Environmental and SWOT Analysis of Southwest Airlines

Environmental Analysis and SWOT Analysis Tiara Jefferson Mkt 574 University of Phoenix 06/17/2024 Prof. Ismael Hau

Part A: Environmental Analysis and SWOT Analysis Business Description Southwest Airlines Co. was founded in Dallas, TX in 1967 and went commercial on June 18, 1981. It is the world's largest operator of the Boeing 737 and has a fleet of eight hundred seventeen (About Southwest Airlines, 2024). Being in business over fifty years, the airline is in more than one hundred twenty airports across eleven countries. The company’s mission statement is “To connect People to what's important in their lives through friendly, reliable, and low-cost air travel.” (About Southwest Airlines, 2024). The vision statement is “To be the world's most loved, most efficient, and most profitable airline” (About Southwest Airlines, 2024).

Environmental Analysis Competitive Forces Southwest is the fourth largest commercial airline fleet globally with over seventy-four thousand employees (About Southwest Airlines, 2024). The main competitors are Delta, American, Frontier, and Spirit airlines. Southwest Airlines ranks number one in overall customer service compared to their competitors (About Southwest Airlines, 2024). To stay competitive in this challenging environment, Southwest needs to continue focusing on cost control, operational efficiency, and delivering a superior customer experience. Economic Forces The company has made approximately 26.1 billion USD as of May 2024 (Southwest Airlines Co (LUV) 2024) and has increased 9.56% since 2022 (Southwest Airlines Co(LUV) 2024). During the pandemic, air travels decreased due to people not feeling safe being in proximity of airplanes. Political Forces Geopolitical events can impact international travel and tourism. To prevent exploitation and other sorts of mistreatment Southwest should guarantee that the employees know the rules and regulations (International Labor Organization, 2023). Legal, Regulatory, and Ethical Issues Legal The laws determine how much overtime employees can be worked, how many hours a person can work in a day, and paid vacation. They are in place to safeguard employees, but they can be challenging for businesses especially if people are not use to their

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culture (International Labor Organization, 2023). Employment Security Act went into effect January 1st, 2018, and it states if working conditions of labor contracts are different from the conditions indicated in the initial job-offering (International Labor Organization, 2023). Regulatory The organization provides a detailed onboarding program that includes networking opportunities, orientation, and training based off the individual jobs. The business also offers mentorship programs and chances for workers to interact with senior personnel and leadership. (Southwest 2024). Due to the pandemic, Southwest still has virtual interviews but since the guidelines have changed in-person interviews are now an option again (Southwest, 2024). The company still makes it efficient, effective, and engaging to the new employees. Ethical Labor unions represented approximately 83% of our workforce. (Southwest, 2024). Their approach to collective bargaining focuses on partnering with Leaders and Unions to negotiate labor agreements that achieve positive outcomes for the employees (Southwest, 2024). The company should work with a local labor union to make rules are followed. Every business should make sure employees are aware of their legal rights and protections, such as Employee handbooks, training seminars, etc. (Southwest SWOT 2023).

Technological Forces Innovation in service offerings and exploring new revenue streams, such as ancillary services, can also help Southwest differentiate itself from its competitors (SWOT 2023). The airline has a Rapid rewards program which allows you to collect points for each flight, and you can redeem them for future flights (About Southwest Airlines, 2024). Each airplane has Wi-Fi and entertainment for an enjoyable experience. Southwest has also introduced their Mobile App (About Southwest Airlines, 2024). With the app, you can do everything you would on a computer but on your phone and it saves time. For example, you can have your ticket on your mobile device instead of printing at home or waiting in line to print at the airport. Social Forces Southwest Airlines uses a method named Diversity, Equity, and Inclusion (DEI) to recognize, respect, and values differences (About Southwest, 2024). The company embraces new skills, talents, and backgrounds to create competitive advantages in Teamwork and innovation (About Southwest, 2024). Current Target Markets Anyone can fly Southwest airlines and feel safe. Their company has a strict no discrimination policy for employees and customers. The main customer base are people traveling short distance low-fare flights, middle-class families, young adults, small and medium size business owners and charter flights for companies, schools, cargo, and international.

