This is problematic, because if the staff begins to see that managers are making irresponsible decisions or are becoming disconnected with employees, it will create the setting for increased amounts of animosity to occur. Once this take place, it means that the company could lose talented employees and may be forced to renegotiate with unions (which would undermine its business model). ("Southwest Airline Corporation," 2002)
Follow Up
When you look at the total effects of the actions that were taken by Southwest, it is clear that the strategy of independently negotiating labor contracts provided the desired results. This can be seen by looking at the various steps that were taken during the process. Where, Southwest would be concerned about labor issues that are affecting other carriers. To counter these concerns, the company would negotiate with employees on acceptable labor costs for both parties. This would help to eliminate the obvious divisions that occur between labor and management. As the negotiation process was seeking a solution that would effectively address the needs of both sides. In many ways, one could argue that this process of openness and transparency would eliminate the barriers that existed, establishing a lower cost structure and providing employees with salaries / benefits that were acceptable to them. ("Southwest Airline Corporation," 2002)
Case Report
The formula that is being utilized by Southwest would help to effectively resolve various conflicts, before they have a chance to become major issues. This is a different strategy from what was being utilized by various airlines, as they would allow these divisions to continue to build up. Then, when they are renegotiating the various union contracts, management and labor are so far apart that the chances decrease they will be able to find an agreeable solution. If management can take the lead and follow a similar...
Southwest Airlines The airline industry has been one that has consistently lost money during the last decade. Even before that, if an airline did not have a good business strategy, they were most likely doomed to failure. Many people do not remember Braniff, TWA or Pan American, but for a long time they were among the largest air carriers in the world. He present model, for airlines as well as other
And many have got successful too in earning the market share. The emerging competition by new companies is a growing threat for the company and it should be tackled properly to avoid any future disturbances. In order to further describe the competition Southwest Airlines is facing a Competitive Profile Matrix is designed. The following Competitive Profile Matrix tells about the tough competitors which are in a good position to have
Southwest Airlines, Inc. Southwest is an impressive company on many levels. Most notably, it's determination to do whatever it takes to get the job done stemming from its original battles to begin operations make the company flexible in meeting the demands of a highly dynamic industry. Secondly, the company fosters innovation and has been very creative in being a leader in transforming the industry. Some of the most important examples include
More specifically, since Southwest invests heavily in both training and the "attitude" of its employees, the fact that all economically motivated employee separations are voluntary buyouts allows the company to protect that investment. A happy workforce is more productive, which further helps the company manage its costs. Compared to the industry average, Southwest serves more than twice as many customers per employee and gets by with 8% fewer employees per
Southwest's interest coverage is comfortable, at 3.909. Southwest's operating leverage is high, as they are in a low margin business. They had a negative change in EBIT over the period, as did AMR, despite both having higher sales. Southwest's combined leverage is 1.505, much stronger than AMR, which suffered a huge decline in earnings per share despite having higher sales. 10) the weighted-average cost of capital for Southwest is 0.56%.
Alternative Strategies. The company should focus on expanding its service trans-North America, and should further look into the possibility of launching trans-Atlantic operations. The company at the same should start dealing with Boeing for the purchases of advanced aircrafts. The company should emphasis more on providing insurances of the passengers. The advertising campaign should be evolved with new spirit irrespective of how well the come performs; the advertising campaign should be in
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