SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. It is a strategic planning tool used to evaluate the internal and external factors that can impact an organization. A SWOT analysis can be performed for a specific product, service, or business as a whole, and can be a helpful tool for identifying both the strengths and weaknesses of a company, as well as the opportunities and threats that it may face.
In the case of Southwest Airlines, a SWOT analysis might reveal the following:
Strengths:
Southwest has a strong brand and reputation for providing low-cost, reliable air travel.
The company has a strong financial position, with consistently strong profits and a strong balance sheet.
Southwest has a large, loyal customer base, with a high percentage of repeat customers.
The company has a strong network of routes, with service to a wide range of destinations across the United States.
Southwest has a strong culture of safety, with a strong safety record and a focus on training and safety procedures.
Weaknesses:
Southwest has a relatively limited international presence, with a focus on domestic routes.
The company's fleet is primarily made up of Boeing 737 planes, which may limit its flexibility in terms of the types of routes it can offer.
Southwest has a reputation for having a less luxurious travel experience compared to some of its competitors.
The company's low-cost model may make it more vulnerable to economic downturns or changes in fuel prices.
Opportunities:
Southwest has opportunities to expand its route network and potentially offer international flights.
The company could also consider expanding its offerings to include more premium services or partnerships with other companies to offer bundled travel packages.
As more people become environmentally conscious, Southwest's focus on fuel efficiency and sustainability could be a differentiating factor.
The company could also look for opportunities to expand into new markets or regions where it currently does not have a presence.
Threats:
Southwest faces competition from other low-cost carriers as well as traditional legacy airlines.
Changes in fuel prices or economic downturns could impact the company's profitability.
Southwest may also face regulatory challenges or changes in government policies that could impact its operations.
The company could also be impacted by external events such as natural disasters or global pandemics, which could disrupt travel demand.
Overall, Southwest Airlines has a number of strengths, including a strong brand and financial position, a large customer base, and a strong network of routes. However, it also faces some weaknesses, including a limited international presence and a reputation for a less luxurious travel experience. There are also a number of opportunities and threats that the company may face, including expansion into new markets and the potential for changes in fuel prices or government regulations. By performing a SWOT analysis, Southwest can identify these internal and external factors and use them to inform its strategic planning and decision-making processes.
With its warm LUV culture, the airline has mastered the art of welcoming customers into the Southwest family. Governments all around the world banned Max 737s for about two years due to safety issues. Weaknesses Nevertheless, there are weak areas that Southwest Airlines can improve to compete with its strongest competitors. Seasonality of demand 2. Strong online presence on different social networking sites of Southwest can allow the organisation to exploit opportunities offered by growing e-commerce trend S3, O6. Use of the latest technologies 4. Volatile fuel prices 2.
International Journal of Information Management, 44, 194-203. Moreover, it does not charge additional fees for items such as seat selection, snacks, curbside check-in, and telephone reservations. Southwest can use the SWOT matrix to exploit the opportunities and minimise the threats by leveraging its strengths and overcoming its weaknesses. The company's mission statement focuses on these aspects of the business. Step by Step Guide to Southwest Airlines SWOT Analysis Strengths of Southwest Airlines — Internal Strategic Factors As one of the leading firms in its industry, Southwest Airlines has numerous strengths that enable it to thrive in the market place.
A rational and intelligent SWOT Analysis of Southwest Airlines
Southwest can improve its performance by exploiting the above-mentioned opportunities. So, compared to the leading competitors of the company, Southwest has a limited international network. However, the individual market share of these companies was close. It also helps the company achieve better asset utilisation. In 2018, the operating expenses of Southwest airlines grew mainly driven by the rising costs of jet fuel. It will enable the firm to maintain its loyal customers with great service and lure new customers through other value oriented propositions.
