Southwest Airlines Analysis - Essay Example

Southwest Airlines have been able to remain successful in the unattractive business. Many investors fear to invest in the industry because of the numerous challenges that the industry does face. There are cases of reduction in the stock prices that discourage investors from joining the industry. Southwest Airlines operation is unique making the organization to have the most known band in the United States. Its brand being known among the public explains why it has remained successful. The mode of operation of the airline is its strengths. The airline has the highest number of departures compared to any other airline in the United States. Additionally, the airline is regarded to be cost effective and lead in the provision of quality services. These good qualities provided in service delivery a low cost by the airline have made the organization to have a lot of customers. There is a very good relationship with its union. Through this, the organization has been able to achieve smooth internal working operations (Carpenter, 2013). The consultation that Southwest Airlines gets from its unions makes the organization to make the informed decision that is both for the organization as well as the customers that the airline serves. Studies also show that the management of the airplane has a history of making successful acquisitions. This has played a huge role in placing the organization to the top position it is. According to most client review, traveling though the airline is fun because of the extra service offered and the employees of the organization that is usually encouraged to have a sense of humor for the growth and development of the Southwest Airplanes. These factors combined explain why the Southwest Airplanes have been able to be successful while other airlines remain unprofitable and are even drawn out of the market (Thomas, 2015).

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Current economic condition of the Southwest airlines

In the recent past, most of the companies in the airline industry have been experiencing economic constraints with most of the organization recording very low profits and some even recording losses. This condition is brought about by some factors such as high operations costs in the industry and increased competition for the existing market. These actors and many others are a threat to a new entry. They make it very hard for a new organization to join the market. The existing companies in the industry are also feeling the pinch as they do not enjoy the expected returns from their services. This is a threat to airlines companies such as Southwest Airlines. They are not assured of a strong future if the conditions persist. However, Southwest Airlines have been able to go against the odds to record positive results in its finances. Southwest Airlines have strongly entrenched in the middle age within the United States market. Despite the economic waves that the US have been having and the industry as well, the firm has remained steady (WORK, 2014). It still continues to exploit its domestic strength by creating a presence in the key US markets while establishing the foundation to improve its international offerings. However, despite these positive strategies it is facing, it is still facing challenges of preserving its culture and coming up with new strategies that it can use to generate more revenue. Despite the challenges, the organization has been able to record consistent results in profits and its balance sheets making it attain the investment grade status.

Current operational issues or challenges within Southwest Airlines

Despite the numerous strengths that the organization depicts in its operations, there are still some areas of weaknesses that are also a challenge to the Southwest Airlines. One big challenge for the Southwest Airlines is that it tries to conserve its culture despite having to deal with people from divergent cultural backgrounds. As an international organization, the Airplane should not have a fixed culture of operation. They should be flexible and change their operations according to the changes in the customers’ expectations. Another big challenge that Southwest Airlines is having is that most of its employees are members of the union. This makes them have less control over them and may in turn impact on the operations and performance of the Southwest Airlines (Brooks, 2012). Southwest Airlines also have limitations such as on the quantity of the freight and the cargo. This limits it from making the huge profit or attaining some level it could suppose it was carrying a large amount of cargo. The company only offers one class of sitting. This is not an international standard and is making the organization to lose some of its customers.

Trends for the future within the operational segment

Some trends are in favor and some not for the growth of the Southwest Airplanes. The growth of the Hispanic population is a trend that is in favor for Southwest Airlines as that means an expansion of the market. Increased use for marketing is also another trend that assists the organization to market itself. However, trends such as the increase in fuel prices and new government regulations that make the air travel expensive are the threat to Southwest Airplanes and right strategies by the firm should be set to counter them.

References

Brooks, R. (2012). A life cycle view of enterprise risk management: The case of Southwest Airlines jet fuel hedging. Journal of Financial Education, 33-45.

Carpenter, M., & Sanders, G. (2013). Strategic Management: Pearson New International Edition: Concepts and Cases. Pearson Higher Ed.

Thomas, M. (2015). Strategic principles at Southwest Airlines. Strategic Direction, 31(8), 10-12.

WORK, D. T., SPEND, E., LARGE, A., & PLAN, B. S. (2014). Making Human Resource Management Strategic. Human Resource Management, 38.