Corporate Culture
South West Airlines began operations in 1967 and continues to dominate the larger United States domestic airline market. The company offers the lowest travel rates in the United States.
This is part of its culture. It has entrenched this culture throughout the economic dynamism experienced over the years it has been in operation. The company offers low rates but cuts down on other in-flight services. These services include airport lounges, first class offers and seat reservations.
The company argues that by cutting down on these services, it increases customer numbers. Its target market is the low-end market that is interested in flying the different states in the country. These people travel to visit their loved ones and conduct business.
Hence, this group may not be interested in high class services to do that. The company has earned itself the tag ‘low cost carrier’ because of that. This does not mean that the services at South West Airlines are not high-end. It only means that the company’s interest is to charge customers as little as possible for flights across the United States.
The company uses only one flight to conduct its operations. The Boeing 737 has been in operation for a considerably long time now. The company argues that this gives it identity in the wide sea of airline operators. The company in-flight services are also different.
It hires stewardesses and flight attendants that have unique body shapes. They must, for instance be tall. They must wear short skirts while at work. Hence, the term ‘long legs and short skirts’. The selection of the employees is quite detailed and includes the need to face a committee (Hewlett, 2006).
Competitive Advantage
The company has been in operation for over 5 decades. During this time, it has maintained this same culture. The company has expanded and grown to be the biggest airline company in the United States that deals in domestic market. The company attributes this to the culture described above.
The argument is that other operators adopted the ‘cool’ travel tag while it maintained its core business: travelling. The various economic slowdowns and falls that have characterized the United States have played to the advantage of the company.
This is because people faced by those situations have reverted to using South West Airlines as the travel partner of choice. The other companies have resorted to too much advertising to win back customers.
It is understandable that change is hard in organizations. It is especially impossible if it is counter change. This change is not proactive and it only responds to a situation. This is what most airlines have been grappling with in the receding economic turmoil of 2008.
In an attempt to cut down on travel budgets, many people in the United States have employed the services of south west airlines. This is because of the culture it has maintained from the start. Therefore, in more than one occasion, South West Airlines business culture has worked to its advantage.
It has offered it the competitive edge in the domestic market. This has positively affected company performance. The company continued to report growing customer and profit numbers when all other operators were reporting losses (Yilmaz, 2008).
Financial Performance
Leadership Styles and Strategic Decisions
It can be seen that the airline made the strategy for charging low air fares a part of it and the airline even became popular because of this. In addition, it adapted a plan that gave its employee the option of leaving employment voluntarily even before they had reached the proper retirement age. This brought about a culture of respect among the employees and management.
The new products that were introduced by the Southwest Airlines for example “the early bird check in”, the package that allowed passengers to travel with pets and the package that made it possible for passengers to access the internet also became a part of the organization. The importance that the Southwest airlines attached to proper financial management also became a part of the organization.
Every organization is always faced with a dilemma when it comes to change. This is because of the uncertainties that change brings with it. However from the above analysis, it is evident that for an organization to survive in the current turbulent times, change is inevitable. The effectiveness of the changes implemented by the Southwest Airlines can be seen in their annual reports.
The airline’s returns have greatly improved despite the current poor economic conditions. The company recorded losses in the first quarter. However, the airline was able to turn this around and report profits unlike it competitors.
The effectiveness of these changes can also be seen as passengers have increasingly become more loyal to the airline compared to others. The airline has also recorded an increase in new passengers who now prefer the airline as opposed to other airlines (Hewlett, 2006).
Southwest airlines has also experienced a reduction in operating costs due to the measures that it put in place to curb the rising costs of operation for example the postponement of expanding the airline, introducing a voluntary retirement scheme for the employees, and looking for different ways to deal with the rising energy costs.
Due to its insistence on the need for proper financial management, the airline has been able to maintain very low levels of debts hence eliminating the possibility of insolvency.
It has also been able to find new and innovative ways to improve its liquidity position. Therefore, when all is said and done, the changes that the Southwest Airlines implemented have been more effective than disadvantageous (Kathleen, 2008).
References
Hewlett, R. (2006). The Cognitive leader. London: Rowman & Littlefield Pub Inc.
Kathleen, B. H. (2008). From Analyst to Leader: Elevating the Role of the Business Analyst Management Concepts. London: Free Press.
Yilmaz, A.K. (2008). The Corporate Sustainability Model for Airline Business. Web.