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Project description and related work Southwest Airlines The purpose of this assignment is to analyze a company’s strengths and weaknesses in order to recommend feasible value-enhancing alternatives. Consider the publicly traded company your CLC group analyzed in the Environmental and Industry Analysis assignment. In a paper of 1,000-1,200 words, discuss potential growth opportunities and strategies for your selected company and compare the advantages and disadvantages of each opportunity. Conduct a SWOT analysis for your selected company and discuss your findings. What advantages does your company have over its competition? What opportunities exist in the industry from which your company can benefit? Who is your company’s competition, and what types of risks might they pose? What weak areas could your company improve to compete with its strongest competitors? Identify strategic alternatives that create value for the company. Which ones are focused on internal growth and what do they offer to the company? What are the drawbacks of these strategies? Which ones are focused on external growth and what do they offer the company? What are the drawbacks of these strategies? How would you use a decision matrix to identify the leading alternative? Explain how you determined the values used to distinguish between each option. What about the matrix, if anything, may be limiting in its use value to an analyst or decision maker? What factors might inhibit the success of the optimal strategic alternative identified? How can the issues you identified be addressed and corrected? Growing an organization is not always about increasing the size of the firm. If expansion is not the main focus, what other elements lend themselves to growth of the firm? How might each be achieved? Southwest Airlines was founded in 1971 and has expanded from 3 cities to servicing 97 cities in 2012 and expanded from passenger flights to supply flights as well (Singh, 2020). Southwest Airlines is a leading airline company that is based in the United States. They have maintained leadership that focuses on service, convenience, and the safety of its customers. Southwest deals in the aviation industry that has an intense competition. Southwest is based out of Dallas, TX and travels within 40 states in the United States with having a few international destinations. They continue to carry around millions of passengers every year, with the competitive strength that continues to keep them going in having pricing strategies and efficient operations. This paper will show how the external environment of Southwest impacts the seven segments of the general environment and how they work with the five forces of competition. The Seven Segments of the General Environment Economics Southwest has come up with a low-cost business model where they have continued to book several flights for the past 45 years with profitability. “Even more impressive?considering the volatile and economically sensitive airline industry. Southwest has also garnered market share from competitors” (Rothman, 2019). However, new challenges have come about since the Coronavirus pandemic, most people have noticed they do not get the free food anymore due to the fear of the virus spreading. The economy has changed drastically due to social distancing, which leads to southwest filling all the seats in the plan and with that they are not making as much profit due to the pandemic. Demographics The demographic portion being discussed will be whether the business covers urban locations or rural locations. Southwest Airlines only service urban locations for both passenger and supply flights. The company started by providing services between the cities of Houston, Dallas, and San Antonio Texas. These services have sense been expanded to service 97 cities across the United States with 10 international locations (Company, 2020). The urban service locations limits where the company is able to do businesses. This limitation impacts the business in a number of was. The limited number of cities means that the company has to take care to choose the most profitable locations by meeting the demand in each location. Competition in these same cities would need to be accounted for as well, as they are trying to service the same customer base. Finding smaller cities with sufficient demand and an airport may be an option to diversity their locations. Sustainable Physical Environment Sustainability is critical in the current in the environment every business finds itself in. Most customers are looking for a company who is looking into the future and what care needs to be taken now in order to provide a brighter future. Southwest has started the process of decreasing the impact they have on the environment. A large portion of making an airline green is by making their airplanes more fuel efficient. To set Southwest airlines apart from the rest, they must show they are more in tune with the cultural expectations. A company, such as Southwest, should be in tune with this because after the initial costs of starting the process, many of these green options will reduce costs or increase profits. Southwest has been working toward a more fuel efficient Boeing 737 airplanes, investing $620 million in improvements (Fuel, 2019). Simple changes they have implemented are performing routine engine washes; reduce ground idle speeds, and utilizing electricity from the building when parked instead of onboard electricity (Fuel, 2019). Redesigning the builds of the Boeing 737, their MAX 8 version, was their most fuel efficient plane, with split scimitar winglets, APU utilization, fuel and flight planning, and electronic flight bags, but the company was required to take these planes out of service due to flight control problems (Fuel, 2019). This innovation was costly to invest in, with further setbacks when they did not work sufficiently. Sociocultural The sociocultural segment is defined as a “society’s attitudes and cultural values” (Hitt et al, 2017). The sociocultural aspect of a society is ever changing and must be monitored in order for the company to adjust to the culture where they conduct business. A major sociocultural topic has been healthcare which is provided to employees of a business. Southwest has an extensive list of healthcare services which are available to their employees. These services which are available to the employees come at a cost to Southwest Airlines, but are critical in ensuring the satisfaction of their employees. Ensuring employee satisfaction will not only increase customer satisfaction but will also increase job efficiency. These services include an option of a PPO or high deductible health plans which include long-term and short-term disability, with Southwest covering some of the costs in order to make the health plan and prescription drugs so employees are able to afford these services (Benefits, 2020). Optional healthcare plans include vision and dental coverage (Benefits, 2020). Any plan comes with the ability to opt into a flex spending account or health savings account (HSA), life insurance and accidental death and dismemberment insurance (Benefits, 2020). There are still more options available from Southwest Airlines which are non-standard, including adoption assistance, adoption leave, child and elder care, pet insurance, and auto