S Airline that operates domestically and is particularly known for its low cost services. It operated domestically for many years until they started operating internationally to a few countries located with US. Threat of New Entrants Southwest Airline has been growing constantly and over the years it has achieved enough economies of scale, but this is the result of huge investments and growth over the years.
By assessing the Political, Economic, Social, Technological, Environmental and Legal factors, the Opportunities and Threats can be faced by a company can be identified. Future trends and requirements for change based on these trends can be identified through this analytical tool Johnson, et al, Political and Legal factors Southwest Airlines domestic operations are significantly influenced by government bodies; primarily Federal Aviation Administration FAA see www.
Recently, a law has been passed to repeal the Wright Amendment to be in effect in Thompson and Gamble, Southwest Airlines has on numerous occasions won legal battles against rivals in the US courts Thompson and Gamble, Economic factors Airline industry is severely affected by fuels costs.
A rise in the price of oil has a major impact upon Southwest Airlines profitability Mouawad, Social Factors Southwest Airline has a strong commitment towards customer service Thompson and Gamble, Campbell, Technological factors Technological developments have both created new opportunities as well as threats for Southwest Airlines.
Emergence of information and communication technologies has enabled robust communication and subsequently provided customers with an alternative for frequent travelling.
It has also enabled Southwest Airline to expand its outreach directly to consumers through e-commerce. For instance, Southwest Airlines was able to introduce ticketless travel through the use of technology Thompson and Gamble, Southwest Airlines reservation system is considered to be outdated.
It needs to update so that the company can sell international tickets, provide passport information to federal authorities, and better handle customer relationships, along with other services Mouawad, Aircraft emissions cause significant damage to the atmosphere Penner et al.
The community noise is another major environmental concern. Noise from the air traffic is not only the reason for irritation and an unpleasant experience and has serious health issues.
The Five Forces analysis is as follows: Competitive Rivalry The competitive rivalry in airline industry has been increasing especially through mergers and acquisitions.
They are offering their passengers access to numerous cities throughout the US and connecting them to four continents of the world which Southwest Airlines does not do Mouawad, Moreover, new rivals have emerged following the footsteps of Southwest. Entry Barriers There are high barriers to enter this industry as it requires a large initial capital investment.
In conjunction with the price wars and low profit margins, it has become difficult to make profit in this industry.Since Southwest Airline was the first major airline to introduce ticketless travel and one of the first to put up a Web site and offer online booking, it has won the high product differentiation.
As a pioneer of “low-cost strategy”, SWA has set up its reputation and won a large number of loyal customers.
five force analysis of Southwest Airline Porter’s five forces framework 1. The threat of new entrants. last five years as many airlines have reported record losses and five of the ten largest airlines have filed for bankruptcy, Southwest has been able to remain profitable and continue to grow.
WikiWealth’s comprehensive five (5) forces analysis of southwest-airlines includes bargaining power of supplies and customers; threat of substitutes, competitors, and rivals.
This model shows the five forces that shape industry competition; threat of new entrants, bargaining power of buyers, threat of substitutes, bargaining power of suppliers, and competitors. In order to analyze the airline industry we have look at each of these forces.
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