Southwest Airlines Co - Article Example

Article Review: Southwest Airlines Co. al Affiliation Does the article appear to be making a clear point, expecting the reader to draw a particular conclusion? If so, what is that thesis or main conclusion? Change is in itself highly steadfast and unchanging, an aspect that makes it inevitable. As such, businesses that fail to accept change in their environment and make appropriate adjustments within the business model in response to such changes are bound to fail. Both external and internal business environmental factors are situations or events that take place within the business environment that alter the normal operation of a business in either a positive or a negative manner. The internal environmental factors include all the events that take place within the organization and can thus are under the control of the organization (Abdelghany & Abdelghany, 2012). On the other hand, while organizations may put much effort in improving the various internal factors that affect their operations, it is impossible for them to alter the various events that take place in the outside environment. The strengths and weaknesses of an organization are part of its internal environment while the opportunities and threats that it faces are within its outside environment. The article “Company Profile: Southwest Airline Co.” by MarketLine, reviews both the internal and external factors that affect the success of the company. According to the author of the article, the operating strategy employed by the company, which has promoted achievement of reliable on-time operation and high asset utilization, forms part of the internal environment of the company that has allowed it to venture into profitable markets and yield greater revenues (MarketLine, 2015). However, the author is keen to pin-point the intense competition within the external environment which is likely to cause adverse effects on the operating results, liquidity, and financial condition of the company. Since the company has no control over the external environmental factors including competition, it is important to capitalize on the presented opportunities in order to increase performance and thus outdo its competitors. 2. Does the author appear to have a particular point of view or approach to the topic? Does this seem to be persuasion or does the author seem to be making a relatively objective effort to answer reasonable questions readers may have about the topic? The author has taken an objective approach towards the topic, with a clear review of both the internal and external factors within the business environment that may affect performance (Abdelghany & Abdelghany, 2012). With the use of a SWOT analysis, the author has been able to review the strengths, weaknesses, opportunities, and threats that may affect the business. It is evident that Southwest Airlines is a well-established company in the market, standing tall among other companies within the same industry. However, the company operates within a highly growing industry, which poses a challenge on the sustainability of its success. The author’s application of a SWOT analysis is relatively objective in a way that it answers various questions that a reader may ask concerning both the internal and external environments of the company. In response to questions pertaining the strengths of the company, the author has been keen to review the various points of difference of the company that place it at an advantage as compared to its competitors (MarketLine, 2015). An organization’s assets and the strengths of the assets form a basis for its strengths. The author has reviewed the company’s fleet and the increasing customer base of the company as the strengths of the company. The author answers areas that may require improvement within Southwest Airlines Company. These form the weaknesses of the company. It is important to note that competitors can exploit such weaknesses to establish a strong competitive base against the company. The author has also been able to review the various changes in the external market that present the company with interesting opportunities. Lastly, the article answers questions concerning any current and potential competitors who are more equipped than the organization through a review of the company’s threats. 3. What are the key issues or topics that make up the article? What conclusions does the author draw concerning each? Through the SWOT analysis, the author has been able to present the various strengths, weaknesses, opportunities, and even threats of the company. These form the internal and external environmental factors that may affect the success of the business. The organizations response to these factors in terms of strategic adjustments is important in ensuring that the various changes are well adhered to and contained towards a competitive advantage (Abdelghany & Abdelghany, 2012). Under the strengths, the author is quick to identify the advantage of the strategy involving point-to-point service, which has allowed the company to gain an increase in revenues. Still under strengths, the author also recognizes the rich destination network created by the company. In addition, the company’s strong fleet base is a major strength. The author has also identified various weaknesses of the company that ought to be improved upon in order to facilitate sustainability. Under this, the author has been able to point out the various litigations and lawsuits that the company is facing which have an impact on the cost of operation of the company. On the other hand, the author also resolves that the low level of operations in freight or cargo expose Southwest Airlines’ reliance on passenger revenues (MarketLine, 2015). Another conclusion made by the author concerning the weaknesses of the company is that dependence on one supplier for aircraft and engines, which limits growth. In terms of opportunities, the author has