Technology Operational Costs and Efficiency After all, the airline industry overall is in shambles. But, how does Southwest Airlines stay profitable?
This firm has been experiencing challenges in maintaining competitiveness with the market. External environment has a great impact on the competitiveness of the firm and this is why a clear understanding of this environment isessential for a firm.
This analysis has divided Southwest Airlines external environment into the macro and micro environment. Macro environment are general environment factors that affect all business within the market. This analysis has focused on the impact of the political, economic, sociocultural and technological environment on Southwest airlines.
The microenvironment refers to factors that affect firms within a specific industry. These factors include; rivalry; threat of substitute; threat of new entrants; consumer power and buyer power.
An analysis of these environment factors has illuminated various opportunities and threats to the organization. Southwest Airlines can enhance competitiveness by making use of the opportunities and countering the threats.
Introduction Southwest Airlines is a carrier that operates in the American domestic market.
It is the airline became the largest domestic carrier in the country, according to the number of domestic passengers. However, the company has been straggling to maintain competitiveness within the market.
The external environment of a firm has a significant impact on the competitiveness of firms and, understanding this environment will enable the company to enhance its competitiveness. This environment consist several factors, which cannot be controlled by business but which have significant effects on the business.
These factors are discussed below. One of this element concerns safety regulation. The country has experienced increased threats to national security. Consequently, the government has developed tough security policies which affect the airline industry Eldad, Airlines have been compelled to heavily in security thus increasing business cost.
Economic Environment Prevailing economic condition the market also has an impact on Southwest Airlines. One of the elements of the economic environment that has had an impact on Southwest is economic growth.
In the last fives years, the US has experienced slowed economic growth. Slowed economic growth is having a substantial impact on the employment situation and the purchasing power of the consumer Eldad, Due to slowed economic growth, employment opportunities have become limited.
This has impacted on the purchasing power of consumer.
Consequently, the travel industry has been affected as people opt to travel only when it is necessary. Even when people have to travel, a good number of passengers are opting for cheaper alternatives.
Sociocultural Environment The sociocultural environment has also had it impact on Southwest Airlines. One element of this environment that is having a substantial impact on the airline is social mobility.
The UnitedState society has become highly cosmopolitan Eldad, People are moving way from their traditional area of living to work and living in other places. Consequently, traveling has increased across the country as people move from area to visit relatives and friends who live in another area.
This has resulted in increased business for the airline industry. There is also high movement of labor across the different states of the country.
This has also increased the volume of travelers thus having a positive impact on the company revenues. Technological Environment The technological environment has also had both positive and negative impact on the airline industry.
Ticketing is one of the areas in which technology has resulted in a positive impact for the company Brueckener, Technology has enabled the airline to do away with the paper tickets and introduce electronic method of ticketing. This has enabled the company to reduce costs associated with printing tickets.
Electronic ticketing has also enabled the airlines to manage its visitors more efficiently. This is because passenger details can easily be conveyed to airline attendants as well as be easily conveyed from one terminal to another.
Communication technology is also having a negative impact on the airlines. The industry environment is closer to the organization than the macro-environment. · Southwest Airlines did fairly well as compared to competition.
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SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. A SWOT analysis is a strategic planning method that helps a business understand itself better and make plans to move forward.
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