Final answer:
Southwest Airlines is conducting a profit pool analysis step of estimating the size of the value-chain activity. In this step, the airline evaluates the impact of videoconferencing on its business travel segment by comparing costs, including opportunity costs, against potential benefits through cost/benefit analysis tools.
Step-by-step explanation:
If Southwest Airlines is considering the consequences of videoconferencing on business travel, it is in the process of cost/benefit analysis, particularly assessing the value-chain activity within its profit pool. This step involves the third option, which is estimating the size of the value-chain activity in the pool. During this step, the company would analyze the potential impact of videoconferencing on its core business activities, evaluating how this technology may affect demand for business travel and thus, the revenue generated from this segment. Costs such as opportunity cost of losing business customers to virtual meetings and the potential cost of investing in adaptations to their service offerings should also be considered.
As business responds to both technological advancement and market changes, it has to employ mathematical models to estimate costs and benefits of different scenarios. For instance, should the airline decide to pivot and offer enhanced connectivity for in-flight videoconferencing, the costs of implementation, operation, and maintenance need to be weighed against potential benefits such as customer retention and attraction of a new customer segment.
Cost/benefit analysis is a prevalent practice not only in business decisions but also in other domains such as voters deciding on public matters or organizations planning team-building events, where they evaluate both direct costs and opportunity costs against expected benefits.