Furthermore, the analysis highlights the different opportunities and threats for Southwest Airlines in the external business environment. Strategic Issue Southwest Airlines has never deviated from its niche: short-haul, high frequency, low-fare service, all delivered with award-winning customer service. Strengths:- Leading Position in the US aviation industry: — Southwest Airlines is the leading domestic carrier of the United States with flight operations across 40 US states serving 99 destinations. This expense is 14% of the total operating costs. Southwest has focused on better customer serviceand operational reliability to improve its market share.
It is one of the major airlines who pioneered ticketless travelling and the only airlines in the United States to offer bags-fly-free service first 2 checked pieces of luggage with size and weight limits applicable to everyone, no change fess, although differences in fares might be applicable. Higher operating expenses can lead to reduced net income for the company. The company has more than 50,000 employees 6. Thus, Southwest Airlines can facilitate growth by expanding and diversifying its fleet to counter the dependency on Boeing and grow its operation. White, Generic Business Strategies, Organizational Context and Performance: An Empirical Investigation, Strategic Management Journal7 1986. Organizations also assess the likelihood of events taking place in the coming future and how strong their impact could be on company's performance.
Apprehensions over Southwest to acquire larger market share prompted rivals to conspire with Fort Worth Congressman Jim Wright and block inter province flights from Love Field Airport. Conclusion In summary, Southwest Airlines is one of the largest low-cost airline companies in the United States. However, higher operating expenses also mean lower net income. Intensely competitive industry Strength 1. Southwest uses a lot of new technologically advanced components to minimize adverse effects on the environment.
Southwest Airlines SWOT Analysis Matrix [step by step] Weighted SWOT
In this model, the airline concentrates its resources on major cities — the hubs. You can use the following in your reference section in order to give credit to the source. The rivals of Southwest like Delta and American serve many more international locations compared to Southwest and the company should try to accelerate its international expansion plan. Such alliance partnerships will help the company cover new routes and serve various new segments of customers which could help Southwest strengthen its bottom line. The application of advanced SWOT analysis can enhance the Strategic competitiveness of Southwest by providing more useful and detailed information. United Airlines also has partnership agreements with airlines in Asia, Europe, and Latin America.
The increase in online collaborative tools has also reduced the need for people to work under one roof. United Airlines flies to 111 international destinations in 74 countries and 79 domestic destinations in the United States. Others include Frontier Airlines, Spirit Airlines, and Sun Country. However, SWOT analysis of Southwest has certain limitations that the company must consider to achieve its strategic objectives. Limitation of Weighted SWOT analysis of Southwest This approach also suffers from one major drawback - it focus on individual importance of factor rather than how they are collectively important and impact the business holistically. At the end of 2020, Southwest served 107 destinations. It began operations in 1936 and is the largest airline by fleet size, with over 881 aircraft, according to Statista.
The company has been successful in implementing this strategy, having experienced strong growth and profitability. The airline has a very efficient operations system , which allows it to offer low fares and excellent customer service. To conclude, it can be said that Southwest Airlines is one of the best and most trustworthy in the industry which is evident from the fact that in spite of difficult times because of COVID, Southwest Airlines has been able to maintain positive financial growth and its customer service is one of the best in the industry despite it being the low-cost carrier with the limited operations. Challenges in organic growth resulting in limiting strategic plans. Operational efficiency:- Apart from a large and fuel-efficient fleet of aircraft, the company also focuses on other areas to maintain operational efficiency. It indicates the need to revise the pricing strategy. The over-dependence of the company on Max 737 can cause disruption in the operations.
A comparative example could be - GE healthcare research helped it in developing better Oil drilling machines. Using a single aircraft type has proven to be an effective and cost-efficient strategy for Southwest Airlines. Despite keeping prices low the company has continued to enjoy Weaknesses:- Limited International operations:- Southwest Airlines is mainly a domestic carrier offering flights to 40 US states. It also solves the long list problem where organizations ends up making a long list but none of the factors deemed too critical. Integrate digitization to offer holistic experiential packages Legal Environmental 1.
