Premium Essay

Southwest Airline Corporation

In: Business and Management

Submitted By maharanee
Words 1057
Pages 5
Chapter 3
Case Analysis of Management Control System
Southwest Airlines Corporation
Southwest Airlines actually could hit the company goal on achieving profitability for consecutive 32 times which is really good compared to others airlines corporations. The company could offer low cost fares to its customer mostly through website and also provides point to point flight majoring on short haul and medium flight. Besides, to ensure the organization reach company goals, the company put more effort on creating comfortable environment and culture for its employees. The company strategy is align with Anthony and Govindarajan (2005) statement about good management control system that is created to ensure that individual actions taken to achieve personal goals also to reach company goal.
Southwest believe that the employees are the fundamental factor on company sustainability. The major impact from above culture is that it can make the employees feel comfortable and happy to work. As the result customer can experience good services from happy employees and the customer possibility to come back again will getting higher. Further impact, it could increase shareholder profit because more and more customer will come to buy company products.
Southwest airlines focus on two strategies which are minimizing operating cost and employee management. It is because company prefer to use low cost to be company competitive advantages. Several actions done by Southwest to implement their strategies are based on the following points:
Use less congested airport. This action is part of minimizing operating cost. By using this strategy, southwest could minimize cost on higher landing fees because of slot reservation on peak period. In addition, in the busy period there are resource and equipment scarcity due to high level of resource usage. This condition could leads into many delay and…...

Similar Documents

Premium Essay

Southwest Airlines Corporation

...Case Analysis – Southwest Airlines Corporation Jerry Pierce California Southern University Case Analysis – Southwest Airlines Corporation Introduction Southwest Airlines is America’s largest low-fare carrier, serving the most domestic customers than any other airline due to their unique combination of low fares, friendly customer service, record of safety, lack of fees, and “an extraordinary corporate Culture that extends into the communities (they) serve.” (Southwest, 2013) Incorporated on June 18, 1971 in Texas, Southwest airlines commenced, serving three Texas cities with three Boeing 737 aircrafts under the direction of its’ founders, Rollin King and Herb Kelleher. Their philosophy was simple and consisted of an idea that getting passengers to their destinations when they wanted to get there, on time, at the lowest possible cost, “and make darn sure they have a good time doing it”, customers will show loyalty to the airline and ensure its success. (Southwest, 2013) Proof of the company’s success was confirmed in 1989 when it exceeded one billion dollars in revenue and established itself as the highest ranked in customer satisfaction among all major airlines. Analysis The mission statement of Southwest Airlines boasts a “dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.” (Southwest, 2013) Additionally, Southwest confirms a loyalty to its employees by creating a stable......

Words: 1292 - Pages: 6

Premium Essay

Southwest Airlines Corporation

...Southwest Airlines Corporation Southwest Airlines was incorporated in Texas and commenced Customer Service on June 18, 1971, with three Boeing 737 aircraft serving three Texas cities - Houston, Dallas, and San Antonio. Today, Southwest operates more than 500 Boeing 737 aircraft between 67 cities. Southwest topped the monthly domestic originating passenger rankings for the first time in May 2003. Yearend results for 2008 marked Southwest’s 36th consecutive year of profitability. Southwest became a major airline in 1989 when it exceeded the billion-dollar revenue mark. Southwest is the United States’ most successful low-fare, high frequency, point-to-point carrier. Southwest operates more than 3,300 flights a day coast-to-coast, making it the largest U.S. carrier based on domestic departures as of September 30, 2008. Since 1987, when the Department of Transportation began tracking Customer Satisfaction statistics, Southwest has consistently led the entire airline industry with the lowest ratio of complaints per passengers boarded. Many airlines have tried to copy Southwest’s business model, and the Culture of Southwest is admired and emulated by corporations and organizations in all walks of life. Always the innovator, Southwest pioneered Senior Fares, a same-day air freight delivery service, and Ticketless Travel. Southwest led the way with the first airline web page, southwest.com. The first-ever direct link to Customer’s computer desktops that delivers live...

