External Environment Analysis

Executive Summary

In this paper we have analyzed the progress of the SWA, with the help of management tools, for identifying the strong along with the weak points of the SWA. Along with that we have also determined the threats that are currently been faced by the airlines and once that the airline could face in the future. In first part of the paper we have analyzed SWA through the Porter's Five Forces Model. In the second part of the paper we have analyzed SWA through the PEST analysis model. In the last part of the paper we have analyzed the airline through SWOT analysis. Along with that we have proposed some solutions which might be helpful for the airline, to continue its rain of success in the airline market, and maintain its position as the number one airline in the United States of America.

External Environment Analysis

Introduction

The following essay is a rudimentary analysis of SWA from the perspective of integrated, and business policy summary. The analysis of SWA airlines have been conducted thought different management tools which involve Porter's Five Forces Model, the PEST analysis, and the SWOT analysis of the SWA. To determine the strong and weak points of the SWA, along with the threat both internal and external that are present for the SWA.

Discussion

Competitive Forces Model

Threat of Substitute Product

Firms within the same industrial like Southwest Airlines are competing amongst themselves. Substitute's limits potential returns on an industry by placing a ceiling on the prices companies charge. The risk of substitute product and services is strong. There is a somewhat swapping cost that is lower producing it is simpler for clientele to move from airline industry to other associated products. In addition, it should be documented that the substitute product to a certain extent very improbable than persons will be spending only on the airline business industry and not anything else.

Bargaining Power of Buyers

Buyers are seen as competitive threats when they are in a position to demand lower prices or better products. Conversely when buyers are weak like in case of the Southwest Airlines, a company can raise its prices and declare higher profits. The bargaining power of buyers within the industry where Southwest Airlines compete is considered as extraordinarily strong. (Porter, 2008)

Potential New Entrants

Southwest Airlines is also having problems relating to the risk for potential new entrants in the industry; it is to a certain extent feeble as the threat of the new entrant is tough to set up a sequence of series of the bike industry, moreover, when new entrants enter the industry they tend to take extra effort in order to take full control of the industry. The extent to which new entrants can enter an industry exerts a significant influence on the degree to which companies may act to earn above average in terms of bottom line.

Bargaining Power of Suppliers

Southwest Airlines is also facing issues that are related to the bargaining power of the suppliers. Suppliers can be viewed as threats ...