Southwest Airline Company is an airline company which is primarily based in the United States. The airline company is well known for its low price fares, point-to-point services and turnaround time. For Southwest airline company to thrive in such a competitive environment, the company has established standards of efficiency for them to be profitable. The company has both the primary and secondary stakeholders who facilitate the existence of the company.

To begin with is the primary stakeholders who consist of the international and domestic customers, the company employees and the investors. The employees of Southwest airline are the critical factor that makes the company’s operations to run efficiently and smoothly. The company believes that if they treat their employees well, then they will create a chain reaction in other stakeholders. By treating their employees fairly, they are guaranteed that the employees will treat the customers well which will, in turn, lead to high profitability. Southwest airline relies entirely on the employees to demonstrate their commitment to the company and a drive and desire to make their company successful. Southwest airline will have both the international and domestic employees as their stakeholders following their international expansion. Empowering the local employees and makes them proud of their work in the company will make them transfer the environment to their development overseas. Foreign and domestic customers as the next primary stakeholders, Southwest airline has loyal customers in the country such that they had an 18.8% market share in 2015. Due to its sharp focus on customer services they have a large customer market. A-list program, A-list preferred program, Rapid Rewards program is one of the largest contributors of customer loyalty. The current target market for the company are the college-age students, frequent travelers, and business travelers. The target market is, however, expanding to make short distance international flights to places like the Caribbean and Mexico. Finally, the last primary stakeholder of Southwest airline is the investors, they are seen to play a vital role especially in the international expansion of the company. The company was able to return $1.4 billion to the investors which consisted of $1.2 billion of common stock and $180 million dividends. The company in recent years has also been experiencing a rise in the amount of money per share that they pay out as dividends. The financials of the company have always been a strength and will play a fundamental role in international market expansion. Aircraft manufacturers are the secondary stakeholders of Southwest airline. During a SWOT analysis for the company, it was found that the company had a weakness of being reliant on one aircraft manufacturers. The company relies on Boeing for purchases of the aircraft spare parts, aircraft purchases and support for its fleet. Boeing is the secondary stakeholder for the company, and it will continue to be an instrumental figure in the expansion efforts of Southwest airline. Because Southwest Airline generates a lot of revenue to Boeing, it means that Boeing will have a vested interest in the company’s future plans.

Environmental Analysis of Southwest Airlines

Shifts in the macro-environment factors lead to a direct effect on all the Regional airlines. The changes in the macro-environment factors affect the Porters Five Forces which are responsible for shaping the competitiveness of a company. They can affect the service industry or an individual firm in the industry. The analysis of PESTEL provides the operating challenges that Southwest airline faces in the prevailing macro-environment factors. In a steady growth trajectory an industry should be profitable; however, this is not the case for Southwest airline because it exists in an unstable political environment. Politics play a vital role in determining the political factors that can impact Southwest airline in a particular market. Southwest Airline Company exposes itself to a variety of political system risks and political environment because it operates in Regional airline business in more than a dozen countries. To make sure that they succeed in their business they have to diversify the political system risks in those countries they operate. There are also economic factors that impact the company that is factors such as inflation rate, foreign exchange, interest rate, and savings rate. The economic cycle determines the aggregate investment and demand in the economy. The company can use the economic factors of a country they operate to predict the growth trajectory of not only their industry but also the organization. Southwest company need to look into such factors like government interventions, the economic system of the country, economic growth rate, unemployment rate, inflation, the comparative advantage of the host country, infrastructure quality in the Regional Airlines, the efficiency of the financial markets and the interest rates to develop a good strategy. The culture of society also impacts the way a company operates in a specific environment. The shared beliefs of a certain community or social groups determine how the marketers of Southwest airline will approach the customers. They have to develop and design the marketing messages for the Regional airline industry after understanding the customers. The leaders of the company should analyze factors such as demographic and the skills of a population, culture, class structure and attitudes of the given society. Reviewing how technology affects Southwest airline, it is good to understand that technology is disrupting in various industries. Therefore a company should not only do an analysis of technology exclusively but also the speed at which the industry is being disrupted by technology. Slow speed technological change may give the company more time to automate, but a high-speed technology will provide less time for automation. Southwest focuses on technological changes in the industry to make sure they are at par with the other competitors. Globally in some of the countries that the company operates in, no robust legal framework is capable of protecting the intellectual property rights of the company. Southwest Airline Company has to, therefore, evaluate the legal framework well before entering into a particular market. This way they will be able to eliminate any threat to theft of their secrets which can affect competitiveness.

SWOT Analysis of Southwest Airlines

The analysis of the SWOT of Southwest Airline Company indicates how well or poorly the company operates. The strengths in the SWOT analysis of Southwest airline includes the point-to-point services, low turnaround time, strong fleet base and price leadership. Southwest Airline Company provides point-to-point services unlike its competitors who follow spoke and hub systems. In a hub and spoke connection is through hub points where one gets the flight connections. Point-to-point services help the company to utilize resources well and save customer’s time. Next strength is a strong fleet base, and the company has a strong network of fleet across American. It also has one of the largest Boeing aircraft fleets in the world. This helps the company to deliver effective services to its customers. Next, the company has experts who help them save time during the turnaround. Their turnaround time is 25 minutes and helps them save capital and make more flights in a day. Southwest airline company is also a leader in price; it offers low priced flights to the customers. Because of their well-developed model, they can save money in other areas and hence charge low prices. The following are the weaknesses in Southwest airline company; one, enormous contributions come from passenger revenue; there is a massive danger because the company over depends on the income from customers. Passenger revenues contribute to over 93% of the revenue in the company with only 1% coming from the freights. The revenues can be affected if the passenger’s traffic reduces due to things like the rise in fuel. Next is the destruction of their image by lawsuits and litigation cases. The company has been involved in actions of lawsuits whose outcomes are still pending. The last weakness is their over-dependent on Boeing as their only aircraft manufacturer. This weakness can affect Southwest airline business in case of the get into a disagreement with the Boeing manufacturers. Opportunities in the SWOT analysis of Southwest airlines are one, expanding network locally as well as globally, in 2014 the company decided to expand their network in the united states and other countries. This was a good move because it will improve the customer base and revenues. Second, growing global tourism, the growth of global tourism industry means that more people will be traveling; therefore the company will have increased revenue from the customers. Lastly, there is an increased business freights due to the growth of E-commerce w hic has enhanced globalization. Southwest Airline Company also faces threats in the industry it operates. First, intense completion, the United States airline business has a stiff competition which is characterized by price wars in the industry. Southwest airline has Delta airline, American Airlines, SkyWest and JetBlue as their main competitors.  Second, stringent government regulations, the government taxes the industry heavily; thus it increases the cost of compliance reducing the profitability of the business. The industry is also subject to legal complacencies and stringent regulations from the government.