SWOT Analysis
Through a SWOT analysis of its operations, Southwest Airlines can have a better understanding of its internal strength and weaknesses, as well as key opportunities that can be used for growth and threats that the company currently faces. Through an analysis of the strengths of the company, management can identify can factors that can be used to stimulate growth in the company. Key strengths of the company, such as the large market share controlled by the company, the positive cash flows received by the company and low operating costs can, for example, be used as a basis for the growth of the company. The analysis of weaknesses can be used to find areas of the company’s operations that may need changes if long term goals are to be achieved. An analysis of the opportunities the company has can enable management to identify effective methods that can be used by the company to create value and attain growth in the long term. The analysis of key threats facing the company, on the other hand, can aid in the design of a risk management strategy that covers all the operations of the company.
BCG Matrix
The BCG matrix can be used to analyze the different divisions and areas of operation of the company and identify ones that are likely to grow in the future. The BCG analysis focuses on the individual division of a company or products and services that are part of its product mix. An analysis of the growth prospects and market share of the division or product is then made, after which each product can be tanked based on its likely growth rate and market share (Jurevicius, 2013). Dogs are products or divisions that have limited growth potential and also have a low market share. Question marks are products with a low market share but are likely to record high growth in the future. Stars are products that are likely to grow exponentially in the future and have a large market share. Cash cows, on the other hand, are products with a high market, but with limited growth potential. Through a BCG analysis, the company can be able to identify divisions that are likely to record high growth in the future and increase the market share controlled by the company.
The IE Matrix
The internal, external analysis is used to analyze the different divisions of a company to identify the most profitable ones that the company should invest in. The internal and external factors that affect the operations of an entity are analyzed in detail in terms of how they are likely to affect the success of the different divisions operated by a company. Weights are assigned for each internal and external factor that affects the operations of a company, which are then used to analyze to analyze the overall attractiveness of each division operated by a company to identify the most profitable (Rajak, 2020). An IE matrix can be effectively used by the company to evaluate competing options that the company intends to include in its strategy. Based on the analysis, the company can identify the most profitable divisions that will create the most value for the company. An IE analysis can also provide the company with information on key external and internal factors and how they are likely to affect the overall performance of the company.