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Southwest Airlines Co. Evaluation Essay

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Updated: Aug 4th, 2021

SWOT Analysis

Southwest Airlines has strived to succeed in the aviation industry despite the challenges. From the case study, the economic challenges, insecurity threats, and market dynamics have affected the company tremendously. In fact, most organisations in the aviation industry have made considerable losses in the business realms.

This is a considerable provision in the context of customer service and organisation’s survival in the market. In regard to SWOT analysis, Southwest Airlines enjoys considerable strengths in the business arenas. The company has established, ratified, and embraced distinctive competitive advantages meant to outdo other contenders within the industry.

As indicated by the author, the company has enough resources to counteract its business dynamics despite the challenges. Also, it has a competent human capital with credible knowhow on how to tackle the market challenges. The company enjoys a strong brand having operated in the industry with excellence since its inception.

According to the case study provided, the company exhibits some weaknesses in the market spheres. It sluggishly launched international flights despite the demands to do so with promptness. Additionally, its approaches to the market dynamics have not been strategic enough to counter such challenges with equal measure.

For instance, the company took long to recover from the previous terrorist attacks, which destabilised the American aviation industry. The company has also established some business tactics, which can be copied by other rivals. This might disfavour it in the competition quarters.

From the case provided, Southwest Airlines has numerous business opportunities both locally and internationally. The market for the aviation industry is rapidly growing with numerous flights created to cater for the new customers. Additionally, the aspects of globalisation have enhanced the need for international flights, which Southwest Airlines can exploit to enhance its market presence and profitability.

It is vital to agree that the company can do better with the current market trends. Additionally, the new transport regulations created by the international community allows the company to establish, ratify, and operate numerous flights both locally and internationally. This is a considerable provision when scrutinised critically in the business contexts.

Another opportunity recognisable in this context is the encroachment and implementation of new technologies helpful in doing business. For instance, IT and the emergence of internet have helped in the realms of advertisements, online booking, payments, and spread of information about the company. Southwest Airlines has managed to embrace technology in its operations despite the costs incurred.

Consequently, its operations and global reach have enhanced in the recent past. It is vital to comprehend how the organisation has managed to streamlined its operations to conform to the global demands. Business threats to the company are also numerous. This is evident in the trade contexts. Firstly, competition has tremendously grown in the aviation industry.

Consequently, Southwest Airlines has lost numerous clients to its competitors. Additionally, the liberalisation of the aviation market has done more harm to Southwest Airlines in the context of its market presence. For instance, companies like JetBlue, Delta, AirTran Airways, and ATA Airways are prominent rivals of Southwest Airlines.

Another threat is the establishment and implementation of carbon tax laws. The company must resort to “clean energy” sources in order to remain relevant and environmental friendly. This might be costly since “biofuels” are very expensive and rare in the market.

Mckinsey’s 7s

From the case provided, Southwest Airlines can be subjected to the Mckinsey’s 7s to assess its prominence and success in the aviation industry. Evidently, the model relies on the ideology that, for an organisation to perform exemplarily, the 7 elements (Strategy, Structure, Systems, Shared Values, Skills, Style and Staff) should be realigned for mutual reinforcement.

For instance, the success of the company has involved various business strategies to counter numerous challenges encountered in the aviation industry. This is a critical observation in regard to the company’s accomplishments to enhance its operations. Additionally, the company has structured its operations and management provisions in a strategic manner.

The structure of its operations is in line with the values, systems, and skill of its workforce. This has allowed the company to register massive success in the past.

It is vital to comprehend the prowess demonstrated by this organisation in the realms of management and customer satisfaction. For instance, the company was ranked the best in terms of the customer satisfaction in 2006. This was due to the mutual realignment of its 7s for the success of its service delivery.

Another considerable provision is the company’s shared values. So as to achieve its business prospects and global limelight, Southwest Airlines has managed to revitalise its business styles in the aviation industry. Actually, this has occurred in collaboration with other elements so as to attain the mentioned success.

It is vital to understand the prospects frontend by this organisation in the context of its relevance and applicability. From the case study provided, Southwest Airlines managed to realign the 7s mutually for successful business operations despite the challenges.

Alternatives solutions

Evidently, the company has been resorting to alternative solutions when fronted by business challenges. For instance, terrorism crisis in 2001 destabilised the aviation industry; however, the company established fresh strategies to ensure that it remained buoyant in the market. Additionally, it has been improving its financial and business strategies to conform to the current globalisation demands.

These are evident in the case study provided as the company strived to establish its market foundation since its inception in the American market. Precisely, despite the internal and external business challenges, Southwest Airlines has always had alternative solutions to its operational hiccups. In order to operate globally and exhaust the local markets, novel business strategies and models have been integrated to guarantee success.

For instance, the aviation industry registered considerable losses in the recent past due to market instability, high operational costs, and revenue plunge; nonetheless, strategic companies (Southwest Airlines included) managed to survive the menace having adopted alternative solutions to the then problems.

Financial Analysis

The financial provisions of Southwest Airlines have exhibited consistent improvements despite the hassles. For instance, the company registered a net income increment of 8.9% in 2006 compared to 2005. The operating revenues and costs equally increased tremendously indicating how the company managed to grow despite the then stiff financial provisions. This is a critical provision when evaluated in diverse fiscal contexts.

Financially, Southwest Airlines has grown considerably; however, it has not attained its utmost limit. The company currently grows as it expands its flights to remote areas in order to clinch the niche markets in such areas.

Currently, Southwest Airlines is the 3rd largest carrier in the world when considered in terms of customers and service provisions in the sector. The company has been profitable financially as indicated earlier. The consolidated income statement of the company shows considerable increments in various sectors.

Competitive Analysis

Southwest Airlines has been competitive in the aviation industry due to its novel products and well-established business strategies. From the case study provided, the author recognises that the company faces stiff competition from other companies like United Airlines, JetBlue, Delta, AirTran Airways, and ATA Airways among others.

It has managed to outdo these organisations due to its well-established business models and competitive advantages. It offers considerable and reliable carrier services to its clients. In fact, most organisations have been copying its business strategies despite the challenges. It is from this provision that the entire arguments lie.

The company began to offer longer and non-stop trips to Baltimore, Maryland, Las Vegas, and Nevada so as to capture a considerable market share. This move expanded in competitiveness within the American market.

The company remains the “lowest-cost” yet the most profitable organisation in the market. Precisely, the company has been competitive in its low-priced services, value addition, customer satisfaction, reliability, and credible business models.

Analysing the Company Today

Currently, Southwest Airlines is a stable organisation despite the market challenges. The company has established sustainable development programs within the aviation market.

Additionally, it has enhanced its carrier services to most parts of the world as it strategizes to enhance its global expansion and market presence. It business models are relevant and applicable in the current market as noted by the author in the provided case study.

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