Strategic Management - South West Airlines - Research Paper Example

Strategic Management Introduction South West Airlines is one among the popular and prominent airlines in America.South west airline was founded in the year 1971 by Herb Kellinger. From then it has been one of the most successful airlines in America. It has been declared as the third largest airline in the world. South west airline, well known for its cheaper fare, operates flights to almost all the states in America. The success of South west airline left others awe struck as it was the first airline to provide service at a much lower cost when compared to the other airlines. It became popular due to its reduced fare throughout the country. This created a wave of fear among the other airlines. South west airline continued to top the list of best airlines in America. The success story does not end with these factors. South west airline followed its own corporate culture that imposed certain policies and regulations. The case study aims at exploring the problems faced by the airline. It analyzes and provides a better option to improve the existing situation of the organization. The company that has been serving the people was voted the best airline of the year many a times. This was due to the dedicated service and continuous improvement in all the departments of the organization. (Dess, 2009) The company had the capability to manage any sort of problem and could resolve immediately with the help of highly qualified and trained professionals. Since airline industry involves a lot of risks, Kellinger made sure that none of the problems were left unattended. This added to the company’s status in the market and from then there was no looking back. The company improved at a very fast pace, and it was the most preferred airline among the Americans. This in turn motivated the employees to work in a better manner to serve the customers. Company’s Situation A company’s success and reputation is not only decided by its situation in market place. It is based on the company’s management plans and strategies that decide the place of the company in the market. Though the company has gone through various bad patches, it manages to place itself in the list of best airlines. It remains as the most profitable airline in the world. South west airline has faced many problems during the last few years. The fluctuation in the price of the fuel drastically affected the airline industry. (Hill, 2008) South west airline followed unique set of principles and strategies that help them during crisis. One among them is the idea of purchasing fuel well in advance and storing it for future use. This helped them overcome the price fluctuations wisely. In spite of the various problems, the company has strived hard to maintain its position in the international market by adapting certain new policies. When compared to the past, the competition in the airline industry has increased. With many airlines coming up with different subsidized rates, it became difficult for South west to attract customers like before. Problems The situation completely changed when many airlines announced cheaper fares and this acted as a great disadvantage to South west airline. Though the company tried its best to compete with them, it could not fare well. There are various problems which the company needs to concentrate and resolve, failing of which may lead to severe consequences. The airline must propose strategies to cope with the situation and also to overcome these problems. One of the major problems is the price range of each ticket. From the time South west was established, it provided the customers with the best and cheaper price when compared to the other airlines. People did not have a second thought while selecting South west airlines. The launch of new airlines that provided the same service at a much lesser fare made a startling twist to those conceptions. South west had a tough time in coping up with the situation. The major problem was the introduction of these airlines as their fare was comparatively less than South west airline. South west had to increase the number of flights and make certain canny arrangements to match with the new airlines, Alaska and United. (Hunger, 2010) Due to this competition the number of flights that connected the various states in America drastically increased. Another problem is the hike in price of the fuel. The fluctuation in the price of the fuel has been in the country for quite some time, but the sudden increase in the price was not expected. The company must incorporate strategies to overcome this situation. The next problem is the sudden increase in the fare of certain tickets in the past one year. The company has increased the fare of tickets almost five to six times in the last two years. This created a down trend in the growth of the company. The next problem is the way in which South West handles seat allotment in the flights. South west is the only airline that does not allocate the seats for the passengers. The passengers can select their seats once they board their flight. This has been creating problems to elderly passengers who find it difficult to find a seat if they arrive in the last minute of the travel. These are the problems faced by the company and it has to adopt certain strategies and policies to overcome this problematic situation. Analysis Analysis is the main step in realizing and resolving the existing problems. Analyzing helps an organization to find out the problems and it makes the process of problem solving easier. The first step in analysis is to approach the customers to know their opinion on South west airline and its operations. This will help the organization to modify themselves according to the requirements of the customer. Since these types of industries rely more on customers, it is better to begin the process with customers. The feedbacks from the customers are collected and recorded. This enables the organization to make necessary changes to improve the existing situation. Analysis includes the study of the company’s policies, mission and vision. (Gimbel, 2005) This eases the process of problem solving as the company’s major advantages can be clearly understood. This can be done by analyzing the organization’s profit and loss statements, policy papers and other essential documents. The next problem is to modify the seating arrangement plans, and this can be done with the help of a proper management plan. Strategic management involves implementation