The Factors Affecting Southwest Airlines Essay

The Factors Affecting Southwest Airlines Essay

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Not all of the external factors affecting Southwest Airlines are helpful, however. In terms of threats, Southwest Airlines faces several challenges. The airline industry is a highly competitive market and costs are continuing to rise (e.g. rapidly increasing fuel costs and labor costs). Unfortunately, these factors greatly increase the risk of another company emulating the strategies and core competencies of Southwest Airlines (Ross & Beath, 2007). Ross & Beath (2007) mention this threat in regards to JetBlue rapidly approaching innovative, low-cost operations. There is also not a clear sense of customer loyalty in this market, outside of frequent flyers seeking loyalty card perks. Overall, the biggest threat to Southwest is its competition.
Michael Porter’s five competitive forces model can be applied to get a clear understanding of the company’s competitive landscape. Based on Porter’s model, potential threat of new entrants is low. The cost of developing a new airline is very high and unlikely. Bargaining power of buyers is medium. Consumers can choose any service provider in the industry, giving them control over the competitive environment, but many consumers prefer the cheapest service. Bargaining power of suppliers is medium. Southwest Airlines has gained a sense of control over its options by taking action, such as prepaying for fuel in response to increased prices and developing its own reservation system in response to increased fees (Ross & Beath, 2007). But the company relies on only one aircraft, making it vulnerable to its only supplier, Boeing. Threat of substitute products is low. Customers can chose other means of travel, such as driving a car or riding a train, but these may be time consuming and le...


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...commend that the company continue to leverage and mitigate its strengths and weaknesses based on the opportunities and threats outlined above.
In conclusion, Southwest Airlines is an excellent example of how information systems can be strategically used to drive the success of a business. Furthermore, Ross and Beath (2007) have laid out an in-depth description of the firm’s approach to IS in the case study “Building Business Agility at Southwest Airlines.” A business now has the opportunity to learn about Southwest Airlines and apply similar methodology as it approaches its own IT management. Personally speaking, I have a better appreciation for the airline industry after learning about this company and its approach to IS. I also have a sense of excitement for what this industry may look like in the future based on the strategic IS focus at Southwest Airlines.

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