In this unit, you will write a comprehensive paper utilizing the knowledge you have gained in all five units of the course.
Assignment Instructions
In this unit, you will write a comprehensive paper utilizing the knowledge you have gained in all five units of the course. The comprehensive paper is different from the essays you have written in Units 1-4 in that you need to integrate and cite key terms and concepts from the READ and ATTEND assignments in all five units of the course. The research requirement is at least two scholarly journal articles, and the course textbook.
Use “in-text” citations, formatted in APA style. A references page formatted in APA style is required as well. Your paper should contain a minimum of 1200 words (not counting the cover page and reference page). You must organize your work using headings formatted in APA style.
Please submit your paper in the drop box for Unit 5.
- Write a brief (100-150 words) company background of Southwest Airlines.
- Describe Southwest Airlines’ organizational culture. Does the culture fit well with the organization’s strategies?
- Conduct a SWOT analysis of Southwest Airlines. You need to provide your own original analysis, using primary sources. Don’t summarize information from someone else’s SWOT analysis.
- Based on findings from your SWOT analysis, what strategies should Southwest Airlines pursue at the Corporate, Business Unit, and Functional levels of strategy? Explain fully.
- What is an appropriate organizational structure for Southwest Airlines? Explain fully.
- Does Southwest Airlines have a sustainable competitive advantage? Explain fully.
- How should Southwest Airlines prepare for major crises in the future?
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Sample Student Answer One
Southwest Airlines
Organization Background
Southwest airlines is one of the largest airlines in the United States (US). The company was founded in 1967, with its headquarters located in Dallas, Texas. It offers both domestic and international flights targeting mostly the low-cost consumer market. The carrier makes daily flights to over 120 destinations in the US and ten other countries. The company’s employee base currently stands at over 56,000 employees, with the most recent sales being over $9 billion (Forbes, n.d.). The company is renowned for its impeccable customer service and value for its employees, having been ranked among the top 50 best employers globally by Forbes.
Organization Culture
Organizational culture plays a crucial role in determining the nature of strategies an organization is likely to employ (Parnell, 2021). South West uses has an employee-centric organizational culture. This is a type of adaptive culture where employees are encouraged to share their ideas and connect with the company’s customers, peers, and leadership in a bid to improve customer experience. It is considered an adaptive organizational culture since it creates room for change based on the innovations collected through employee engagement and interaction (Parnell, 2021).
Employees are usually regarded as first-line customers whose feedback is crucial in developing services that fit into the dynamics of a given market (Huang, 2020). Therefore, an employee-centric culture allows the organization to deliver a great customer experience by challenging internal processes. In addition, by focusing on a positive work environment, where employees are highly motivated, one that respects and cares for employee values, they can share the same attitude externally with their customers, consequently improving the airline’s customer experience, an element that fits well with the organization’s strategies.
SWOT Analysis of Southwest Airlines
Strengths
The organization has several areas of strength that place it in a position of competitive advantage. One of the areas of strength is the company’s low-cost pricing which makes it quite competitive compared to other high-end carriers like American Airlines. The carrier also has a fairly modern fleet that allows an almost similar level of experience in terms of safety and comfort as provided by other high-end carriers. The company also has highly competent and motivated staff who deliver quality services focused on creating an enhanced customer experience. In addition, the company has built a strong brand over time that is admired by both customers and employees alike.
Weaknesses
The company has a fairly narrow market base which limits making it susceptible to high levels of revenue fluctuations in case of consumer changes in its main market. Another area of weakness is that the company has very limited product diversification compared to its competitors making its scope in revenue collection to be equally limited compared to other players in the industry.
Opportunities
The organization has several opportunities to capitalize on to enhance its competitive advantage further. One of the opportunities is new market prospects in other countries, which the company has yet to explore. Southwest Airlines already has a large enough fleet that the airline can capitalize on to venture into new routes. The organization also has an opportunity to consider diversifying its products to expand its consumer depth.
Threats
Changing market dynamics, especially in the local market, is a significant threat to the airline. This is partially attributed to the company’s narrow market base. A high level of competition in the industry is also an existing threat. Volatile fuel prices are another threat, with an increase in fuel prices having a significant impact on the company’s revenue, given that the company’s strategy is highly dependent on the pricing of its products.
