Southwest Airlines External Factors

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.

The company realized a 10 percent reduction in baseline costs from this great work (Ross & Beath, 2007). Additionally, Southwest Airlines focused on its business integration capabilities by dedicating a two year project to redesign its “sacred transactions,” those transactions that provide the company’s core data (Ross & Beath, 2007). In these ways, the company has worked to rationalize its technology infrastructure to build a new

It educated all employees on the business goals of the company and created a system called “Knowing the Score” to provide transparent information that would drive performance. The company sought out other ways that IS could support its strategy, and recognized, for example, that technology actually enabled its ability to provide customers with a personal touch (Ross & Beath, 2007). The company also tried to ensure that all IS changes were in support of its mission. In fact, the company acknowledged an opportunity to improve its process by evaluating post-implementation impact on operating costs and customer service (Ross & Beath, 2007). Nevertheless, linking IS and the company’s business strategy became more challenging as the company looked at growth opportunities. For example, there were concerns that expanding internationally required operational changes that challenged its principles. Management kept sight of the business strategy at Southwest Airlines and tried to position the company to drive both cost and customer service benefits from IT (Ross & Beth,