Words: 890 - Pages: 4

Premium Essay

Southwest Airlines Corporation

...Dhian Ayu Paramita Management Control System Assignment 12/335910/EK/19096 Discussion Questions -- Case 3.1 Southwest Airlines Corporation Question 1 : What is Southwest’s strategy? What is the basis on which Southwest builds its competitive advantage? One of the goals of the company is to achieve its goals which can be seen through the Vision. Southwest’s Vision “ To become the World’s Most Loved, Most Flown, and Most Profitable Airline” can be achieved by planning good strategy. Strategy is also needed in order to achieve Southwest’s goals and purpose, which is “To connect People to what’s important in their lives through friendly, reliable, and low-cost air travel”. The main strategy of Southwest is the capability of the company to manage and take advantage of its competitive advantage. Major competitive advantage of Southwest Corporation is its people, just like current CEO Gary Kelly said on company’s official website : “Our people are our single greatest strength and most enduring long-term competitive advantage”. Additionally, Southwestt keep developing its sustainable competitive advantage by using Generic Competitive Advantage. It was the advanced of Michael Porter’s Five Force Analysis Model consist of Low Cost or Differentiation. a) The Low Cost Strategy or Cost Leadership Southwest used tight cost control and cost minimization by keeping their cost of goods sold low but not as an exchange of satisfaction of the......

Words: 1043 - Pages: 5

Premium Essay

Southwest Culture

...Abstract Southwest Airlines has a one of a kind culture primarily based on customer service. Southwest Airlines dedication to happy employees has been the platform for their success. Like any organization, communication is essential to keep employees and customers informed and united. Southwest Airlines has numerous forms of both internal and external communication such as newsletters, customer interaction software, and much more. Southwest Airlines adopted values most definitely align with their enacted value, which they call their formula for success; a happy employee equals a happy customer (Southwest Airlines, 2013). Southwest Airlines is one of the nation’s leaders in customer service, and it roots from the culture of the organization. Southwest Airlines vision is to grow by doing it conservatively. They want to capitalize and cut back on schedules for other airlines which will result in a long-haul success. Their mission statement is to provide the highest level of customer service with friendliness and company spirit. From the very beginning, Southwest Airlines motto was to give everyday people a chance to fly and their low-cost fares definitely support their values. Southwest Airlines biggest dedication is to their employees. They continuously provide employees with a steady work environment with equal opportunities for learning and advancements. They encourage employee’s voice his or her opinions and new ideas they may have for improvement. To Southwest......

Words: 631 - Pages: 3

Premium Essay

Boeing Leadership and Management

...surpassed by Airbus in annual airline sales.   Through the organizing function of management, Boeing is once again the leader in the aerospace industry, continues to build a competitive advantage, and is more flexible, innovative, efficient, and responsive to its customers.   The organizing function of management follows the planning function and requires management to develop and organizational structure, assemble and coordinate the human, financial, physical, informational, technological, and other resources needed to achieve the organizations goals.   To be effective, managers need to use new forms of organizing and possibly view people as the most valuable resource.   Companies will departmentalize an organization during this function of management.   Examples of departmentalizing an organization include organizing by function, product, geography, or customer.   Although the organizing function of management consists of assembling and allocating the resources needed to achieve goals, organizing is also about utilizing resources to build a dynamic organization (Bateman & Snell, 2009). A key resource to the organizing function management is human resources, which involves maximizing the capabilities and performance of the organizations people (McNamara, 2011).   For Boeing to regain its elite status, the company began making plans to develop and build a new commercial jet, which means most organizations within the Boeing Commercial Airlines Division will be affected......

