Margins have fluctuated and are down, indicating short run cost control failure. However, company performance in the long run is strongly attributable to the corporate culture. Southwest has had consistent performance since its inception, despite many swings in the fortunes of the industry overall. This indicates that management fostered a culture that over the long run will drive customer loyalty and will drive steady, incremental cost reductions. Success for Southwest is not measure in short-term results so much as long-term and on that measure the culture has contributed to a long run of success for Southwest. One of the strategic decisions in the case is how to deal with the declining revenue environment. The airline industry has struggled in recent years leading to industry-wide cost reductions. To address this issue it is recommended that Southwest simply ride it out. The corporate culture has been a source of value for the company, and layoffs could compromise that culture. Therefore layoffs will cost more than doing nothing even as revenues drop. The second recommendation is to use the opportunity to find new routes. As other carriers reduce capacity, space may become available at airports that would allow Southwest to drop less profitable routes for ones that are more sustainable...
While layoffs are bad, the fear of layoffs is almost as bad for morale within the organization, so a public stand could assuage that fear. The second leadership action would be to ask for the employee's assistance in cutting costs further. While the culture exists, this act would reinforce the culture, by imploring the employees to buckle down and go to battle for the company. Another leadership action would be to go on the offensive -- make an internal declaration such as a mission statement for the coming year that will rally the troops against a specific target. This could be overtaking a rival airline in market share or perhaps turning a profit. In either case, these tactics will work because the instill confidence in the employees and then follow through on that by challenging them, appealing to their sense of being an underdog.
Southwest Airlines Effectiveness of Southwest Leadership Southwest management has defined a clear and simple business purpose. The management has also chosen the right business model that supports the business purpose. The management consistently demonstrates the core values and behaviors derived from the key business purpose (Emerald, 2005). The quality of the airline customer service is synonymous with warmth, friendliness, individual pride, and company spirit. This has kept the staff morale high. The
Southwest Airlines is one of the most successful low-cost airlines in the world. The company's focus on constant innovation, excellent labor relations, and sound financial management have ensured its success at a time when many companies have suffered from the economic downturn. In this way Southwest Airlines has created an example of business success for many. The company's success is also due to the consistency among its organization practices, which
The secondary gross margin measure, Gross Margin after Depreciation, shows the costs of having a rapidly growing infrastructure to support new routes and the purchase of additional planes over the five-year period. The reduction Gross Margin after Depreciation would be flat or slightly down during a strong economic period as well. This measure of gross margin indicates that the capital investments that are often amortized over seven years as
At YUM Brands, this internal environment is characterized by an organizational culture focused on the role of people in the attainment of the organizational goals and objectives. The Yum Brand managers then recognize their employees as the most valuable assets and strive to increase their on the job satisfaction. "We believe that our customers' experience will never exceed that of our team members. For that reason, our Dynasty Model starts
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
The most notable would include: a renegotiation of the contract rates and benefits for employees. 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
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