Southwest Airlines, having a well-established business incarnation throughout the United States is among the most competitive passenger airlines in terms of pricing strategies and customer services. The company has always been pursuing a growth strategy for its business operations in the local market. Currently, it has customers from all over the United States that consider it a low cost quality airline service provider. The company operates with a fleet of advanced Boeing aircrafts. The company has a strong brand image and sound financial strength which help it in its business growth strategies. It also expends a great amount on R&D section in order to improve its customer services and cope up with the most advanced aircraft. The company has an efficient and dedicated workforce that is committed to provide quality services to the company's customers.
Converse to these strengths, Southwest Airlines has some weaknesses in its operations. The target market is limited due to non-availability of morning flights and non-presence of passenger class segmentation. The company is dependent on just one aircraft manufacturer which limits its potential for stronger supply chain. Southwest Airlines can overcome these weaknesses if it fully avails its strengths and core competencies. The expansion of business operations into international markets is the most attractive opportunity for the company. It can also segment its passenger travel into different classes and target the customers in a better way. The international expansion strategies can pose some threats to Southwest Airlines. The biggest threat would be the well-established international competitors which are also the low cost carriers and can easily snatch its customers. The oil prices, economic conditions, terrorism, and income levels of the customers are some important factors which can put hurdles in the success of Southwest Airlines in the local as well as in the international markets.
Introduction: Southwest Airlines
Southwest Airlines is the largest low-cost passenger and logistic airline in the United States. Established in 1967, Southwest Airlines has been serving the nationwide customers for 103 destinations in 41 States. It is headquartered in Texas and employs a workforce of more than 46,000 employees in different offices and business units. The top-served cities of the airline include Chicago-Midway, Las Vegas, Phoenix, Washington, Denver, Los Angeles, Dallas, and Houston-Hobby. The company has planned to internationalize its business operations in 2014 by offering its passenger and logistic services to the worldwide customers. The highly advanced, safe, and cost-efficient fleets make the Southwest Airlines one of the most successful airlines in the country (Southwest, 2012). This paper presents a comprehensive SWOT analysis for Southwest Airlines which will be useful in analyzing its current market position and predicting future viability in the industry.
SWOT Analysis for Southwest Airlines
A) Internal Analysis:
The biggest strength for Southwest Airlines which has also become a core competency is its cost leadership in the airline industry of the United States. Southwest Airlines is the largest low cost airline in the country which provides all kinds of passenger, logistics, and mail services. It has a strong fleet operation which carries more than 3,000 flights per day. It is also the world's largest airline in terms of number of passengers served during one year. Another big strength of the company is its brand image among its key stakeholders which it has developed by providing the highest quality of services for more than 40 years. The low-cost strategy has helped the company in keeping itself in the row of the most competitive airlines in the world (Kurtz, MacKenzie, & Snow, 2010). The revenues of the company have always been showing an increasing trend which enables it to adopt a continuous growth strategy and strengthen its position in the industry. The passenger travel is the most profitable service for Southwest Airlines due to the full-capacity usage in every flight. The company has not only grown through expansion in its business operations, but it has also made a number of successful acquisitions in different related service industries.
Moreover, Southwest Airlines has very effective safety and environmental protection measures which has greatly contributed in strengthening its public image and ensuring a sustainable future in the industry. Southwest Airlines is also the pioneer in using e-ticketing systems which also helps it in minimizing its costs of operations. A strong emphasis is given on Total Quality Management which is ensured by extensive Research and efforts of highly experienced and skillful engineers and technicians. The workforce of Southwest Airlines works like a team which makes it one of the best employers in the United States. The employees perform their job responsibilities with full dedication and commitment. They provide excellent on-the-journey and off-the-journey customer services in a view to provide a pleasant flying experience to the customers.
Despite being the largest airline in the United States, Southwest Airlines is still serving the local market only. It has been operative for the last 40 years which can be regarded a long period for any business organization to think beyond its national boundaries. This weakness has restricted Southwest Airlines to make limited profits from a specific region only. Another weakness in the business operations of Southwest Airlines is its dependence on a single airplane manufacturer. The entire fleet flies on the Boeing 737 aircrafts. It shows good supply chain relations, but adding more manufacturers in the supply chain can give it a competitive advantage in terms of cost-efficiency and broader business network (Lancaster & Withey, 2007). Moreover, Southwest Airlines only offers a single class of passenger travel; there is no segmentation like Executive, First, or Economic class. This thing also affects its sales revenues when customers do not find their required class in the aircrafts and switch to other airlines. Non-availability of morning flights is another weakness of Southwest Airlines which further makes the target market limited.
B) External Analysis:
Southwest Airlines has numerous opportunities to grow in the local as well as international markets. It can take advantage from its distinctive competencies and core strengths to overcome its weaknesses (McDonald, 2011). First of all, it can introduce morning flights in order to attract the large number of customers who do not travel through its airlines due to these time constraints. Secondly, it can segment its passenger travel into executive and economy classes but keeping the low price policy intact. The customer services and off-the-journey facilities can be improved in order to become more competitive in terms of service quality. As far as international expansion is concerned, Southwest Airlines can make acquisition of international airlines to start serving the international markets. The strong brand image and financial strength can greatly benefit the company in establishing its Global presence in a short period of time (Cadle, Paul, & Yeates, 2010).
Southwest Airlines can expend greater amount on its Research and Development section in a view to produce more advanced technologies and improve its customer services including e-ticketing and web booking services. Furthermore, Southwest Airlines can make effective marketing and promotional efforts in a view to communicate its low price traveling services and discounted offers to the potential market segment (Kotler, Brown, Burton, Deans, & Armstrong, 2010). For this purpose, it can use electronic, print, and social media marketing channels.
A big threat for Southwest Airlines is that it is unable to safeguard its competitive advantage. A number of other strong competitors and new entrants are adopting the same low price strategy; thus, giving a stiff competition to Southwest Airlines in each and every area of its business operations (Kotler, Brown, Burton, Deans, & Armstrong, 2010). Oil and fuel prices are also increasing in the world markets. These increasing prices are a big threat for the company in maintaining low price travels and keeping good profit margins. The heavy expenditures done on the Research and Development section…