplier over southwest airlines. In case of disagreement, Southwest Company can majorly suffer. Law and litigation cases are another weakness as it will affect the image of the company. It is involved in a group of lawsuits actions whose results are pending. Receiving any adverse outcome can alter its vision and finances. Southwest airlines also depend heavily on customers contributions (Dang, 2019). If the customers are affected by the rise in fuel prices, it will result in low input, thus the company earning less revenue and small profits.

Strategies Implemented to Maximize Strengths and Minimize Weaknesses

To maximize the strengths of point to point service, the company should seek to introduce new flight routes, based on brand recognition among target customers. The courses will ensure that services are available to customers whenever the need arises. Based on the price leadership, the company should ensure that its cost remains the lowest while improving on the quality of their services. On the short turnaround time, the company should ensure that it makes several flights in a day using the least period to turnaround. It should open more routes to ensure its fleet remains the strongest.

Strategies that are implemented to fix the weaknesses facing southwest airlines include; coming up with ways to be independent and thus retrieve some of its power from Boeing. It should also ensure it adheres to all laws and pays any litigation fee associated with providing its reputation is good. It should get ways to raise its revenue rather than depending on the customers' contribution alone. It will earn the company more profits.

Southwest Airlines Tangible and Intangible Resources, Core Capabilities, And Competencies

Southwest airline is a company that has both tangible and intangible assets. Physical resources are those that can be touched and seen. They include plants and machinery, equipment, land and buildings, planes, and raw materials. Intangible assets are resources that cannot be contacted or seen they include, knowledge, intellectual properties (patents, copyrights), brand, customer loyalty, and company reputation. The company is also associated with core capabilities and competencies. Capacity is the ability to do something. Southwest has the following core capabilities, high-quality services, and it can give point to point services. Competence is the ability to do something efficiently. The core competencies for Southwest airlines are the ability to maintain a competitive advantage and low-cost leadership. It is the only company that can give customers the most economical price while maximizing its profits.

General Business Environment Affecting Southwest Airlines

The business environment is divided into two external and internal. Internal environment entails factors that affect the company within while the external environment is factors that influence the company's performance outside its premises. The external environment is divided into five categories, namely, political-economic, social, technological, environmental, and legal factors ("Porter's Five Forces of Competitive Position Analysis," 2019). The political and the legal environment affects the company in similarly. They have set safety regulations that are difficult for the airline to achieve. The government also has developed strict policies that are hard to meet. Southwest is doing all it can to work within the set rules and laws.

Technological factors have both negative and positive influence on the airline industry. It has impacted the ticketing sector by allowing the booking online. It has also reduced the number of employees since a lot of tasks are done using computers. Technology has also made it easy for customers and the company to share information freely. Southwest airlines aim at improving technique and implementing modern ways of carrying out activities to improve their performance.

Competitive Forces Facing Southwest Airlines

There are strategies that the competitors employ to get an added advantage. According to Porter, there are five competitive forces which are rivalry, buying power, supplier power, substitutes/complements, and entry, and exit. Southwest airlines are affected by rivalry and substitutes/ complements (Speta, 2012). The rivalry is seen when the competing company come up with a similar strategy like the one the organization uses. Southwest handles this force by differentiating its operations by giving high and unique services. Substitute for the airline's rare car buses and trains (Speta, 2012). To curb this force, the company provides quick and affordable services to attract more customers. To overcome the effects in future, the company should improve its services by giving customers more after-sales services and discounts.

Threats and Opportunities of Southwest Airlines

Risks are things that hinder the performance of an activity. Threats that affect Southwest airline are, regulation, fuel price volatility, the U.S. economic condition, and diminishing advantages as a low-cost carrier. The significant risk to the company is fuel price volatility where the cost of fuel becomes too high achieve. The company maximizes the fuel used during flights to ensure they get the desired revenue (Speta, 2012). The company also makes the highest number of trips with little turnaround time used to ensure no fuel is misused.

Opportunities are the things that a company has that other organization lacks. Southwest airlines are associated with the following opportunities, growth from AirTran, in-flight Wi-Fi, and live sports and new international destination. The most significant opportunity for Southwest Airlines is the latest international destination (Speta, 2012). It will allow the company to venture into various parts of the world and establish branches there.

Conclusion

In conclusion, Southwest airlines should embrace their strengths and opportunities and make them more productive and stable. It should also focus on fixing the weakness and how to overcome the threats. It will ensure that its performance is excellent and the quality services are provided. The company should continue aiming at maintaining its competitive advantage and dominating the airline industry.

References

Dang. (2019). Five forces, swot and internal analysis of southwest airlines and the.... Retrieved 4 September 2019, from https://www.slideshare.net/HoangDang5/five-forces-swot-and-internal-analysis-of-southwest-airlines-and-the-airline-industry

Porter's Five Forces of Competitive Position Analysis. (2019). Retrieved 4 September 2019, from https://www.cgma.org/resources/tools/essential-tools/porters-five-forces.html

Speta, J. (2012). Pacific Southwest Airlines: The First Large Discount Airline. Deregulation and Competition: Lessons from the Airline Industry, 4(2), 101-122. DOI: 10.4135/9788132101598.n5

Cite this page

SWOT Analysis of Southwest Airlines. (2022, Mar 19). Retrieved from https://proessays.net/essays/swot-analysis-of-southwest-airlines

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