and home insurance (Benefits, 2020). Global Aviation has always existed to make the world a smaller more accessible place. Through this, many airlines travel all over the globe internationally. This allows them to charge high prices and expand their customer base. Southwest airlines, on the other hand, only travel to 14 international location spanning 10 different countries (Radka, 2019). Some believe that it is a part of Southwest’s brand to not expand their offering out of the country due to their south western roots. But to expand the business and increase revenue, it may require them to expand the coverage of airports they fly to. People love budget airlines, and to be able to fly one internationally would be a huge advantage on competitors like American and Delta.? ?? Political and Legal The airline industry has always been one for strict rule following and regulation. The FAA’s vision statement is as follows, “we strive to reach the next level of safety and efficiency and to demonstrate global leadership in how we safely integrate new users and technologies into our aviation system. We are accountable to the American public and our aviation stakeholders.” (Mission, 2019). This clearly states that they exist to create a safe reliable system for the American people to utilize the airline industry as much as possible. As a major airline, Southwest is subject to constant legal and regulation scrutiny. As would any airline that flies 130 million passengers in a single year (Company, 2020). While there are many rules to follow that are cut and dry, there seems to be a lack of specificity when it comes to pilots having the ability to remove a passenger at their discretion. Section 44902(b) of the FAA is known as the “permissive refusal” section. This provides the pilot with a broad authority to remove passengers he deems a safety risk (Beiersdorf, O., & Kiernan, C. E., n.d). With the current social climate and emphasis on discrimination and racial profiling, this leaves Southwest vulnerable to passengers looking to bring legal action against them for remocing them from a flight. In the case of Makhzoomi v. Sw. Airlines Co., Makhzoomi was talking on his cell phone in the cabin. Two police officers and a SW customer service manager removed Makhzoomi from the plane after the woman in the seat next to him started making a scene, claimed he was using words associated with terrorist acts. Makhzoomi ended up pressing charges against Southwest on emotional distress and discrimination under section 1981 and the Unruh Act (Ryu, 2019). This is just one example of many that Southwest has a wide exposure to legal action due to the pilot’s discretion when it comes to who stays and who are removed from a flight. This is potentially harmful to the company, in today’s current climate because they are under a microscope now more than ever. Technological From the propeller to the jet engine, from oxygen masks to seats that float, the airline industry is a very technologically driven industry that rewards the top of the line for having better technology. An improved technological setup can entice more customers to use Southwest Airlines. Research and Development is an area that successful companies across industries allocate a large portion of funds “given the rapid pace of technological change and risk of disruption” (Hitt et al, 2017). Technology can be inspired by how the customer and consumer experience the service. Having consumers fill out survey and return is a great way to acquire valuable information on what to improve and can generate a need for a technological advancement. Alternatively, the internet can allow these companies to have access to information that will push them to new technological heights. The Five Forces of Competition Threat of Substitute Services Consumers have several substitute options available to them when it comes to travel. Flying is the most convenient way as it allows consumers to travel a long distance in a short period of time. Substitute options such as train, bus, or self-drive options allow the consumer to save money on travel. To earn business Southwest Airlines must focus on meeting the needs of consumers along with abiding by all government regulations to remain profitable. Investing in technology such as autonomous flying will allow Southwest to save money on pilot salaries and pass the savings along to consumers (Zhang, 2017). Offering lower airline fares will make flying an attractive option to substitute products. The cultural image of airlines is not favorable as the industry creates a significant amount of pollution in the form of carbon emissions. As the awareness of carbon emission grows, airlines must work to shed the negative image being portrayed on the industry to sustain a steady customer base. Commercial flights account for 2% of the carbon emissions with the expectation that the carbon emissions will continue to increase as consumers are traveling more (Covene Editors, 2019). Investing in cleaner travel options will allow the airline industry to compete with substitute options such as boat and train travel. Bargaining Power of Suppliers Southwest has suppliers with the highest bargaining power with the two leading aircrafts such as the Boeing and Airbus. The Boeing 737 is best known for the high fuel efficiency within the fleet of aircrafts. The idea is for Southwest to keep focused on the low cost because one that is what customers look forward to and two requires them to look at the day to day controlling operations. The Boeing is the highest bargaining power for Southwest, the higher the purchasing power it helps control suppliers bargaining power within itself. However, it is not just the aircraft but also the raw materials or parts and technology to help keep the operations going successfully for the airline. “The overall impact of higher supplier bargaining power is that it lowers the overall profitability of Regional Airlines.” (Southwest, 2021). Threat of New Entries Threat of new entries into the airline industry is usually a low and slow process. Due to the large capitol requirements and cost structure, it takes years to become profitable in the best of cases. While it is unlikely to have new entries, two things that do leave the door slightly open are: low switching costs between brands and no proprietary technology exclusive to one carrier. Even still, with airline ticket prices being so high few individuals or corporations are will look to spend such a large sum of money with a brand they do not trust (Porter’s, n.a.). With every business, as a company grows, it can save on costs and push that savings out to customers. In the beginning, there is not much wiggle room in the expenses so the first couple years you are just building a brand and infrastructure, which will deter most from ever attempting to enter the industry. Bargaining power of Buyers Buyers, or paying passengers in the case of the air travel industry, can hold significant bargaining power over the seller and provider of air travel. Powerful customers can cause the seller to lower their prices for air travel “but not below the level at which the cost leader’s next-most-efficient industry competitor can earn average returns” (Hitt et al, 2017). Customers can even lower the prices below this point; however, this does come with a potential backlash. Customers may cause the prices to drop