Macro-Environment of Southwest Airlines (Revised Text)

Economic Environment: encompasses all factors that have a direct effect on GDP, unemployment, inflation, interest rates, and exchange rates (Gimbert 48). The most fundamental are; fuel prices, and the effect of economic cycles. Economic downturns brought about by such factors as the 2007 financial crisis and the September 2011 tragedy drive airline customers across the U.S. To cut down on personal expenditure. The company, as a result, faces lower levels of air ticket demand, although the levels of customer expectations remain unchanged.

World fuel prices are quite unstable. Southwest Airlines largely depends on fuel; as a matter of fact, fuel costs account for almost half of Airline companies' operational expenses. An increase in the price of fuel impacts negatively on profitability; the company may not consider raising its air fares, so as to protect its excellent-service-at-low-cost reputation.

Political and Legal Factors: federal, state and...
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