Swot Analysis Of Southwest Airlines

Resources:

Southwest Airlines had always managed its resources well including the financial resources. In 2012, Southwest returned $422 million to Shareholders through repurchasing $400 million of common stock (approximately 46 million shares) and distributing $22 million in dividends. It made money every year and earned a Return on Invested Capital (ROIC) of 5.8%. Even in 2008, an awful year for the airline industry it made a profit and earned an ROIC of 4%.

By October 2013, Southwest Airlines has a large standardized fleet of 550 of Boeing 737 aircrafts.

Implementing a new reservation system as a part of its endeavor towards technological resources, Southwest Airlines introduced the e-ticketing service a few years back which is now responsible for generating 46% of its revenues.

Hiring at the rate of only 3% of the job applicants interviewed, Southwest Airlines has the most thorough recruitment process which equips it with the most competent workforce. Apart from this the company culture of teamwork is influential in efficient handling of operations.

The profit sharing plan which makes at least 25% of the employee’s share of the plan invested in Southwest Airlines stock, acts as a major motivating factor of the workforce making it more flexible and productive.

Southwest Airlines excludes meals and provides for light snacks as inflight refreshment, so as to minimize the overhead expenses and save the resources.

Capabilities:

Southwest Airlines focuses mainly on point-to-point service, rather than the hub-and-spoke service provided by major US airlines. Point-to-point service allows for direct nonstop routing by minimizing connections, delays and total trip time. As a result, approximately 71% of Southwest Airlines’ cust...

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...; and changing from the latter to the former is not recommendable at this fragile state of the aviation industry.

Southwest Airlines has a unique, thorough and highly selective hiring process which ensures that its workforce has the requisite motivation at par with the spirit of the Airlines. Now, this cannot be as easily applied by its rivals who are mostly very hierarchical and formal.

Southwest Airlines innovated the strategy of fuel hedging for a long time, something which its rival cannot start and reap short-term benefits.

With its unique way of communication to both prospective and incumbent passengers, either by goofy humor or funny flight attendants, Southwest Airlines has been able to sustain a Differentiation Leadership. No other carrier can practically think of depending too much on its on-board staff in absence of any kind of inflight entertainment.