Current Marketing Tactics Emotional ad campaigns to connect with consumers were used to increase business especially when Covid happened. The ads would display all the safety protocols the airline was taking to ensure your flight would be smooth. Showing family-oriented company and services, such as commercials with families travelling and having the best experience. Flexibility policies (The Big Flex) which is the carrier's flexible and Customer-friendly points of difference, including two bags fly free, no change or cancellation fees, flight credits that don't expire, and points that don't expire (Southwest, 2024). Social media and different marketing tactics help promote the business. Currently, they have a sale going on from June 10-13 flights are $99. Some airlines allow you to purchase tickets on other booking sites (Expedia, booking.com) but with Southwest, you can only buy exclusively from their website or by downloading the app. SWOTT Analysis Strengths The employees are provided career advancement, educational assistance, benefits (medical, dental, vision, wellness). Full and part time employees also receive 401K, short/long term disabilities, life insurance, etc. Employees are encouraged to be themselves and draw on their unique perspectives, skills, and experiences in their day- to-day jobs (Southwest, 2024). Employees are treated with the same concern, respect, and caring attitude within our organization that they are expected to share externally with every Southwest Customer (Southwest, 2024). The company proves Programs, such as, High Impact Development Portfolio and Mentorship program which allows you to career development and leadership skills to advance your career.

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Weaknesses Although Southwest is a good company, the turnover rate has increased over the years and the main cause was due to the pandemic in early 2020. The company should focus on building a strong employer brand, recruitment strategies, and retention programs (SWOT, 2023). The employee referral programs, and the onboarding process can be enhanced to help new employees learn about the company and help with a smooth transition. Southwest only uses Boeing 737 aircraft, and they could expand more by reaching out to other aircraft companies. Opportunities Southwest uses mixed recruitment to fill unfilled positions. The company posts internal job openings to find people inside and uses job boards and recruiting websites to find individuals externally. For example, social media is a huge tool to promote jobs. Applications are mostly done online and since Covid, interviews are done virtually. For example, if you are applying to be a pilot or captain, skills, experience, and hours logged impact wages matters. The requirements for a flight attendant or ramp agent are completely different so each position has its own qualifications. Threats Fuel cost, regulation changes periodically, and geographical events are some of the main issues that are harmful to the success of the company. Aviation regulations, environmental laws, or safety standards can lead to fluctuating prices (SWOT, 2023). Cyber-attacks would cause a significant impact to the operating systems. Trends

The Emerging Leader Development Program (ELDP) is a job rotational program that seeks to train and develop excellent Leaders for Southwest Airlines (Southwest, 2023). This program provides support for pilots and other career areas to receive additional certifications, upgrading their skills, and pursuing leadership roles within the organization (Southwest, 2023). Converting Weaknesses and Threats to Strengths & Converting Strengths to Opportunities Southwest should consider expansion to discover new revenue and build lasting relationships. The aviation business is always growing and changing so the company should be a part of the positive change. Having technical advances and the increasing popularity of Artificial Intelligence (AI) can help with operation and improve customer service. Marketing Objectives By the beginning of 2024, the company has gift cards, and they can be used to purchase flights and other Southwest related products (Southwest, 2024). There are also packages that include flight, hotel, and rental cars for a discounted price. A strategy was launched from 2014-2019 to increase revenue and how to maintain it. Ten years later, there has been a 35-40% increase and it is constantly growing. In early 2025, Southwest plans to introduce new seats and an updated cabin design for its 737 Max 8 and 800 aircraft (About Southwest, 2024).

References About Southwest Airlines. (2024). Southwest Airlines Co. https://www.southwest.com/about-southwest/ Southwest Airlines Co (LUV). (2024, June 6). Stock Analysis. https://stockanalysis.com/stocks/luv/revenue/ Southwest Airlines Co. SWOT Analysis. 5/9/2023, p1-7. 7p. Abstract: A SWOT analysis of Southwest Airlines Co. is presented. (AN: 163731361) https://wwwiloorg/ifpdial/information-resources/national-labour-law

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profiles/WCMS_158904/lang--en/indexhtm. (2023). International Labour Organization (ILO).

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