This firm has been experiencing challenges in maintaining competitiveness with the market. External environment has a great impact on the competitiveness of the firm and this is why a clear understanding of this environment isessential for a firm. This analysis has divided Southwest Airlines external environment into the macro and micro environment. Macro environment are general environment factors that affect all business within the market.
By assessing the Political, Economic, Social, Technological, Environmental and Legal factors, the Opportunities and Threats can be faced by a company can be identified. Future trends and requirements for change based on these trends can be identified through this analytical tool Johnson, et al, Political and Legal factors Southwest Airlines domestic operations are significantly influenced by government bodies; primarily Federal Aviation Administration FAA see www.
Recently, a law has been passed to repeal the Wright Amendment to be in effect in Thompson and Gamble, Southwest Airlines has on numerous occasions won legal battles against rivals Southwest airlines external environment analysis the US courts Thompson and Gamble, Economic factors Airline industry is severely affected by fuels costs.
A rise in the price of oil has a major impact upon Southwest Airlines profitability Mouawad, Social Factors Southwest Airline has a strong commitment towards customer service Thompson and Gamble, Campbell, Technological factors Technological developments have both created new opportunities as well as threats for Southwest Airlines.
Emergence of information and communication technologies has enabled robust communication and subsequently provided customers with an alternative for frequent travelling.
It has also enabled Southwest Airline to expand its outreach directly to consumers through e-commerce. For instance, Southwest Airlines was able to introduce ticketless travel through the use of technology Thompson and Gamble, Southwest Airlines reservation system is considered to be outdated.
It needs to update so that the company can sell international tickets, provide passport information to federal authorities, and better handle customer relationships, along with other services Mouawad, Aircraft emissions cause significant damage to the atmosphere Penner et al.
The community noise is another major environmental concern.
Noise from the air traffic is not only the reason for irritation and an unpleasant experience and has serious health issues. The Five Forces analysis is as follows: Competitive Rivalry The competitive rivalry in airline industry has been increasing especially through mergers and acquisitions.
They are offering their passengers access to numerous cities throughout the US and connecting them to four continents of the world which Southwest Airlines does not do Mouawad, Moreover, new rivals have emerged following the footsteps of Southwest. Entry Barriers There are high barriers to enter this industry as it requires a large initial capital investment.
In conjunction with the price wars and low profit margins, it has become difficult to make profit in this industry. It is very common for airlines to project losses in their financial statements.
Therefore a new entrant must be able to handle losses at the beginning. Another barrier to entry is the limited availability of landing slots at the US airports. The slots are already reserved by established airlines and are difficult to obtain especially in airports with high passenger demand Czemy Internal Environment' Southwest %a"ed many o% the same o&sta"les that outer "omanies in the airline industry are dealing with' The internal strengths and wea7nesses o% the airline are what have made the di%%eren"e in dealing with these issues'.
To assess the macro-environment of Southwest Airlines, a PESTEL analysis will be used. By assessing the Political, Economic, Social, Technological, Environmental and Legal factors, the Opportunities and Threats can be faced by a company can be identified. Opportunities and Threats are external environmental factors (that cannot be controlled) that have an affect on any organization.
Examples are fuel costs, new legislation, technological changes, and changes in the marketplace that affect your organization. Take a look at the Southwest Airlines SWOT analysis below. External Environment Analysis for Southwest Airlines Introduction The airlines industry is one of most competitive industries in the world because of the nature of services that are discharged by firms operating in the industry.
SWOT Analysis: Southwest Airlines SWOT Analysis: Southwest Airlines Southwest Airlines made its first voyage back in with service based in the cities of Dallas, Houston and San Antonio (Brief History, ).
38 years later, Southwest Airlines has more than flights a day and serves 66 cities in 33 states (Factsheet, ). The paper "Southwest Airlines - External Environment Analysis" discusses that social, technological and economic factors are the ones that are mainly affecting the airline industry (Business Balls website, ).