Strategies
Based on the SWOT analysis, Southwest should consider undertaking a growth strategy to expand its market base. It can achieve this through horizontal integration, where the organization acquires other companies at the same level in an industry (Parnell, 2021). One of the advantages that the organization has in pursuing this strategy is the strong capital base that can allow it to participate in mergers or acquisitions of other airlines. This strategy aims to provide Southwest with the ability to expand its services in new territories.
Southwest Airlines is currently using a low-cost strategy without focus to gain the upper hand in its market. This business-unit level strategy focuses on maintaining prices at a minimum without focusing on a particular market segment (Parnell, 2021). However, to further improve its competitiveness based on the SWOT analysis, the organization should consider integrating product diversification to expand its market base. A diversification strategy can also provide some level of risk mitigation, whereby, in case a particular market fails, the other markets can cushion the organization from total losses (Arte & Larimo, 2022).
Functional level strategies are strategies adopted to support the business level strategies (Altuntaş et al., 2014). In this case, Southwest should focus on enhancing some of its products to create a diverse pool that customers can choose from. This can be achieved by leveraging on information systems and technology. Given that the goal is to create a low-cost differentiation strategy, emphasis should be given to information that focuses on costs of operations and innovative processes meant to create unique services (Parnell, 2021).
Organizational Structure
The organizational structure that Southwest should adopt is the matrix structure. In this case, Southwest should consider merging its current functional structure with a geographical divisional structure to create a consistent level of efficiency across all the organization (Parnell, 2021). The strategy that is proposed to the organization is to further expand its market into new routes preferable in new countries. This strategy may necessitate the organization to decentralize some of its functions to the different geographical locations, thus requiring a geographical structure. However, the current functional structure should still be in place, given that most of the decisions will remain centralized for optimal efficiency.
Sustainable Competitive Advantage
Southwest currently has a sustainable competitive advantage in its market. However, this position could change depending on how the company will fair in adopting new strategies and stability of its primary market, which is centered around local flights. That is why a growth strategy towards exploring new markets is proposed to sustain its competitive position further. The current challenge that Southwest faces is that it is likely to be affected in the event of major changes in its primary market. What is currently holding the organization’s strong competitive position is the brand that has been built over time, a brand centered around high levels of customer and employee experience with the company.
Preparation For Future Crises
Southwest should take proactive risk mitigation measures. One of the effective shock absorbers during a crisis period is innovation (Am et al., 2020). For example, during the COVID-19 pandemic, several companies managed to develop innovative ways to deliver services to customers amidst the stringent measures put in place. Without a doubt, airline and tourism hospitality industries were amongst those that were hardest hit.
One of the ways that most airlines used to navigate through this period was to innovate new products, mostly focused on cargo handling and delivery to cushion against the drop in passenger flights. In addition, having the right communication strategy to respond to different forms of strategy is crucial. This was apparent in a previous crisis involving Boeing 737 max, where faults in communication were partly to blame in how the airplane manufacturer responded to the crisis.
References
Altuntaş, G., Semerciöz, F., Mert, A., & Pehlivan, Ç. (2014). Industry forces, competitive and functional strategies and organizational performance: Evidence from restaurants in Istanbul, Turkey. Procedia-Social and Behavioral Sciences, 150, 300-309.
Am, J. B., Furstenthal, L., Jorge, F., & Roth, E. (2020). Innovation in a crisis: Why it is more critical than ever. McKinsey & Company.
Arte, P., & Larimo, J. (2022). Moderating influence of product diversification on the international diversification-performance relationship: A meta-analysis. Journal of Business Research, 139, 1408-1423.
Forbes. (n.d.). Southwest Airlines (LUV). Forbes. https://www.forbes.com/companies/southwest-airlines/?sh=2640378c4c2a
Huang, Y. T. (2020). Internal marketing and internal customer: A review, reconceptualization, and extension. Journal of Relationship Marketing, 19(3), 165-181.
Parnell, J.A. (2021). Strategic Management: Theory and Practice (6th ed). Academic Media Solutions
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Sample Student Answer two
Southwest Airlines
Organizational Overview
Southwest Airlines is one of the largest airlines in the world and is the biggest low-cost carrier. The airline was established in 1967 as Air Southwest Co before changing its name to Southwest Airlines Co in 1971. The airline has over 100 destinations in America and has other destinations in Puerto Rico, Mexico, the Caribbean and Central America. The company trades in the NYSE stock exchange, with its good financial performances attracting investors who trade with its shares.
