Sample Essay on Environmental analysis

Example of analysis essay, Sample analysis research paper

"Our success in no way depends on the failure
 of anybody else, but on our own achievements"
Southwest Airlines

The history of the Southwest Airlines is the story of 32 years of hard work and dedication. It is a story of “being different” from others and “being better” than any other airline. From the very start of the existance of the Southwest Airlines Rollin King and Herb Kelleher decided that it’s main goal would be to get passengers to their destinations at the time they want to get there, on time, at the lowest possible fares, and make sure they have a good time doing it. It is a simple but hard to keep promise. To be “different” from others was the only way to survive and to stand out in the struggle for #1 customer’s choice.

Environment analysis of the Southwest Airlines Essay

Southwest Airlines did even more than that. Southwest Airlines paved its way to the top owing to all the innovations, which it ushered in making the flights easier, better and cheaper for its customers. If we take the target market descriptors of the Southwest Airlines we can identify the main ones. They are: low cost leadership, strategy of market development, safety, territorial expansion (point-to-point, high-frequency), constant innovations (short-haul). These five descriptors are the main one’s concerning the Southwest Airlines. Though low cost leadership stands in the first place descriptor due to the importance of this criterion for the consumers, it is very important to point out that this is just an external view of the matter. In fact low cost leadership is the natural outcome of the company’s strategy of market development. So it is possible to identify the company’s strategy of market development as the primary criteria used to describe the target market of Southwest Airlines. Key elements of the company’s strategic efforts have been a conservative growth pattern (minimizes debt/maximizes working capital), rigid cost-containment (operating costs 15-25% lower than competitors), and a firm commitment to their employees. The airline has refined the low-cost, no-frills, no-reserved-seats approach to air travel, providing about 2,300 flights daily to about 60 cities in 31 states. A very low percentage of accidents makes it one of the most trusted airlines and does also become one of the market descriptors. Southwest Airlines are slightly above average in pursuing strategies that maximize returns on external opportunities and practice threat avoidance. The gradual expansion into areas that can support their core competency of providing frequent, low cost, short flights into business markets became vital as dealing with the territorial expansion made the airlines for the past 30 years. The company expanded its fleet by a net 20 aircraft, its available seat miles by 5.5 percent, its share of the domestic airline market (based on revenue passenger seat miles produced) to 10 percent. It also increased shareholders' equity by $407.6 million due to the criterions listed above. Southwest was the first airline with a frequent flyer program to give credit for the number of trips taken and not the number of miles flown. It pioneered senior discounts, Fun Fares, Fun Packs, a same-day airfreight delivery service, ticketless travel, and many other unique programs. All of these give a deep view of the market position of the company. A company with annualized return of 25.99% has without any doubts a steadfast place in the market. Southwest Airlines have an average annual profit in the amount of $198.0 million, excluding special items ($241.0 million, including special items). Southwest Airlines never gave promises it could not keep and looking through its history makes it obvious that it has always been a company whose main characteristic was “trustworthy”. Southwest Airlines did make a lot of innovations in it’s history such as: ticketless travel, same-day airport cargo delivery, self-service checking kiosks (to reduce the amount of time Southwest Customers spend in line); visually distinctive Winglets (started extending the airplane’s range, saving fuel, lowering engine, maintenance costs, and reducing takeoff noise); online boarding passes via southwest.com (allows the customers to proceed to their departure gate without stopping at the ticket counter, skycap, or self-service kiosk) and many more. So as a major company it realized that a company may find opportunities for innovation by looking at substitute industries and products. Southwest created the concept of frequent point-to-point flights, with fares often 60 per cent below competitors', plastic reusable boarding passes, airports in small cities or smaller, less-congested airports in larger cities and 15-minute gate turnrounds (against 35 minutes for the average carrier). The company’s main achievement concerning substitute products was the creation of a new market - short-haul air transport. It is focused on short-haul flights with an average distance of 425 miles. It deals with meals, in-flight films, designated seats and multiple seating classes from first to economy, membership in an airline reservation system, central airports, and a hub-and-spoke route system. So the company moved across substitute industries and even all the advantages listed above are not the one’s that made Southwest Airlines make the best of substitute industries. Contemporary people need speed, the speed of movement from one place to another, and it especially works when it goes about short distances. So the airlines created point-to-point flights to make short-haul travel and it did cut an additional 15-25 per cent off average flight time. According to the statistics 70% of American people are ready to pay more in order to save their time. And in addition to the speed people need to save money to chose the Southwest Airlines, because otherwise they may decide to travel by car or else. So the company offers another substitute by offering low fare-rates. For example, prior to Southwest's announcement that it would begin flying from Philadelphia to Providence, US Airways' unrestricted fare was $938 round trip. But Southwest's unrestricted fare on that route now matched by US Airways is $177 round trip, including taxes. Such examples in addition with faster arrivals make Southwest Airlines an excellent choice for the costumer. Substitute products and services deal with the consumer choosing this airline and no other mean of transportation. So the excellent level of service is one of the priorities of the company. Southwest Airlines offer their customers low prices, along with a strong customer commitment and an array of benefits and rewards.  