Porter's Five Forces Model of Southwest Airline

External Audit of Southwest Airlines Co.
Opportunities of Southwest Airlines Co
1. There is an expected world tourism growth of up to 4.3% on an annual scale hence the airline must take advantage of this opportunity for growth as well.
2. The accessibility of the Mexico, Cancun and the Caribbean region following the AirTrans merger bring the international opportunities that Southwest Airline can take advantage of.
3. The ATA domestic code-sharing treaty also breaks down barriers and bureaucracies for ease of trade.
4. The repeal of the Wright Amendment also works for the good of the airline in its operations.
5. With the down cycle of the economy since 2009, there has increased the potential for profit for this airline since people have become more cost sensitive than before.
6. The lower interest rates in the economy than before also works for the advantage of the airline
7. There has been a rise in the passenger revenues by 7.3% from 2010 hence presenting a vibrant market for the airline.
8. There has been an oil price drop from $150 a barrel to less than $100 a barrel hence lowering the cost of operations.
9. The regional jets have changed significantly the short distance markets that were left by the major airlines hence a chance to operate for Southwest Airlines.
10. There has been generally an improved customer satisfaction and value in the industry (Moran D, 2018).
Threats to Southwest Airlines Co
1. There has been an increased government regulation due to security reasons hence expensive to operate in this industry.
2. There has been persistent failure to meet the expectations of the stakeholders.
3. The global security threats like the terrorism has shrunk some routes and cost the airline money invested in curbing insecurity.
4. The competition has been stiff in this market.
5. The price of petroleum is very volatile and depends on the political atmosphere in various regions.
6. The high inflation and high rates of unemployment has left many unable to travel or to fly.
7. The several joint ventures have dented the image of the airlines.
8. There has been a growing trend of labor cost hence increase in operational costs.
9. The Southwest airline also moved their flights from non-profitable routes to profitable routes hence diminishing their brand presence in those routes.
10. Competitors have targeted the airline by introducing lower pricing (CAPA, 2014).
Porter’s Five Forces analysis of Southwest Airline Company
Thereat of new entrants – this thereat is relatively weak since Southwest Airline Company has invested heavily in its brand name over the decades and also the enormous amounts need for any new company to get into the airline travel business makes it almost unlikely that a new entrant will be a possibility.
Threat of substitutes – this is a strong threat since in the travel industry people have alternatives to choose from including the train, bus, personal cars, cruise chips and even bikes. The cost of switching from the flying alternative to the others is not high hence a real threat to Southwest Airline Company.
Bargain power of the buyers – there are individual tickets and those of groups bought by agents. The agents and individuals often look for the lowest possible prices and Southwest Airline often offers this hence this threat is considered moderate.
Bargaining power for suppliers – since there are few suppliers/manufacturers of airlines, and at the same time few airline operators, the manufacturers would like to keep their relationship with the airlines cordial hence will agree with most demands of the airlines, making this force a weak one or low bargaining power.
Rivalry among the existing firms – the competition in this market comes from both internal and international markets and it is worth noting it took many years for Southwest to establish its brand. It has to equally work hard to maintain its brand name, hence the rivalry is a strong force in this market (Adamkasi, 2017).
References
Adamkasi, (2017). Porter’s Five Forces Analysis Model of Southwest Airlines. https://www.porteranalysis.com/porters-five-forces-analysis-model-of-southwest-airlines/
CAPA, (2014). Southwest Airlines SWOT: Financial strength is mainstay, but cost and culture challenges loom large. https://centreforaviation.com/insights/analysis/southwest-airlines-swot-financial-strength-is-mainstay-but-cost-and-culture-challenges-loom-large-187714
Moran D, (2018). Diane Moran’s audit of Southwest Airline. http://dianemmoran.com/wp-content/uploads/2013/12/Southwest-case-study-audit-12.1-.pdf