Words: 2313 - Pages: 10

Premium Essay

Business and Management

...Mission Southwest Airlines' mission statement reads: "The mission of Southwest Airlines is dedicated to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit." All these traits are what have made Southwest # 1 in fewest customer complaints for several years running. Southwest continues to thrive on its reputation from this # 1 ranking as well as reap monetary rewards that come with this distinction. Southwest’s commitment to their employees reads: “We are committed to provide our Employees a stable work environment with equal opportunity for learning and personal growth. Creativity and innovation are encouraged for improving the effectiveness of Southwest Airlines. 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” Objectives Strategy The strategy that Southwest Airlines should use in order to continue its success is also based on the “Short-Haul” strategy. The difference is that the strategy must be inter-converted. Southwest can try its best to duplicate its “Short-Haul” strategy globally. For instance, it can do exactly the same business with the same strategy once again. But this time, Southwest has to do it in every part of the world. For instance, Southwest can expand its business in France, Germany, Australia, Russia, China, Japan, Poland, Greece, etc. All......

Words: 4871 - Pages: 20

Premium Essay

Southwest Airlines Case Study

...MBA 610 Case Study: Southwest Airlines Corporation 1. Southwest Airlines Corporation is an extremely popular and profitable company due to their strategy of being the nations’ low-fare, high customer satisfaction airline. Southwest is able to offer the nation’s lowest fares due in part to their low operating-cost structure, the lowest in the domestic airline industry. This low operating-cost structure (refer to Exhibit 1 for 5 year financial highlights and 2004 data) is the basis on which Southwest builds its competitive advantage, as it allows Southwest to sell low fare tickets while still enjoying a gross margin percentage of sales (29.2% of sales in 2004) much higher than United Airlines (22.7% of sales), American Airlines (1.9% of sales), and Delta Airlines (18.9% of sales). Southwest achieved this low cost operating structure through eschewing the traditional “hub-and-spoke” approach used by their competitors, and instead flying short haul, medium haul, and point-to-point flights, allowing for more frequent flights. As a result, about 80% of Southwest’s passengers fly non-stop and the overall passenger length is approximately 758 miles. Additionally, Southwest consistently seeks out ways to improve its efficiencies and low cost structure. For an example, at Southwest, turnaround time (from the time a plane lands until it is ready for takeoff) takes approximately 20-25 minutes and requires a ground crew of four plus two people at the gate. By comparison, turnaround......

Words: 805 - Pages: 4

Premium Essay

Organizational Commitment and Communication

...Matthew Dunscombe COM/530 June 20, 2013 Charles Sherman Organizational Commitment and Communication The following document is a review of Southwest Airlines Company. Additionally, the literature will discuss how different leadership styles would affect group communication in Southwest Airlines Company. Moreover, this document will analyze the different sources of power found in Southwest Airlines Company and how those different sources of power affect group and organizational communication. Furthermore, the current culture in Southwest Airlines Company will be reviewed to identify the motivational theories that would be effective within their culture. Likewise, the role of communication will be evaluated as an element of the theories pronounced. Last, the commitment of the workforce to the organization and Southwest Airlines Company’s relationship to the organization’s communication will be described. Different Leadership Styles Effective leadership in Southwest Airlines Company involves being conscious on how to correspond with all components of the group, involving workers, other executives, clients and stockholders. Southwest Airlines Company communication would be affected by different leadership styles in a good way depending upon the smooth transition between styles. Every unit inside the corporation may involve a diverse communication style and leadership style. Moreover, leaders should be able to acclimate based on the unit he or she are......

Words: 1459 - Pages: 6

Premium Essay

Accounting

...Southwest Airlines Kaushal Desai Vaishali Patel Debra Quach Introduction Although the airline industry is no longer experiencing the rapid growth it exhibited before 1990; commercial air travel in the U.S. remains the preferred method of transportation for a majority of Americans due to cost-effectiveness and timesaving characteristics. From 1980 to 1990 the number of passengers traveling by air increased by approximately 72%, in contrast, in the 1990-1998 period, the airline industry only experienced 36% growth. Furthermore, during 1965-1978, the government regulated the airline industry by forcing artificial wage increases and artificial price levels. In the postderegulation era, labor negotiations were the cause of many labor strikes. The big carriers have tried to cut costs, but have been constrained by strong union opposition. For example, “Unions have fought against moves to shift unprofitable routes to lower cost regional jets with lower paid pilots.” Confronted with cut-throat competition, particularly from low-cost rivals such as Southwest, now America's fourth largest carrier in terms of traffic flown, the big airlines have found themselves caught traditional fare wars that cut into their already slim profit margins. The domestic airline industry in the United States is characterized by intense rivalry and low profit margins. Through product differentiation and a strategy of low cost and no frills, Southwest has been successful in distinguishing itself from......

