Labor Relations This is an area where Southwest Airlines needs to focus more of their attention. Currently, Southwest Airlines, is approximately 85% unionized and the airline is trying to negotiate seven contracts concurrently. The ramp, operations and cargo unions have been working without a contract since 2011. The pilots and mechanics have not had a contract since 2012 and the flight attendants contract expired in 2013 (Leff, 2015). In a statement made by the president of Southwest Airlines’ Pilots Association, union representatives must do something while ongoing poor decisions are being made by management that are affecting our airlines passengers (Schlangenstein, 2016). Additionally, the union is also demanding the removal of CEO Gary …show more content…
Southwest Airlines has always proudly identified themselves as a low cost airline. They have successfully been able to incorporate Human Resource management, merger and acquisitions, financial performance and allocation of resources as part of their corporate strategy. When it comes to the meat and potatoes, Southwest Airlines has implemented a corporate value-creating strategy. Ultimately, because of this strategy, Southwest is surpassing its competitors and gaining a larger share of the market. Furthermore, this strategy is adding perceived value to its products and services by taking advantage of the economies of scope (Bradley, 2016). The airline’s business units can take advantage of their differentiation by lowering their cost structure. For example, Southwest Airlines 714 fleet consist of only one type of aircraft, the Boeing 737. The advantage of having one type of aircraft is extremely cost efficient as the airline only has to train mechanics to repair one type of aircraft and they only have to store parts for one type of aircraft therefore lowering overhead and human resources expenses which translates into lower fares to its passengers (Southwest, …show more content…
Southwest Airline’s ability to diversify, while limited, is still an option. When Southwest airlines first made its mark in the industry, it was a local carrier flying between Dallas, Houston and San Antonio. Today, Southwest fly’s internationally and is continually adding additional countries to its destination list. The introduction of its Amadeus Altéa reservations system is set to operate both the domestic and international bookings. The same competencies that helped establish Southwest Airlines in 1973, are being implemented today with its diversification and growth
The Organizational Structure of Southwest Airlines. One of the determining factors of the organizational behavior in an organizational structure. It includes several areas such as issues of authority and control, communication team, market and geographic structure, product division. Southwest Airlines determine all these areas and proved a strong competence in all issues. The SWA organizational structure is well-known for being functional. First of all, because their structure is multi-divisional, “each division in a multidivisional structure is essentially a different business. Moreover, the responsibility of each divisional manager is to design the divisional structure that best meets the needs of the products and customer of that division” (Jones, 2007, p. 155). The major positive aspect of such kind of structure is an increased organizational effectiveness and control. In this system, behavior is controlled through internal upward mobility. “A large divisional company possesses an internal labor market which increases managers’ motivation to increase organizational effectiveness” (Jones, 2007, p. 157). One more important issue in such type of structure is how to keep the customer’s happiness. The SWA coped with this question easily. They put the
Some speculate that this “new light” will not be positive for the airline; after all, one of the reasons Americans love Southwest is because it has always differed from other large and impersonal airlines, such as American Airlines and Delta. Southwest has always seemed like the underdog taking on the giant, overpriced competitors; now they seem to have hopped on board with the “big boys” of the airline industry. Another disturbing trend is that studies show Southwest’s fares have risen 39% over the last five years compared to a 10% rise in the rest of the industry, while Southwest still lets bags fly for free. There is some debate if that will be one of the items swept away in the airline’s big restructuring. Time will tell if Southwest’s top-notch customer service will still be enough to set them apart from other airlines, or if their new, “stiff” image will leave them with shaking heads and deficits on the balance sheet (Tuttle, 2013).
Another internal challenge for Southwest Airlines is the conflicting management style and business operation with AirTran. On top of that, the external challenges such as the increase of competitions and gas prices are some of issues f...
Southwest Airlines strategy of focusing on short haul passenger and providing rates as low as one third of their competitors, they have seen tremendous growth in the last decade. Market share for top city pairs on Southwest's schedule has reached 80% to 85%. Maintaining the largest fleet of 737's in the world and utilizing point-to-point versus the hub-and-spoke method of connection philosophy allowed Southwest to provide their service to more people at a lower cost. By putting the employee first, Southwest has found the key to success in the airline business. A happy worker is a more productive one as well as a better service provider. Southwest will continue to reserve their growth in the future by entering select markets only after careful market research.
Even though Southwest offers no-frills, there is still a high degree of customer satisfaction that continuously builds customer loyalty for the company. As mentioned, Southwest offers low prices on their airplane tickets. Also, Southwest is renowned in the airline industry for its short turnaround time on arrivals and departures. And since people's biggest concern nowadays is money and time, having low price airline tickets to cater their traveling needs in a shorter period of time will surely satisfy them. Moreover, aside from the low prices offered, what attracts to customers is Southwest’s way in dealing with them. The employees of the airline treat their customers well and really listen to their needs.