The firm is also one of the largest employers in the US, with over 50,000 employees. The business has been performing exemplary because of strategies introduced by the management. These techniques are evident in the areas of operations and competitive advantage. The management also insists the good performances of the firm are because of its solid cultural practices.
Organizational Culture
The most significant organizational culture of Southwest Airlines is employee-centric culture. Southwest Airlines’ culture identifies workers as critical in attaining its mission and goals. The company’s website insists that proper dealings with human resources contribute to quality output (Southwest Airlines, 2022). The firm boasts that the culture is unique; thus, it is one of its strengths.
As part of maintaining its corporate culture, the airline focuses on workers as the foundation of its culture. The business has several policies that aim at boosting morale, motivations and job satisfaction of human resources. The culture concentrates on improving the well-being of its workers so that they can reciprocate with good performances.
Several characteristics define this organizational culture. The first characteristic is employee-centred appreciation. The company is quick to recognize the contribution made by workers through appreciation and celebration. The company is aware employees would improve their efforts if adequately appreciated by the business. Consequently, the company is keen to recognize workers through work benefits, promotion and reasonable compensation.
Besides, the culture reminds workers to live in the Southwest way. The airline’s corporate culture promotes excellence, perseverance and respect. Southwest Airlines workers must exhibit these characteristics when dealing with handling customers. Accordingly, Southwest Airlines compels workers to exhibit its practices during regular operation. The organizational culture is holistic as it aims to attain the work-life balance of its workers. Working the Southeast way motivates workers to ensure safety, compliance and provision of services.
The company’s corporate culture supports its mission and vision. The fact that the organizational culture is deeply rooted in its values and the way of thinking, every cultural strategy has to support its mission and vision. The organizational mission and goal focus on high quality, popularity and long-term profitability. The centerpiece of this culture is human resources. The company understands that workers are essential in ensuring the business’s goals are attained.
Employees’ involvement, satisfaction, morale and motivation are part of the efforts that support the mission and vision statement of the business. The company takes pride in this organizational culture as it has been propelling it against rivals and other economic players. Further, workers are critical to strategies such as low-cost pricing, innovative logistical solutions and top customer experience. These approaches depend on the handling of human resources, as they are the ones actualizing these strategies.
Southwest SWOT Analysis
The SWOT Analysis is a strategic tool that features the strength, weaknesses, opportunities and threats of a business.
Strengths
Southeast Airlines has diverse strengths, which boost its competitive advantage. The first strength is lower costs. Southeast Airlines is famous for its low-cost transportation (Ren, 2020). The business’s flight ticket has lower prices, a move that has been maintaining its loyal customers. The idea, in this case, is to have a large number of customers to cover costs incurred by the company.
The company is also famous because of its employee-centric culture (Borenstein, 2021). This approach has helped make employees feel like part of the family. The effect has been the provision of quality services. The other strength is consistent financial performance. The company has been generating consistent profits over time, despite being in a fiercely competitive industry.
Weaknesses
Southeast Airlines also has some weaknesses worth noting. The most significant weakness of the airline is overdependence on one income source. The company is overly dependent on passenger revenues, which translates to over 95%. However, freight constitutes only 1%. The risk of this arrangement was evident in a period like the onset of COVID-19, where global governments halted movements. Uncertainties of these times increase risks that face the business.
Additionally, Southeast Airlines is overly dependent on the US market. In any case, there is the entrance of another best performing airline in the US market; it is likely Southeast Airlines will suffer significantly. Besides, the business is over-dependent on Boeing 737s. The situation is risky as it was the case of the government grounding Boeing 737 MAX. The decision by the government to halt its models will be detrimental.
Opportunities
The business has had diverse growth opportunities. The first opportunity is global expansion. The low-cost model of the business is needed in many global nations. Southeast Airlines must identify the best market to venture into to boost its performance. The company also has the ability to expand its freight business. The ever-growing market has few players, which the business should consider venturing into to boost market share. Additionally, Southeast Airlines should consider offering long-distance flights. New markets are emerging with the behavior of millennials to live further from home. The company could capitalize on this trend.
