Case Study 2 Southwest Airlines 2011
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Case Study 2 Southwest Airlines 2011
Southwest Airlines is one of the most popular and successful companies in the United States. The company has experienced continued profits in the airline industry before the onset of the 2008 economic crisis that hit most countries. The main issues identified in the case involved operational factors that saw the sluggish nature of the airline to resurface on the market. The downfall involved incompetence in the management of the company by failing to control the mergers with major companies such as that with AirTran (Inkpen et al., 2002). Southwest Airlines failed to understand the conditions associated with mergers such as increased operational costs.
In this case, the need to employ more airline crew implied that the company had failed to consider such elements of the merger. One of the major indicators present in 1978 was the passing of the deregulation act that saw the entry of more airline companies into the market with reduced airline costs (Inkpen et al., 2002). With the emergence of other airlines, the scope of competition expanded as the demand for air services was elevated. The cost and route structure of the airline changed warranting a revision of the future implications and the possibility of losses. Moreover, inflation affected the wages of the airline employees as other companies encountered bankruptcy issues.
The problems presented in the case of Southwest Airlines prove to be relevant in a broad perspective in business. For instance, the airline managers failed to understand the concept of contingency and systems theory. Contingency theories allow managers to make decisions based on the most important aspects of the issue (Drazin & Van de Ven, 1985). In this case, before engaging in the merger, the managers could have evaluated each aspect allocating resources and workforce. Based on the systems theory, the company failed to concentrate on the competitive nature of any emergent company in the industry. To counter the competitive nature, the airline could have reorganized its operational systems, an area that could be improved to accrue more from the business operations.
The Southwest Airlines condition may be enhanced through defining various action alternatives based on the performance of the company. Considering that the management plays a major role in actualizing the business procedures and systems, the alternatives will focus on improving operations at this level. Action options for the success of the company need to correspond to the strengths, weaknesses, opportunities, and threats. Arguably, the feasibility of the option is an important aspect of consideration (Ireland, Hoskisson & Hitt, 2006). The company has experienced a reduced rate of growth and development that tends to affect their increase in profits. Therefore, an implementation strategy that seeks to shuffle the management of the company, expanding the market, cut down operation costs, and introduce new control measures proves to be an effective method of approach for Southwest Airlines.
Shuffling the management will involve choosing qualified and experienced management personnel that possesses leadership qualities and are able to focus on the success of the company investments. Expanding the Southwest Airline market may increase the operation costs and warrant the employment of more personnel but will increase the profits of the company as well as the growth rate. Introducing new operational measures will imply an improvement in the services offered that would allow the concentration of clients (Ireland, Hoskisson & Hitt, 2006). Cutting down operation overheads will reflect an increase in the net profits as well as a revision of the cost strategy.
Southwest
Airlines can delegate a team to follow through the alternative plan
highlighting the conditions and deadlines to be
met. Additionally, the firm can employ modern technology in assessing
the feasibility of the action alternatives. The case of Southwest Airlines provides companies with the
opportunity to learn from the issues that were present relating them to their
business procedures.
References
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Drazin, R., & Van de Ven, A. H. (1985). Alternative forms of fit in contingency theory. Administrative science quarterly, 514-539.
Inkpen, A. C., DeGroot, V., Wagner, A., & Tan, C. W. (2002). Southwest Airlines 2002. Thunderbird, The American Graduate School of International Management.
Ireland, R. D., Hoskisson, R. E., & Hitt, M. A. (2006). Understanding business strategy: Concepts and cases. Mason, OH: Thomson Higher Education.
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