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Essay / Research Paper Abstract
This 4 page paper looks at Southwest Airlines to assess the share value. The paper starts by looking at the firm in its environment and its strategy to assess current performance and its' potential future performance. The share price is then assessed using CAPM and the dividend discount model before making a recommendation. The bibliography cites 9 sources.
Page Count:
4 pages (~225 words per page)
File: TS65_TESWcapm.doc
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Unformatted sample text from the term paper:
share which will give them potential for a good return. To determine that potential the investor may consider the background to the company, their strategy and their lifecycle position, as
well as competitive influences from the macro environment in order to determine the way they believe the for, will perform financially in the future. In addition to this there are
a number of models which may be used to assess the value of the share and give a logical price. The different models wile result in different outcomes, and despite
the underlying logical approach of the model, the environment and firm performance has too many variables for these models to give a definitive answer. However, they may still provide a
framework to increase knowledge and aid with decision making. The different inputs and process may be discussed by looking more closely at Southwest Airlines. Southwest Airlines was founded
in 1967, the airline was able to gain a significant first mover advantage as the developer of the low cost carrier model. The approach of the airline combines the provision
of low costs supported by a high level of const control and strategies that enhance employee productivity with a high level of customer service (Southwest, 2012). The firm has been
highly regarded by investor due to the strong financial results that have been well above the average airline. The firm did not face looses when many airlines struggled in 2001
following the 9/11 terrorist attacks, with the firm posting 33 consecutive years of profit before facing a single year of loss in 2006 and then returning to profit ever since
(Southwest Airlines, 2006, 2011). 2006 was a difficult year for many airlines due to increasing fuel costs, and many made losses (Southwest, 2012). Today the firm remains successful, the current
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