Southwest Airlines has been an innovator in the airline industry. The company has steadily implemented one of the most interesting operational strategies since the company was founded. As a result, Southwest Airlines has earned countless awards rated against factors such as employee satisfaction, customer satisfaction, and profitability. Furthermore, Southwest was able to claim these awards while being able to also claim some of the lowest operating costs in the industry. Despite the company's long track record of success, it will face brand new set of challenges and risks in the coming years since the airline industry seems to be evolving. The evolution of the airline industry will be driven by rising fuel costs, slow demand, and many environmental issues. Therefore Southwest will have to be able to further refine its strategy to meet the challenges in the new continually evolving external environment.
External/Internal Industry Analysis
Threat of New Entrants -- Low
The global recession has created an environment in which there is little market share available for any new competitor to try to tap into. Furthermore, since the market size has stagnated, the industry is generally accepting a reduced margin on their services. Furthermore, there are many layers of industry regulations that must be considered before new competitor is to enter the marketplace. However, competition can also enter through acquisition or leave through liquidation which also provides some volatility to the industry and opportunities for a new landscape.
Supplier Power -- High
There are basically two suppliers in the aircraft industry; Boeing and Airbus (Mustoe, 2010). Not only is the number of suppliers exceptionally low, but these suppliers actually coordinate their operations to some extent. For example, the two main companies also share many of the same suppliers and have worked together to...
Another issue is the legal/political power that Southwest has (or does not have, in relation to its rivals). Ultimately, the company has suffered as the result of the Wright Amendment, and it needs to leverage its current size to fight back against American Airlines over this legislation. Not only should Southwest fight for the amendment to be repealed in its entirety and immediately, but it should fight for punitive
The secondary gross margin measure, Gross Margin after Depreciation, shows the costs of having a rapidly growing infrastructure to support new routes and the purchase of additional planes over the five-year period. The reduction Gross Margin after Depreciation would be flat or slightly down during a strong economic period as well. This measure of gross margin indicates that the capital investments that are often amortized over seven years as
There are many examples of this throughout the company's history, all pointing to the fact that employees who have a strong sense of ownership and wiliness to sacrifice for the greater good. Southwest's ability to translate cultural values into financial performance while embracing, even attacking change, in their industry is what fuels their profitability. Through the worst recession in 40 years, Southwest has been able to generate positive Return
Business Studies Southwest Airlines Southwest Airlines has been a highly successful airline, it has been one of the most successful airlines in U.S. history with the low cost carrier model created by Southwest emulated successfully by many other airlines across the world. Today it is the largest domestic carrier in the U.S. And has a history of consistent profits, with on a few quarters in the recent recession showing losses (Southwest Airlines,
Southwest Airlines Effectiveness of Southwest Leadership Southwest management has defined a clear and simple business purpose. The management has also chosen the right business model that supports the business purpose. The management consistently demonstrates the core values and behaviors derived from the key business purpose (Emerald, 2005). The quality of the airline customer service is synonymous with warmth, friendliness, individual pride, and company spirit. This has kept the staff morale high. The
Southwest Airlines Case Analysis Southwest Airlines is a company that has grown from a small regional carrier in Texas and surrounding states to the largest U.S.-based airline. The primary strategy of the company is to be the low-cost, no frills option for people wanting to travel within the United States. Recently, Southwest acquired another carrier so they will soon begin international flights to the Caribbean and Mexico. This paper discusses the
Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.
Get Started Now