Southwest Airlines operates in the American domestic market. It is well known for its growth over the years. Its mission is the dedication to the customer service of the highest quality that is delivered with a sense of friendliness, company spirit, personal pride and warmth, (Inkpen & Degroot, 2). The airline industry had general environmental factors that do impact it is several ways within the market.
Southwest Airlines has been in business for more than thirty years. Presently, operating airplanes and flight services is very competitive, and in most cases, is not cost-effective industry; however, Southwest Airlines has been consistently profitable company, which is successfully designed with the intention of achieving high growth. According to an interview of Southwest Airlines former CEO, Herb Kelleher, when he visited Graduate School of Business at Stanford University, despite all airline industry challenges, the “low-fare airline has grown into the third largest in the world as measured by the number of passengers carried, and the largest with destinations exclusively in the United States” (2006). To the customers, Southwest Airlines is known by the low-fare service, short distance routes and high frequencies flights.
In a dysfunctional time for the airline industry, most airlines, especially major carriers, are adapting the concept of "doing less with more." One low-cost carrier, JetBlue, is changing the domestic aviation landscape in this regard and is defying the odds. Here is a company that has examined each marketing mix elements carefully, has adapted them to its customer’s needs, and is succeeding because of this approach.
The theoretical frameworks are Unitarist, Pluralist and Marxist/Radical which is proposed by Alan Fox in 1966. The employment relationship will be conceptualised by these theories so that these will improve the understanding of the concept of employment relationship within businesses. Although Unitarist, Pluralist and Radical/Marxist by Alan Fox are the most used theories, individualism and collectivism by Purcell in 1987 can also conceive the topic of employment relationship.
The low cost and no frills strategy is make travel affordable at low cost. The company only operates one type of aircraft which is Boeing 737 to help maintenance cost low. Southwest was the first airline to use E-ticketing in this way customer can reserve spot and buy ticket on their web and allow less expense in printing tickets. Medium measured airports which allowed them to produce better time performance and less fuel costs so plane do not have to wait in the line at the runway. The core value of the company of “LUV and fun” makes the company great place to work that gives customer with a great experience.
It all started in 1971, when Rolling King and Herb Kelleher decided to challenge the existing rut of charging high prices for air travels. They considered the railways and roadways their competitors and decided to offer cheaper travel for smaller routes. The company was incorporated in 1967, apart from initial entry troubles, Southwest has been the only US airline to have earned profits since 1973. The eccentric company’s outlandish way of conducting themselves has been the sole reason for Southwest Airlines to succeed in a highly competitive and packed industry.
The mission of Southwest Airlines is a dedication to the highest quality of service delivered with warmth, friendliness, individual pride, and company spirit (Mission…, 2007). The company also provides opportunities for learning and personal growth to each employee. Creativity and innovation is very important and highly encouraged, for the purposes of improving effectiveness. Employees are to be provided the same concern, respect, and caring attitude within the organization that the employees are expected to share with the customer. Southwest Airlines was initially created to be a low-cost alternative to high price of intra-Texas air carriers (Freiberg, 1996). Southwest’s fares were originally supposed to compete with car and bus transportation. It was a little airline, and it would withstand the test of time. As a discount, no-frills airline, it would provide stiff competition for larger airlines. Their strategy was to operate at low cost, offering no food, no movies, no first class, and no reserved seats. They created their own market and provided increased turnaround times at the gate, by avoiding hub-and-spoke airports and opting for short-haul, direct flights. Through this market approach, Southwest has a majority of market share in the markets they serve.
For the political environment, Southwest has faced harsh regulation. especially after the attacks of 9/11. Due to the increased security and discomfort by the TSA, Southwest has needed to adopt various ways to ensure customer comfort and accessibility to their flight.
...ustomer orientated companies, which it at Southwest. Feedback must be attained from customers and employees. Being focused on the customer is seen in Southwest’s emphasis on how employees make the experiences enjoyable for customers. This is a process of letting the employee interact with customers and then monitoring how the employee performs with customers. The Human resources department hires personnel on their fit with the Southwest culture. That is highly focused on the employee’s ability to satisfy the customer. The HR team looks for those who do things that are fun, to try to lighten up the environment. They try to find those who are helping other employees and encouraging them. Southwest’s HR team has a big responsibility in hiring the right individuals for the job. This task is very hard but if you’ve every flown Southwest you can see this process working.
airline in history to enjoy a twenty consecutive years of profitability. Many business scholars and strategic experts tend to argue that, Southwest “formula” for success boils down to cutting costs with their one type of plane model, cheap fares, and plenty of advertising. These are pretty easy and basic model that can be replicated and apply to another airline, one would think? However, all the airlines that try to adopt the low-cost model have failed. That’s because there is passion, enthusiastic, and high-spirited culture that offers the desire and tenacity with a sense of “Espirit de corps” for employees that’s the real secret to Southwest’s success. It is a clear fact that culture has everything to do with Southwest’s