Words: 3410 - Pages: 14

Premium Essay

21st

...Organizational Behavior December 12, 2014 Gary Kelly serves as the Chairman of the Board, President, and Chief Executive Officer at Southwest Airlines. Under Gary's leadership, Southwest has grown to become the nation's largest airline in terms of originating domestic passengers carried and is a mainstay on Fortune magazine's list of the most admired companies in the world, ranking seventh in 2013 (About Southwest, 2014). Gary's biggest source of pride is the fact that Southwest Airlines has never had a single furlough in the airline's 43-year history. Gary is pioneering the airline's transformation through several key initiatives, including the integration of AirTran Airways and launching international destinations in 2014 for the first time in Southwest's history. Gary has been named one of the best CEOs in America by Institutional Investor magazine three times and he was selected as Dallas Business Journal's CEO of the year for 2011. Gary is a lifelong Texan and received a B.B.A. in Accounting from the University of Texas at Austin. As a proud alumnus, Gary has served the University in a number of capacities, including on the McCombs School Advisory Council. Gary is a Certified Public Accountant; serves on the Board of Directors of the Lincoln National Corporation and is Chairman of Airlines for America (Southwest, Gary C. Kelly, 2014). Southwest Airlines would not be the company it is without having a superb leader. It takes a good leader to understand the current......

Words: 1859 - Pages: 8

Premium Essay

Case 3.1

...Southwest Airlines Corporation Question 1 :   What is Southwest’s strategy? What is the basis on which Southwest builds its competitive advantage?       One of the goals of the company is to achieve its goals which can be seen through the Vision. Southwest’s Vision “ To become the World’s Most Loved, Most Flown, and Most Profitable Airline” can be achieved by planning good strategy. Strategy is also needed in order to achieve Southwest’s goals and purpose, which is “To connect People to what’s important in their lives through friendly, reliable, and low-cost air travel”. The main strategy of Southwest is the capability of the company to manage and take advantage of its competitive advantage. Major competitive advantage of Southwest Corporation is its people, just like current CEO Gary Kelly said on company’s official website : “Our people are our single greatest strength and most enduring long-term competitive advantage”. Additionally, Southwestt keep developing its sustainable competitive advantage by using Generic Competitive Advantage. It was the advanced of Michael Porter’s Five Force Analysis Model consist of Low Cost or Differentiation.   a) The Low Cost Strategy or Cost Leadership       Southwest used tight cost control and cost minimization by keeping their cost of goods sold low but not as an exchange of satisfaction of the customer. They maintained low cost operation by doing several following things in the right way, effectively and......

Words: 383 - Pages: 2

Premium Essay

Southwest Airlines

...------------------------------------------------- Southwest Airlines Thousands of people travel by air; Southwest Airlines provides low-fare air transportation service among 58 cities in the United States. Although the industry suffered a major blow from the terrorist attack of September 11th, the company is still holding strong; while other airline companies are in debt. The information was majority gathered and analyzed from the Internet; sources such as "News Week," and "Wall Street Journal." According to the acquired knowledge of Southwest, the company maintains steady sales. The major success to their continued success is due to their low-cost model and competitors are aware that they cannot match Southwest Airlines low prices therefore, by dropping the price even lower; Southwest Airlines can force a company to go bankrupt.  Introduction In 1971, Rollin King and Herb Kelleher started an airline service with one simple notion: "If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline." They were right about that. Southwest Airline is now a major airline, in fact, the fourth largest airliner in the United States that is trading under the Symbol LUV on NYSE.  The mission of Southwest Airlines is dedication to the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride, and company......

