Southwest Airlines: The External Environment
James Goggans
Embry Riddle Aeronautical University
MGMT 436, Strategic Management
Prof. Robert E. Rue
25 July 2021
Natural and Physical Environment
Weather
Weather affects the operations of the company by increasing the time between taking off and landing. Weather patterns such as ice, fog, and snow increase the time is taken between take-off and landing, consequently reducing the number of aircraft that the company can manage in a day. Weather also affects road transport, and travellers may take longer to reach the airport. During bad weather days, the company is likely to make more profit.
Temperature
There is a significant climate change, and the temperature changes share the performance of the aircraft ad general operations at the company. Very high temperatures reduce the lift and make the requirements lengthy (Ryley, 2020). The company mays also consider increasing the payload that may reduce demand. Also, temperatures influence travel destinations and may change the demand for the company's services geographically and seasonally.
Sea Levels
The company is expected to witness an increase in sea levels due to the changes in global climate. A rise in sea levels puts Southwest Airlines a risk of inundation, and there is a possibility of increased storms marked by geographical differences. When the sea level is high, the airport may lose its airport capacity, leading to disruption networks. Other surface links will be disrupted, leading to delays and the cancellation of flights. Consequently, the company will register low profits.
Wind patterns
Extreme winds increase turbulence and disrupt schedules significantly. When it is windy, airplanes experience challenges when decelerating and accelerating. The situation is worse when there is snow on the ground, as the high winds will cause the airplane to drift the runways, leading to delays (Chen et al., 2020). The delays reduce the number of flights in a day which leads to reduced income.
Forces that affect the Aviation Industry
Economic factors
Prevailing economic factors shape the profitability and operations of southwest airlines and other companies in the aviation industry. Economic growth increases sales and profitability, while economic suppression reduces profitability. Coronavirus has created economic uncertainties by minimizing travel which directly influences the industry's operations (Antosova et al., 2020). The past year has witnessed reduced sales and profitability because of reduced traveling and other carriers' availability in the domestic market.
Technological factors
Technological factors are significant in the aviation industry, and companies that use more advanced technologies gain a competitive advantage over others. Today, the industry has shifted focus to customer safety, convenience, and satisfaction. The need to meet customer needs has challenged companies in the industry to deploy safer flight technology and enhanced digitalization to stand out from other companies (Ravi, 2020). Today, the use of mobile devices in booking flights has increased significantly, and most companies, including Southwest Airlines, have invested in mobile technology.
Political-legal factors
Political regulations have a direct, significant impact on the performance of the company. Recently, the legal environment is not very tight, and the company exercises some freedom regarding routes and charges (Van Kleef, 2020). However, the hit of the pandemic has also shaped the operations of the company and the entire industry. Governments exercise direct control, especially in terms of routes to help contain the pandemic, and this control affects the company's performance. Although the company introduced leisure travel recently, the profitability is lower due to minimal traveling.
Sociocultural factors
Sociocultural factors shape the performance of the industry by increasing or decreasing demand. As people become more economically and technologically aware, the demand for air travel increases. Today, more people are using air transport because of increased knowledge and perception of the industry. According to research, companies are more attracted by companies with a positive social image (Yowell, 2021). Since the company has a positive image in society, the demand for its services is high. Airline companies that have a positive image have a competitive advantage over those that have a negative image.
References
Antošová, G., Vogl, M., & Schraud, M. (2020). Challenges for the Visegrad Group–The Coronavirus Crises and its Impact on Tourism. Visegrad Journal on Bioeconomy and Sustainable Development, 9(1), 28-32.
Chen, F., Peng, H., Chan, P. W., & Zeng, X. (2020). Wind tunnel testing of the effect of terrain on the wind characteristics of airport glide paths. Journal of Wind Engineering and Industrial Aerodynamics, 203, 104253.
Ravi, A. K. (2020). Reinventing strategic management: An evolutionary perspective. Asian Journal of Management, 11(4), 429-433.
Ryley, T., Baumeister, S., & Coulter, L. (2020). Climate change influences on aviation: A literature review. Transport Policy, 92, 55-64.
Van Kleef, G. F. (2020). Model of Low-Cost Carriers Development Possibilities in the International Small Packages Delivery Markets (Doctoral dissertation, Vilniaus Gedimino technikos universitetas).
Yowell, A. (2021). Corporate Social Responsibility Takes Flight: An Exploration of Airline Industry CSR Reporting Practices.
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