of various plans according to a pre defined manner. This enables an organization to improve its standards there by resolving the existing issues. Though the open seating arrangement is popular among the passengers, it poses certain disadvantages to the people who arrive late. To identify a solution for this problem, a customer survey can be conducted. This would certainly help on knowing the customer’s idea and reaction to such a plan. The next is the issue due to price hike in the fuel. To analyze this problem, the airline must conduct a thorough study on its historic reports. The previous reports regarding fuel consumption will help the management to have a clear idea about the fuel consumed every year or quarter. This would enable the organization to arrive at a conclusion for this prevailing problem. The increase in the fare has been in the books for a period of two years. The company had to modify its policies and patterns due to the introduction of new airlines that provided the same service at a much lower cost. During that period, South west considerably reduced its fare and this resulted in various other financial issues. Due to this factor, the company had to increase the fare of the tickets. The organization must analyze the reason for such problems and must ensure that it retain its customers. Another major problem is the seating arrangement for overweight passengers. This problem has been prevailing for a long time, and the company has not made any alternate arrangements for the passengers. This has led to various other issues and the passengers go through a tough time when they travel through South west airline. The organization must act according to the situation to make sure that it satisfies the requirements of the passengers. Organizational polices play a major role in the development and growth of an organization. The policies must be designed in such a way that the issues of an organization are attended immediately to resolve the problems that occurs in an organization. Strategic management involves basic planning and analysis that assists in maintaining the company’s reputation by building customer satisfaction. The performance results must be evaluated to make sure that the company follows its policies and predefined models. Analysis cannot be done overnight and it requires proper planning and execution. Analysis can be performed with the help of analysis tools like SWOT and pest. These tools simplify the procedure of analysis thereby improving the current situation of an organization. Pros and Cons of Alternatives Every solution or an alternative will have its own advantage and disadvantages. The nature of the company and the problem are the major factors to decide onthe type of alternative. The idea of implementing a new mechanism for the seating arrangement of passengers purely lies on the company’s policies. Since it has been maintaining this method for more than 35 years, it would be difficult for the organization to fit into such novel methods. Hence the current method was popular among the passengers; the alternative must be to maintain this method by making minor changes to the existing procedure. The passengers must be allowed to select their seats at the time ofbooking their tickets. This will minimize the confusion that occurs during the travel. The airline must allot certain amount of seats for the elderly and disabled. This in turn will ease the process of allotting a set of their preference. (Hunger, 2010) The major drawback in this alternative is, the passengers who book their tickets well in advance have more option than the ones who book their ticket the last minute. Since it is a first come first served basis, all the passengers cannot get the seats they require. Though this seems to be a problem, it can be ignored considering the priority of the prevailing issues. Action Recommendations The next alternative to tackle the price hike of fuel is to store the fuel in large quantities as the company used to do before. Though this does not provide a permanent solution to the existing problem, this will enable the company to proceed with its normal operation for a certain period of time. Since the price of fuel keeps fluctuating, the company cannot decide on measures that would yield a profit to the company. This alternative is not much advantageous in terms of the financial aspects. To overcome the problems in deciding on the ticket fare, the company must analyze the financial stand of the organization. These commitments are the major causes of concern as based on this only the company can decide about fixing the price for a ticket. The company must also analyze its competitors and their tactic of keeping low fares. South west happened to be the only airline that could provide tickets at lower rates. Due to the introduction of these new airlines the price has not been stable and there has been a change in their fares for the past two years. The main reason for an increase in the fare is due to the rise in the price of fuel. The sudden rise of fuel led to the increase in the air ticket fare. The company could not manage with the increasing fuel price, and hence it increased the ticket fare more than five to six times in the last two years. Conclusion The case study analyses the problem prevailing in South west airlines. This study analyses and evaluates the organization’s current situation and provides various plans to improve the situation. The company’s management must implement strategies that help them in building a better organization. This helps in maintaining the reputation of the organization. The problems are analyzed and various alternatives are provided. This is achieved using the analytical tools and core concepts. The financial means and resource capabilities of the organization are the main factors that decide the deployment and implementation of the proposed alternatives. The action recommendations will certainly resolve the problems and improve the organization’s reputation. Works Cited Dess, Gregory. Strategic Management: Creating Competitive Advantages. U.S.A: McGraw Hill, 2009. Print. Hill, Charles. Essentials of Strategic Management. U.S.A: South-Western Cengage Learning, 2008. Print. Hunger, David. Essentials of Strategic Management. U.K: Pearson Education, 2010. Print. Gimbel, Barney. “South West’s New Flight Plan”. 16 May 2005: 151.10. ProQuest. Web. 31October 2010. Serwer, Andy. “South West Airlines: The Hottest Thing in the Sky”. 8 March 2004. 149.5. ProQuest. Web 31 October 2010. Read More