Words: 2861 - Pages: 12

Premium Essay

Southwest Airlines: a Case Analysis

...strength that Southwest Airlines has is its financial stability. As known in the US airline industry, Southwest is one of those airlines who are consistently earning profits despite the problems the industry is facing. With such stability, the corporation is able to make decisions and adjust policies, which other heavily burdened airlines may not be able to imitate. Having a low amount of cost in their operations is one of the contributing factors in Southwest Airlines’ financial success. Such low cost model of the corporation is brought about by an effective strategy. Southwest uses only one type of aircraft – the fuel-efficient Boeing 737. This tactic keeps training and maintenance costs down. Moreover, the no-frills approach to customer service contributed to the low cost of operations for Southwest. The airline does not serve meals on board, and there are no luxurious or first class seats offered. Services like these have been seen by the airline as unnecessary for an airline that provides a short-haul trip from city to city. By these, Southwest were able to offer low price tickets to customers, which was good for the company because most people would prefer to fly without those services mentioned if it meant for cheaper ticket price. Even though Southwest offers no-frills, there is still a high degree of customer satisfaction that continuously builds customer loyalty for the company. As mentioned, Southwest offers low prices on their airplane tickets. Also,......

Words: 1540 - Pages: 7

Premium Essay

Business

...Southwest, Inc. Case Analysis COMPANY NAME: Southwest Airlines Co, Inc. INDUSTRY: Southwest Airline, Inc. COMPANY WEBSITE: (http://www.southwest.com/html/about-southwest/history/fact-sheet.html) COMPANY BACKGROUND: Southwest Airlines traces its roots to the March 15, 1967 incorporation of Air Southwest Co. by Rollin King and Herb Kelleher to provide service within the state of Texas. Southwest Airlines was incorporated in Texas and commenced Customer Service on June 18, 1971, with three Boeing 737 aircraft serving three Texas cities-Houston, Dallas, and San Antonio. Today, Southwest operates 550 Boeing 737 aircraft among 72 cities. Southwest topped the monthly domestic originating passenger rankings for the first time in May 2003. Yearend results for 2010 marked Southwest's 38th consecutive year of profitability. Southwest became a major airline in 1989 when it exceeded the billion-dollar revenue mark. Southwest is the United States' most successful low fare, high frequency, point-to-point carrier. Southwest operates more than 3,400 flights a day coast-to-coast, making it the largest U.S. carrier based on domestic passengers carried as of December 31, 2010. On May 2, 2011, Southwest acquired Orlando-based AirTran Airways and expects to complete the integration of the two airlines over the next several years SWOT ANALYSIS: Strengths: The biggest strength that the case study focused on was advantage that Southwest is that it is the most productive airline in the......

Words: 2649 - Pages: 11

Premium Essay

Jetblue

...low cost passenger airline that provides high quality customer service, and to build an organization where the employees take pride in their company (JetBlue Airways 2006 Annual Report, n.d.). (2)Strategies: Present strategy/strategies Some of JetBlue’s most important strategies are: • Limiting operating costs • Flying with a new Airbus A30 Fleet • Developing a quality brand • Hiring dedicated employees • Pursuing the latest technology Its overall strategy has been to identify routes with high average fares and beat the competition price, as well as to distinguish itself with service offerings such as TV and radio programming. (3)Time-bound: 2. (1)customer segmentation: Major carriers, regional carriers, and low-cost airlines. Currently there are 16 major carriers, the largest of which are American, Continental, Delta, Northwest, Southwest, and United (JetBlue Airways 2006 Annual Report, n.d.). These airlines offer scheduled flights to most large cities, and except for Southwest, use the traditional hub and spoke network route system (Flint, 2005). Regional airlines such as SkyWest and Mesa generally operate smaller aircraft on lower volume routes. These airlines generally form alliances with the major carriers and provide service from their hubs to smaller cities in the region. Low cost carriers such as Southwest developed after deregulation in 1978. Southwest pioneered the low cost airline model, which many other airlines have tried......

Words: 755 - Pages: 4