Southwest Airlines stands at the top position in the US aviation industry with its provision as a low-cost carrier. The company’s effective handling of its operations and strategic management of internal and external factors are a success. This SWOT analyses endeavors to examine the internal as well as external factors. The strengths along with weaknesses act internally while opportunities, as well as threats, affect the business environment externally. The company uses its strengths to realize its mission and vision statements. Southwest enhances its business operations and effectiveness by exploiting the opportunities available in the external strategic factors. By adopting shrewd strategic management to cope with the problems and challenges highlighted in this SWOT analysis, the company can minimize the threats and weaknesses. Given the current position and value of the Southwest in the aviation industry, the company guides on how to maximize performance and revenue generation while operating at low-cost service providers.
The company has devised an intensive growth strategy and generic strategy to influence the competitive limitations and advantages. For instance, Southwest’s strategic management enabled the company to focus on a single threat and weakness while utilizing all its strengths and opportunities to address that. Its leadership and management believe a shift in strategic policy can strike the needed balance between the influences of internal and external factors prevalent in the corporate environment, as revealed by this SWOT analysis.
Strengths of Southwest Airlines
These strengths acting internally are responsible for promoting high productivity and operational effectiveness with competitive advantages. This SWOT analysis reveals that these strengths enable the company to compete against rivals and take opportunities prevalent in the business environment. The company has many strengths upon which it secured a leading position in the aviation industry. Southwest’s significant strengths are:
- Extensive commercialized brand
- Widespread organization and fleet size
- Point-to-point system for Scalability of operation
The company’s position as gigantic-sized operations at low cost enables the aviation giant to attract and retain a great market share. Thereby, the company can penetrate the market and introduce new routes according to the changing demographics to enhance brand recognition and target customers. Moreover, the company’s corporate culture focuses on customer convenience and friendliness, making the passengers’ travel a charming memory. In the meantime, the enormous size of the organization and fleet further strengthened the company’s operations. The high scalability of operations acting on internal factors further strengthens the company to expand. To illustrate, the company can expand its operations without stressing the ongoing operations and activities. Southwest maintains a highly organized and effective point-to-point scale for defining new routes. Therefore, the company can expand due to these internal strengths.
Southwest’s Weaknesses
These weaknesses prevail in the internal environment and are barriers to the growth and expansion of the company, and they can undermine its strength. Therefore, the company must address its weaknesses to exploit its business strengths. The most prevalent weaknesses are given as follows:
- Restricted expansion in the global market
- Low profits due to low-cost strategy
The company has been operating in the US since the beginning. This Analysis brings forth this weakness which can undermine the company’s expansion and, thereby, the revenue generation in the long term. Moreover, the company’s strategy to provide low-cost services is another weakness as it prevents the company from accumulating massive profits. The company needs to review its cost-effective generic strategy to accumulate profits. Therefore, the internal weaknesses of the company are related to its own strategic choices rather than the imposition by the environment. The company must choose to make a shift in the strategic approach to minimize these threats.
Opportunities in the way of Southwest
The company is facing several opportunities in its external environment. This SWOT analysis presents opportunities that Southwest can exploit to foster growth and development. The successful opportunities are revealed by this SWOT analysis in the external strategic environment of the company:
- Expansion in the global market for growth
- Securing partnerships with relevant firms
- More growth through industrial diversification within the aviation
Southwest’s main operational market is in the US. Rapidly developing economies around the globe have allowed the company to expand its business operations beyond the US boundaries. Thereby, the company can increase its resources and growth by expansion via establishing more new routes and serving the air passengers of other countries. The company can promote its market and expansion by signing treaties with other complementing firms. To illustrate, these firms can help in promotion and advertisement by giving lucrative packages of services to both the companies, and they can simply sell Southwest’s tickets. Even more, the company has the opportunity to grow by diversifying its services in the aviation industry. It includes the introduction of related businesses that can go hand in hand with the existing business operations. Thereby, this SWOT section revealed the opportunities to grow, expand, and develop business by diversifying services, exploring new routes, and signing new alliances.
Threats posed to Southwest’s Business
Threats are the barriers in the way of growth and expansion of the company. These threats can hinder operations and effectiveness as well. As shown in this SWOT analysis, these threats make it difficult for Southwest to expand its operations globally. The next discussed threats are posed by the external business environment:
- Intense competition and the presence of larger airline firms
- Regulations for commercial aviation
- Fluctuating fuel rates
- Limited number of pilots
Intensifying competition is the foremost challenge to the company. Southwest Airlines has many competitors in the market, including Delta Airlines, United Airlines, and American Airlines, which can compete with the company’s position. These companies hinder Southwest from exploring the routes where they are already operating, thereby limiting the company’s business and operations. This enhanced competitive force, as identified in Porter’s model of Five Forces analysis, strains Southwest’s growth. Moreover, the hurdles to regulation are another factor that contributes to the force of threat. However, this threat is not that big considering the company’s business position and experience. Additionally, the fluctuating prices of fuel are another problem for the company. The airline’s business is dependable on fuel prices as their fuel consumption is high. Southwest’s devised strategy of corporate social responsibility can minimize this threat. Finally, the limited numbers of pilots and their high wages are another threat to the company. This restrained number of pilots may not cope with the future needs of the thin industry. This SWOT section has exposed the threats that can endanger the growth and operations of the business. However, many of these threats are prevalent in the external environment, and some are not under the firm’s control.
Summary and Recommendations
Southwest’s strengths have enabled the company to cope with the swelling competitive environment. The company’s brand value and large scale of operations help it to expand into new commercial markets. Nonetheless, the section related to weaknesses has exposed the company’s vulnerability to lowered growth and restrained expansion due to its low profitability strategy. However, Southwest has the opportunity to explore the growth and expansion in the developing markets. To mitigate the threats, the aviation giant needs to undertake innovative and robust strategies to foster growth, expansion, and revenue generation for long-term success. Therefore, analyzing the internal and external environmental conditions, Southwest Airlines must adhere to expanding its operations globally. The company can augment its brand value by reaching agreements with complementing companies to penetrate deeply into the market.
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