Southwest Airlines:
Business Evaluation
Submitted by:
D. Dill
March 13, 2006
EXECUTIVE SUMMARY
Purpose, Method and Scope
Southwest Airlines began business over 30 years ago in Dallas, Texas, to provide customer with a low-cost way to fly and has grown to the third largest airline in the nation. To evaluate whether Southwest has good investment potential, there must be an evaluation of the airline industry and Southwest. The industry will be evaluated using Porter's Five Forces Model. Southwest will be evaluated using a strengths-weakness-opportunities-threats (SWOT) analysis. After the assessments are complete, they will determine if Southwest stock should be purchased as in investment.
Strategic Analysis Findings
First, Porter's Five Forces Model showed the airline industry to be high risk, but not to be discounted if held as part of a diversified portfolio. Second, a comparison between segments determined the U.S. airline market is more stable and faces fewer threats than the European market, so any investment will be made with a U.S. based carrier. Third, Southwest was shown to have outperformed other U.S. carriers. Fourth, Southwest business level analysis shows its functional strategies offset the threats and weaknesses revealed by the SWOT analysis and Porter's Five Forces Model; it also shows Southwest is well positioned to take advantage of the strengths and opportunities showcased in the SWOT analysis. Lastly, Southwest has excellent organizational structure, controls and corporate culture to adapt to industry changes in the future.
Solutions and Recommendations
Although the airline industry is unpredictable, some airline carriers are more dependabl ...