Threats
Diverse external factors are threatening the success of the business. The most significant issue is increases in fuel. The volatile oil markets have been affecting business expenses and profitability. In continuation, the airline is experiencing stiff competition from companies like Jet Blue, Delta and Alaska among other entrants. The business has also been suffering from Boeing 737 Max issues. The grounding of this model could affect the business negatively because of overdependence.
Corporate, Business Unit and Functional Level Strategy
The business should consider corporate, business unit and functional level strategies to boost its performance. The corporate approach used by the business should be a differentiation approach. The company has been successful with the cost leadership approach, where it uses price to compete. However, stiff competition from firms like Delta and Jet Blue would demand a new strategy (Zou & Yu, 2020). Differentiation approach will be helpful to meet this goal. The company should consider offering diverse passenger and freight packages to attract different customers. For instance, the firm could consider offering business class flights to cater for premium customers.
The company should also introduce different strategies for business units. The most significant approaches introduced in diverse business units include innovative logistics solutions (freight unit) and a deep focus on customer experience (passenger unit). Southeast Airlines should consider innovative logistical solutions to boost its freight business unit. As it stands, the company is over-reliant on passenger units compared to freight units.
However, it must introduce practices that will attract clients to use the freight department to attract clients. Innovative solutions will help attract clients to the department. Further, concentration on customer experience will be critical for the passenger business unit. Customers demand proper services and treatment to regard Southeast Airlines as a superior option.
Organizational Structure
The most appropriate structure of the company should be a divisional product structure. The method separates the activities of a business into self-contained entities. Each department is responsible for the production and distribution of its activities. Southeast Airlines has diverse services offered to clients. The business deals with the transportation of passengers and cargo to their destinations. When using the divisional product structure, the company will have the chance of separating them into individual entities. This arrangement has advantages and disadvantages.
The benefits of this method include a focus on the success of the firm and identification of the cost and profit centers (Parnell, 2021). Southeast Airlines has the chance of identifying the real source of its successes. Currently, the company accumulates its revenues as one source of income. Therefore, it is difficult to understand how each unit works. Adopting divisional product structure would help the business understand passenger unit is the primary source of income and profits, while the freight segment eats up the former’s profits. The business could make informed changes to boost the performance of the freight section.
Sustainable Competitive Advantage
Southeast Airlines has diverse competitive advantages, which will boost its going concern and performance in the market. The company has a series of competitive strategies that guarantee a competitive advantage. Firstly, the business has extremely efficient operations. These operations have been helpful in boosting the performances of the airline. The other strategy is low-cost pricing. Southeast Airlines is popular because of low-cost tickets.
This technique is increases sustainability since few airlines will be willing to reduce their prices to compete with the firm. For this reason, Southeast Airlines is set to dominate the low-cost carrier market. In continuation, proper handling of its employees means the business will guarantee quality performances. These approaches are set to maintain the competitive advantage of the business.
Coping with Future Crisis
The COVID-19 pandemic was one of the crises that affected Southeast Airlines negatively. However, the company was famous for strategies that guarantee growth, such as opening new routes to take advantage of airlines that exited the market during the pandemic. The company must be ready for stiff competition through the diversification of products and services. Diversification engrosses the introduction of new market routes and new services (Parnell, 2021). New routes are crucial to the survival of the company.
More low-cost airlines are entering the market, with this meaning proper technique is required to boost survival during crisis. New products like airlifting cargo will help the business survive a pandemic like COVID-19. Setting aside contingency funds is also useful in dealing with scenarios such as paying workers while aircrafts are grounded. The COVID-19 was a enough indicator that an event could occur, where the company has to sustain employees without enough revenues to cover costs.
References
Borenstein, L. (2021). It’s Personal: The Business Case for Caring. GIL Press.
Parnell, J.A. (2021). Strategic management: Theory and practice (6th ed). Academic Media Solutions
Ren, J. (2020). Fare impacts of Southwest Airlines: A comparison of nonstop and connecting flights. Journal of Air Transport Management, 84, 101771.
Southeast Airlines. (2022). Culture. https://careers.southwestair.com/culture
Zou, L., & Yu, C. (2020). The evolving market entry strategy: A comparative study of Southwest and JetBlue. Transportation Research Part A: Policy and Practice, 132, 682-695.
Jermaine Byrant
Nicole Johnson
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