Southwest offers a “Rapid Rewards” program that allows customers to receive a free ticket based on the number of times they fly with the company.  By making 8 round trips or 16 one-way trips, the client receives a free round-trip ticket that can be transferred or used by anyone.  This promotional offer is very attractive to customers who fly frequently for business or pleasure.  Southwest also has a program called “Frequent Flyers—Companions Travel”. This program allows members who make 50 round-trips a year to designate one individual the ability to fly with the travel partner free of charge for one full year.  The next substitute product is online travel booking center. If a ticket is unused the consumer may gain refund at any point of time to the departure through it. It also gives a client the ability to choose a car rental or hotel rental reservation online. The cars can be chosen from various car-rental companies such as: Alamo, Budget, Dollar, and Hertz. And the car style, chosen by the client may be from economy to sport and full size vans. This service makes the choice of this very company very appealing to the customer.  More than 34,000 total employees work on making this choice even more guaranteed. If we take the 2003 statistics over the Southwest Airlines we see rather impressive numbers: it’s net income was $442 million, the total number of passenger carried was 65.7 million people, the passenger load factor was 66.8% and the total operating revenue: $5.9 billion. This definitely makes Southwest Airlines the largest carrier on scheduled domestic departures. Southwest Airlines, as any other airline has a definite group of regulators that control its activity throughout the whole market and optimize it. And though they are usually approximately the same the company has always something different from the others. It is time for everyone to realize the scale of its development, because it became new company that is able “to take on major players in a highly competitive industry and gain market share, satisfy customers and employees alike, and make money”. So accordingly to this the main regulators in the Southwest Airlines’ work are: the high quality of provided products and services, company’s strategy, very high percentage of satisfied clients, the company’s policy towards its employees. All of these factors all together make what we call- Southwest Airlines outstanding work. Southwest always showed dedication to a core competency and commitment to the employees. They find a comparable interest in meeting customer expectations and get a big score on it. The company’s conservative approach to growth due to senior management made a weighty impact on the direction of development. And one of the reasons of such a good employees job is the company’s employee policy. Southwest Airlines possess a sense of loyalty on the employees' part and as a result get the highest employee productivity in the industry. The company provided complete job security for its 33,705 active Employees and a $155.6 million contribution to their collective profit sharing and savings plans. The company adopted this plans in 1973. Through this plan, employees own at least 10 percent of the company stock. The airline is approximately 80 percent unionized. This regulator is unchallengeable. Southwest Airlines continues to witness healthy unit growth, the analyst says. The EPS estimate for 2005 has been reduced from $0.75 to $0.70 to reflect high fuel prices and a deceleration in the company's capacity growth. Owing to the company’s economic strategy the company gains the best income and is ready as no other company for the possible changes if the U.S. economy should decline. The company is constantly expanding their available seat mile capacity for the year by 4 to 5 percent in addition to all the changes given in the text above. Its strategy includes the predictions of possible risks and owing to this the company is ready not only for the change of fuel prices but also even for a terrorist assault in a better way than any other company, as Herbert D. Kelleher declared. The company’s positions on the share market is rather stable, the dividends amount per each share is 0.0045. One other way Southwest took to satisfy its clients was the equipment it uses. For instance it operates Boeing 737 jets, fleet has an average age of about 9.5 years, performance-enhancing Blended Winglets are being installed on the current and future fleet of 737-700s. Southwest's average passenger airfare is $87.67, and the average passenger trip length is about 759 miles. And finally, southwest has ranked number one in fewest customer complaints for the last 13 consecutive years as published in the department of transportation's air travel consumer report. A common trend it that a lot of the Southwest tips are nowadays used by other airlines, but nevertheless it is still on the top. And if a company is awarded the 2004 “Performance through people award” by the forum for people performance management and measurement that does mean whose regulators work most effectively and form a perfect environment for the company’s development.
It makes a difference; a real difference that makes people chose and trust Southwest Airlines. On one hand in a way it breaks the “rules” but on the other it forms new «rules», rules that are being used in the Southwest Airlines Empire. Or it would be better to say the “empire of difference”.

Bibliography:

• July 28, 2004 edition of "Spirit Magazine" by Southwest Airlines.
• “Nuts! Crazy Recipe for Business and Personal Success” by Kevin Freiberg and Jackie Freiberg/Broadway 1996.
• “The Southwest Airlines Way: Using the Power of Relationships to Achieve High Performance” by Joddy Hoffer Gittel /McGraw Hill 2003.
• “Flying for Peanuts: The ABCs of Flying Southwest Airlines” by Marty Thompson/Five Star 2004.