BUSINESS

Business Context - October 2011



Business Context - October 2011

Introduction

Southwest Airlines is the largest local Airlines of United States that mainly offers facility of point-to-point and inexpensive fare services. This Airlines operates only in United States and its headquarter is in Dallas, Texas. Southwest Airlines Company was established in 1967 and it holds more than 34,000 employees. It offers more than 3300 flights a day. The mission of Southwest Airlines is to provide highest quality of customer service at lowest price. JetBlue, Continental Airlines and AMR Corporation is the top competitors of Southwest Airlines. They offer few amenities and no frills. Therefore, they offer lowest competitive prices for customers. (Ranson, Lori, 2011)Southwest Airlines has served almost 1.5 million customers since its inception. The highest domestic fare is $517 and it is still the cheapest in the market. It is a member of FORTUNE 500.

Discussion

SWOT analysis is a detailed study of organization's Strengths, weaknesses, opportunities and threats. Internal analysis or resource-based view mean's the strengths and weaknesses of an organization in formulation of strategies to achieve a sustainable competitive edge in the industry. In this paper the internal analysis of Southwest Airlines is brought into view.

Tangible Resources  

By tangible resources of Southwest Airlines means the physical resources, human resources, financial resources. In physical resources south west airlines hold 1700 aircrafts including 550 Boeing 737. SW holds more than 34 thousand employees. The financial resources of SW were $459 million in 2010.

Intangible Resources

The intangible resources of South west airlines include information, innovative ideas, intellectual property rights, including trademarks, patents, trade secrets, goodwill and technological processes.

Distinctive Capabilities of Southwest Airlines

The distinctive capabilities of Southwest Airlines include: Efficiency in processes, Quality flight services, innovative ideas (no frills, amenities, low cost) and above all customer responsiveness that what customers require from them? Firm infrastructure, quality human resource management, technology up-gradation and procurement activities of Southwest Airlines are key for achieving highest profitability in Airline industry. Each employee and board of members is kept responsible for his/her own compliance with the company's code of conduct. (Kay, 1993, pp.29) states that the distinctive capabilities of an organization's resources is considered an important factor in attaining competitive advantage.

All these qualities add value for the Southwest Airlines in the Airline industry. There is a difference between resources and capabilities: resources are inputs for production but capabilities are the capacity to perform a task. (Grant, 1991, pp.114)

SWOT analysis of Southwest Airlines

STRENGTHS

Competitive lowest fare service provider airline with quality fleet

Flights availability round the clock due to the flexible hours given to employees in shifts

Use of massive internet booking services

Awesome staff relations by taking care in terms of salary, work- life balance and other benefits

Distinctive customer services

WEAKNESSES

Traditional growth strategy often becomes a weakness

Depends only on its own booking service

Limited space to carry cargo or freight

Does not have international flights

Does not offer any special class seating options

THREATS

Recession in the state created threat

Rise in oil prices

Criminal or terrorist activities

JetBlue, AMR Corporation, Continental Airline competitors

OPPORTUNITIES

Introduction of International flights

improving customer satisfaction and value ...