been able to review various events in the external environment of the company, which would facilitate success of the company. One of such opportunities is the increasing global tourism that provides the company with a chance to increase its position in the market (MarketLine, 2015). Another opportunity involves integration of the AirTran’s operations into the company’s which would allow for improving of route network. Lastly, the author believes that the outlook of the air freight global market is favourable enough to guarantee future growth and thus provides an opportunity for the company to increase its sales and subsequently profit margin. The threats that the external environment poses on the company have also been well identified by the author. One of the highly emphasized threats by the author is the intense competition within the industry, which is likely to affect the margins in a negative way. In addition, the experienced fluctuations in the fuel prices are likely to affect the company’s financial condition and its operations. On the other hand, the author also concludes that the stringent regulations by the government are likely to increase the cost of operation for the company (MarketLine, 2015). 4. What sorts of evidence and reasoning does the author use to support each of his/her main conclusions? Note specifically, all facts the author cites in the article. Can you determine if they are accurate? Southwest Airlines’ strategy involving point-to-point services is more advantageous than the hub-and-spoke approach as it reduces the time of travelling and prevents inconveniences such as delays (Cook & Goodwin, 2008). The author has been able to conclude that this service strategy has promoted achievement of better utilization of assets and on time performance that is more reliable thus allowing opportunities to maximize on profitable markets and increasing revenues. On the other hand, with an inclusion of AirTran’s operations, the company has increased its destination networks allowing the company to disburse its services to new customers and thus positively affected the top line of the company. The company’s fleet base also facilitates increased ability in terms of rendering effective services to the customers and promotes quick response to the various opportunities that may arise in different locations (MarketLine, 2015). Amidst such strengths, various class action lawsuits have been filed against the company including allegations that AirTran and Delta Air Lines had violated federal antitrust laws, which have led to spending of high amounts of money by the company both in the court process and in payment of fines (MarketLine, 2015). Lawsuits are highly unpredictable in terms of length and cost and thus could adversely affect the financial condition, cash flow, or operational results of the company (Abdelghany & Abdelghany, 2012). On the other hand, in terms of high reliance by the company on the passenger revenues, it is evident that dependence on one line of business poses a high risk of failure and thus the company ought to increase its line of operations and invest more in cargo operations in order to expand its source of revenue. In addition, dependence on one supplier increases the supplier power and thus impairs the ability of any organization to expand. Moreover, since recession different industries, including the tourism industry, have experienced outstanding recovery, due to the improved global economic conditions (Abdelghany & Abdelghany, 2012). This provides an increased market for airlines including Southwest Airlines. The global freight market, which also experienced a great failure during the 2008 financial crisis, is also experiencing promising growth, an aspect that provides another opportunity for the company to increasingly invest in this line of product and improve its sales and profits (Cook & Goodwin, 2008). In line with the threats of the company, the increase price competition experienced particularly within the local market within the US may force airline to reduce their prices or have an impact on the market share, an aspect that would ultimately affect the margins (Abdelghany & Abdelghany, 2012). On the other hand, various fluctuations have been experienced in fuel prices because of different factors that cannot be controlled by companies such as Southwest Airlines. These fluctuations in the cost of fuel lead to fluctuations in the earnings of Southwest Airlines, an aspect that is likely to affect the company’s growth initiatives (MarketLine, 2015). Lastly, the various legal and regulatory compliance requirements towards which Airlines are subject lead to increased expenditures for these companies, an aspect that affects the cost of operation (Abdelghany & Abdelghany, 2012). 5. What kind of general impression(s) would you expect the typical reader to take away from the article after reading it? The article aims at informing a reader that both the internal and external factors within a business environment ought to be considered before laying strategies that would facilitate the success of a business within the market. As such, even though individuals may easily manipulate the internal environmental factors of their business, it is a challenge to respond to the external environmental factors as they are beyond the control of the business. Thus, in order to facilitate sustainability, it is important for the business to evaluate such factors within the external environment in order to come up with the best approaches that would lead to success. References Abdelghany, K., & Abdelghany, A. (2012). Modeling Applications in the Airline Industry. Farnham: Ashgate Publishing, Ltd. Cook, G. N., & Goodwin, J. (2008). Airline Networks: A Comparison of Hub-and-Spoke and Point-to-Point System. Journal of Aviation/Aerospace Education and Resarch, 17(2), 51-60. MarketLine. (2015). Company Profile: Southwest Airlines Co. New York: MarketLine. Read More