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Southwest airlines management case study
Airtran and southwest merger
Southwest airlines management case study
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The top management team of Southwest Airlines is listed below: Gary Kelly - Chairman of the Board of Directors and Chief Executive Officer
Aviation, business strategy and operational management experience
Held the VP of Finance and Director position at Lincoln National Corp. for taking on the role of Controller with SWA. Kelly carries an undergraduate degree in Accounting. Thomas Nealon - President
Information Technology, IT Strategy and Executive Management experience
Accountable for driving long-go technique and conveying improved concentration to advancement endeavors. Fosters the vitality that Southwest—acclaimed for its entrepreneurial soul and imaginative critical thinking—puts into creating inventive items, administrations, and procedures.
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Romo holds a B.B.A. in Accounting. Michael G. Van de Ven - Chief Operating Officer
Project Management, Executive Management and Auditor experience
Responsible for all operating departments at Southwest Airlines, including Ground Operations; Inflight and Provisioning; Flight Operations; Maintenance and Engineering; Flight Dispatch; and Safety, FAA Airport Security and Environmental Services. Van de Ven is a Certified Public Accountant and has a B. S. in Business Administration. Robert Jordan - Chief Commercial Officer, Executive Vice President
Commercial Aviation, Revenue Analysis and Enterprise Software experience
Provides executive leadership of Marketing, Revenue Management, Network Planning, Corporate and Strategic Planning, and the Customer Experience. Closed the $3.4B deal to acquire AirTran Airways. Holds a B.S. in Computer Science and an MBA. Arthur Jeff Lamb - EVP Corporate Services
Leadership Development, Acquisition Integration and HR
Southwest Airlines is one of the most successful airlines in the United States. There has never been layoffs or strikes in the history of the company, although there were several times when layoffs could have been justified, including the months following the September 11, 2001 terrorist attacks. However, Southwest's Mission statement says “Above all, Employees will be provided the same concern, respect, and caring attitude within the organization that they are expected to share externally with every Southwest Customer.” (Southwest, 1988). The Airline has always believed that their corporate culture is one of the keys to their success. The culture recognizes that employees have emotional intelligence and that their attitudes and morale are key to the teamwork and creative environment.
As the project management triangle states, “do you want something done good, cheap, or fast?. Pick two!” That had been the constraints applied to many businesses until the launch of Southwest airlines in the mid 1960’s. Southwest managed to break free of the management triangle and offer safe (good), low cost (cheap), and timely (fast) air service in Texas and eventually across the United States. From the beginning, the company’s staff and management shared these goals, and developed a foundation on which to build the business. Visionary leaders Rollin King, Herb Kelleher, Colleen Barrett and other early leaders at Southwest, proved that there is no more competitive advantage than a dedicated, loyal work force. Her Kelleher’s transformational leadership style was just what the new airline needed to be successful, and motivate the staff of SWA to do what no other airline had done before: offer cheap, short distance, no frills air service, and make a profit doing it.
Southwest airlines is one of the most widely respected companies among those profiled by Firms of Endearment. They are recognized for having one of the best corporate cultures, which is emphatically encouraged from the top down. Southwest’s model clearly exemplifies the concept of servant leadership, and we will elaborate on how this creates a firm of endearment.
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
Current Issues Despite Southwest’s long standing reputation as an employer who makes their employees and customers happy, there have been storms brewing in the company’s labor relations and customer relations sector. As mentioned before, Southwest recently acquired AirTran Airways and revealed plans to take its already successful domestic business international with flights to Mexico and the Caribbean (Martin, 2014). This organizational restructuring is causing Southwest to have what Time Magazine’s Brad Tuttle calls an “identity crisis” for the airline, whose new advertisements have removed the humor they are famous for and the messages of “bags fly free” from commercials. Bob Jordan, a Southwest executive, described the change as a new era for Southwest and a chance for consumers to see them in a brand new light.
Southwest Airlines employees are its biggest strength. Their hiring process strictly ensures that only the best candidates are hired. Training is necessary to sharpen the skills of these employees. Its low cost approach is also a major strength as it attracts more clients. Staff members need to be trained to improve efficiency so that the company can remain profitable even after charg such low prices. Finally, Southwest Airline only purchases Boeing airplanes to keep the repair costs at minimum. This is also a significant strength (Gittell,
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...
“Our people are our single greatest strength and most enduring long-term competitive advantage,” reports CEO Gary Kelly on the Southwest Airline website (https://www.southwest.com/html/about-southwest). The company works hard to hire great individuals and then rewards and supports them to make satisfied, productive employees (Ross & Beath, 2007). In fact, Southwest Airlines has received repeated recognition as a great place to work (“Southwest Corporate Fact Sheet,” n.d.). As a result, Southwest Airlines is able to provide a low-cost, fun-cultured experience with excellent customer service (Ross & Beath, 2007). This has allowed the company to build its final strength in this evaluation: a strong brand
§ Herbert (Herb) D. Kelleher: Chairman of the Board, Chairman of the Executive Committee, former CEO and co-founder of Southwest Airlines
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.
Southwest Airlines is also well-known for having a very productive and loyal workforce. Such loyalty and productivity among the employees were brought by the way Southwest’s management treats them. As they say, the employees are willing to work hard for the company because they feel appreciated by the top management. Southwest maintains good employee relations because what they believe in is that if employees are happy, satisfied, dedicated, and energetic, they'll take real good care of the customers.
Southwest has comprehensive strategy and they work with harmony. They are low cost airlines which make the customer feel like royalty. Southwest have a winning strategy is proven by their profit year after year even thought they had economy crisis. Since 1973 Southwest reported a profit each year even when they lost billions of dollars from the year 1980 to 2009 because of the low operating cost strategy, low fares and customer service. Since the start of Southwest they have stay faithful of keeping low cost across the industry. Their value in corporate culture reflected through their prices and customer service.
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.
Southwest has an organizational culture that is obsessed with putting people first. Dave Ridley, Senior Advisor to the CEO, states that “the only way to consistently deliver remarkable service on the front line is if your people are being treated in a manner that reflects how you want them to treat the external customer. Southwest considers its employees as internal Customers - and their wellbeing is valued equally or even more than the external customer” (Peel, n.d., para. 3). Therefore, Southwest places much effort into recruiting and hiring the right people.