Strategic Management - Southwest Airlines - Essay Example

MGT599 - Strategic Management, Mod 5 SLP Table of Contents Table of Contents 2 0 Southwest Airlines 3 2.0 Organizational Structure 4 3.0 Systems 5 4.0 People 6 5.0 Culture 7 6.0 Conclusion 8 References 9 1.0 Southwest Airlines Southwest Airlines Co is an US based public company headquartered at Dallas, Texas. It was founded in the year 1967. Originally it was known as Air Southwest. Later it was renamed as Southwest Airlines and commenced its business operations in the year 1971. The shares of the company are traded in the New York Stock Exchange (NYSE) with the ticker symbol “LUV”. Southwest Airlines is engaged in the business of providing scheduled transportation for its customers through air in the United States. It started its business operations with three of the Boeing 737 aircraft which served the three cities in Texas namely, Dallas, San Antonio and Houston. It managed to expand its business on a large scale mainly due to its acquisition of AirTran Holdings in the year 2011 and as at December 31, 2011 the company operated a total of 698 aircrafts that includes 88 Boeing 7171s and 610 Boeing 737s. AirTran Airways is now operated as one of the wholly owned subsidiaries of Southwest Airlines. The company is regarded to be one of the lowest fare domestic airlines in United States and is committed towards providing best Customer Services in the airlines industry. 2.0 Organizational Structure Organizational structure of the company can be elaborated in the following manner (Southwest-Airlines, 2012). The company encourages employees to express individual ideas to improve performance of the company. Employees are treated as greatest asset for the company and they have the independence to present their feedback in front of management of the company. The company encourages employees to compete against each other to meet performance standard but the competition level is always maintained as a healthy practice to develop personal skills. Although the organization structure works in a centralized manner but communication line follows both top vertical and horizontal approach. Organizational hierarchy of the organization has minimum number of layers to decrease the time for communication process. For example, flight attendants clean the flight themselves in order to save money and time. It is evident from the above mentioned organization structure that vice presidents report to their respective senior vice presidents and senior vice presidents report to CEO of the company. Multiple roles playing by individual employee is the specialty of the company. The company gives importance on creating separate task force for various activities. They use guidelines for employees to perform daily work and work schedule is prepared according to the requirement. For example, top managers of the company perform as ticket agents, reservation agents or cabin crew member once in every quarter. Flexibility in work responsibility acts as a key issue to decide success of Southwest Airlines (Bunz & Maes, 1998). 3.0 Systems The company uses clarity system to measure corporate performance. They use Clarity software for corporate planning, financial budgeting. Previously they use Microsoft Excel application for financial management reporting but the application can’t be operated in web based platform and at that time it was need of the hour. They have integrated web based excel application of Clarity software with the existing Hyperion Essbase for financial budgeting. The company has turnover beyond $9 billion. They plan budget on annual basis and crush report is prepared on for each quarter. They give importance on five things during performance management, 1- annual financial performance of the company, 2- operational activity and customer service, 3- productivity of staffs, 4- application of information technology to create competitive edge over other competitors (Dssresources, 2007). 4.0 People According to the CEO of the company, employees are their biggest asset and they try to do whatever they can to take care of their employees. Employee attrition rate of the company is lowest in the industry. The company uses the concept of employee empowerment to motivate them to perform better. Job flexibility aspect of the company is already described in organizational section. The company prefers to hire experienced candidate having the attitude to cope with multi functional work environment. Employee empowerment concept of the company can be analyzed from four different points of view. • The process helps the company to motivate employees to perform efficiently in daily work • They tries to create an amicable environment of knowledge sharing, equal power sharing among employees. • Top management tries to create a flexible work force in terms of assigning multidimensional tasks to them, creating value delivery frame work for employees. • Senior executives try to implement self actualization concept among employees by empowering them. They try to create a skill society among employees (Gittell, 2005, p. 6-10). 5.0 Culture Cultural value of the company is driven by the top level management. They communicate the vision statement to employees not by giving speech but by setting practical example for them. Top management shares great bonding with employees. Top managers of the company perform as lower level employee once in a quarter and they also shares their practical work experience with employees to motivate understand work culture of the company. The company follows customer oriented culture which makes them as major force in the airline industry. Employees share profit of the company and that makes them responsible for their action. Ownership attitude of employees help them to perform well on daily basis (Jackson, Schuler, & Werner, 2011, p. 12). 6.0 Conclusion Market capitalization of the company has increased in last twenty year due to their superior customer service and efficient work culture. They have achieved gung ho over competitors due to their excellent organizational value system. Comparative analysis for market capitalization of the company is given in the following diagram. (Source: Gittell, 2005, p. 4) References Bunz, U. K., & Maes, J. D. (1998). Learning excellence: Southwest Airlines’ Approach. Retrieved from http://bunz.comm.fsu.edu/southwest.pdf. Dssresources. (2007). Southwest Airlines selects Clarity Systems to optimize corporate performance management. Retrieved from http://dssresources.com/news/2004.php. Gittell, J. H. (2005). The Southwest Airlines Way. New York City: McGraw-Hill Professional. Jackson, S. E., Schuler, R. S., & Werner, S. (2011). Managing Human Resources. Stamford, Connecticut: Cengage Learning. Southwest-Airlines. (2012). The Official Board. Retrieved from http://www.theofficialboard.com/org-chart/southwest-airlines. Read More