Southwest Airlines Co. – 2007 Case Analysis On the brink of airlines’ market share battlefield, many of the companies failed to launch new strategies and price controls because of fuel prices, market requirements and safety issues. Along with the history of low price policy that Southwest Airlines started to implement decades ago, the recent challenges and soaring competitive behaviors made that company pass huge obstacles. Southwest Airlines manifested the new growth in Texas air carrier businesses and located itself on the top of carriers’ prime ranking (Southwest Airlines).
In this case the concept will be depicted and insights made on that topic. This will be done by starting with the organizational structure of that corporation and classifying many aspects of the entire growth and the difficulties of Southwest ending up with chartings and contribution graphics of company’s activities done last years. By analyzing all the consequences and in-depth research of the financial, hierarchical and structural management of Southwest Airlines, many decisional revelations will be discovered and exposed thoroughly.
Theoretically, all the targeted issues that could evolve all the strategic workouts of that company cannot bypass the key solutions without highlighted marks. Southwest Airlines should be more decentralized organization Nowadays, all companies are taking a strategic view on whether or not to decentralize or centralize, and which system is more eligible for them. Centralization of organization is the strategy of assigning and transferring decision-making authority and ability to higher levels. On the contrary, decentralization is the transferring of the latter to the lower levels (Adampieniazek).
The first challenge started by an air carrier’s investment adviser, Rollin King, who firmly offered the flight between three big metropolis cities in Texas. Rollin King convinced the organization’s supreme board that by achieving this goal of consequent enlargement of flights in different cities by low-flight-fare strategy, Southwest Airlines can compete against the giant air carriers. Considering that his position was not high enough for typical centralized “bureaucratic” organization, the decision-making allowance and admittance by the board can be pledged to be in a decentralized shape.
In this occasion, launching the new flights took start and year by year increased Southwest’s revenues, opening the broad business opportunity emerged new challenges with other air giants. King’s foreseen assumptions and predictions over the future were profitable to the company his assumptions helped the financial statements annually. The company has had a team spirit approach accumulated throughout the years. The reason for this is the company believes that employees are first, not the customers.
Their high efficient labor is objectively being evaluated and participation in decision-making is important. By halting the renovation processes of its headquarter building and delaying to buy new aircrafts Southwest kept all its employees including all benefits, and salaries. From an ethical point of view, the company’s management obtained a huge reputation and respect by its employees and labor organizations. Despite the 20 percent job loss since 2001 in U. S. Airline industry, Southwest kept employing 32,000 employees during any type of difficulties occurred during last couple of years.
Making an effort to satisfy customers with low-cost, high efficient and fair quality is one of the Southwest’s main aims. Meanwhile, the have to bear all competitors’ market games and dumping. As a result, air carrier takes care of its precious quantity portion of customers: both permanently and temporarily. Core values and mission statement A mission statement is a statement of main core values, purposes, responsibilities of the organizations. Mission statement, is also an opportunity to characterize the company: who the company is, what the company does, what is it stands for, and why they are doing it.
For the company, core values are the values which inform the company on how to reward, guide in making decisions and business processes, as well as, mission statement clarify who the company. They also help to explain why the companies do business the way they do (Southwest Airlines). Expressing the mission statement of Southwest Airlines can preliminarily clarify this company’s mission outlined showoff. The company is aimed to offer their workers a progressive environment in their work with satisfactory prospect for experiencing and growth.
Adding to that, innovation and creativity are encompassed for empowering the efficiency of the company. All workers are assured to be treated with the same respect, attitude and concern inside the company. Southwest protected its entire internal strategy in a consecutive order. By keeping almost all the operations aboard despite both company-wide and market-wide financial turndown, Southwest Airlines guaranteed its service enlargement mission for future, even though annual income decreased from 548 mn to 499 mn as of years 2005 and 2006.
By handling overall services, Southwest Airlines broadened its operations; accompanying other cities of different states, they derive new goals from their general missions periodically and expand their travelers annually. Continuous enhancements in customer service and relations are always a prime goal of Southwest that is seen in their mission statement (Southwest Airlines). Propose and organizational chart The company gives authority to employees to participate in decision-making. So it turns on that Southwest Airlines is far from centralized structure.
Centralized structure is the bureaucratic and all the strategic and organizational issues are solved on the top rank. Therefore, decentralized structured organization then the most befitting organization chart. On the top of the hierarchy is the CEO of Southwest Airlines Gary Kelly. From the hierarchical point of view, Southwest as an organization divided all duties proportionately, from tip to toe, starting from CEO, subordinates, and employees. Considering its decentralized hierarchy, the CEO has two levels of dependants.
Inflight and Provisioning Manager controls and maintains all flights, both departures and arrivals from and to the airports. All the law issues, statements, updates and upcoming public affairs are the prime duty of Law, Airports, and Public Affairs Manager. Including both Public Relations and Community Affairs, Customer Relations and Rapid Rewards are subdivisions of Corporate Communications Deputy Management. The Strategy and Planning Department is responsible for all the future strategies, major corporate planning decisions and projects.
Vice President of General Counsel is head lawyer of the Southwest Airlines. Purchasing (spare parts, air catering, disposal, airplanes etc. ) department is the main branch of Strategy & Planning Department. Recommended Solutions Gradually, keeping its position of low-priced and reliable partner, Southwest Airlines can not only dominate in major cities but it can also expand its target market. For this purpose the company should undock its low-priced policy and revise its state-wide flights.
The historical motto of this air carrier is the strategy which is mentioned above. Basically, locating these criteria on board and step-by-step implementing innovative methods for current air carriers’ principals can commonly guarantee its rising reputation and revenues. If company ignores the optimal structured organizational chart then the another option can only be centralized, which does not offer bright perspectives for during the future of the company, as well as, its difficult times, especially when multiple decisions needed.
In conclusion, Southwest Airlines, during this economically tied situation, can handle all the financial and corporate difficulties. Southwest Airlines can also hold almost all of its employees in the company and deliver the vital principle throughout its short history. After making thorough research about both the structural and organizational values of the company, it should be mentioned that after a long trail of on-market activities Southwest proved itself both financially and organizationally.