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Business Analysis of Southwest Airlines Corporation - Essay Example

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Cost-benefit analysis refers to the evaluation of the advantage and the cost incurrence in undertaking a given project. It helps in decision making, since if the cost is found to be more than the benefits, then it is not worth investing in the project and vice versa. …
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Business Analysis of Southwest Airlines Corporation
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Download file to see previous pages While tangible costs can be indentified directly with a certain project and can be quantified, for example, by the cost of an asset, intangible costs are those that cannot be identified with any particular project, and their nature is not quantifiable, for example, by the value of goodwill in a business. 2) I was forced to decide on whether to enroll for a Master’s program or to take up a job. I sought the motivations behind each decision. In a scale of 1-4, where 1 represents the least important, 2 - important, 3 - more important and 4 represents the most important, I graded the motivation behind my selecting either of the alternatives. I finally decided to take up a job first and enroll for Master’s program at a later date, since there was a higher motivation towards taking a job as compared to Enrolling for Master’s program. Financial reasons Family Viewpoint Personal objectives Social considerations Total scores Enroll for Masters 1 3 2 4 10 Take a job 4 1 4 3 12 Executive Summary This paper is a study of challenges facing Southwest Airlines Co., an airline company based in Dallas, USA. The paper starts by introducing the company which was established in 1961. It has employed 33,000 employees since then. The Airline makes 3,300 flights a day to 72 destinations in 37 states of the USA (Larry). The mission of the company is to provide the best quality services to its customers with a spirit of friendship and respect. It also serves to provide its employees with a steady and conducive working environment. Though it is ranked as the best performing Airline Company within the framework of domestic passenger travels in the USA, the company experiences some challenges that are the basis of this study. The symptoms of these challenges which face the company today include loss of profits, retarded growth rate, cutting down in flights and a decrease in the share value of the company (Ragland, 1990). To accomplish this study, a problem statement was designed to guide the research undertaken. The problem statement is the following: many analysts see the slumping of the fuel prices as the only cause of the Airlines’ great profit loss. However, they do not take into consideration how the general weakening of the global economy contributed to this scenario (Libby, 1998). Without such considerations the whole phenomena will never be fully understood. Slumping of the oil prices and the general weakening of the global economy are factors worth consideration in demystifying this occurrence (Bailey, 2011). The study is narrowed down to focus on the root causes of the loss in profits of the company. The root causes were found to be the plunging of the global fuel prices because of a general weakening of the global economy. The abovementioned causes resulted in increased operation costs of the company and a reduction in the customer base of the company. As a measure of averting these challenges the study recommends an increased funding of the operations of the company to serve its customers as before and retain their goodwill. A merger or acquisition is also recommended to strengthen the resource base of the company. However, it is feared that this might lead to the loss of identity by the company and a dilution of its customer focused value system (Libby, 1998). The recommendations can be implemented through selecting a company that has similar value system to merge with this company. A flexible fuel hedge program should also be established to eliminate the risks associated with global oil price fluctuations. The success of such recommendations can be measured on a quarterly basis, applying the customer base growth and the increase in revenues of the ...Download file to see next pagesRead More
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