Southwest Airlines case study – Term Paper

4.2 Southwest Airlines Problem

Although the process of acquiring AirTran Airways show significant potential for growth and increased revenue, the implementation process signifies several pitfalls. The firm operates in international markets as opposed to the strategy of the Southwest Airlines. The process of integrating the management of the international flights poses significant managerial challenges. The expertise and competencies of the firm have been founded on local market characterized by short distance and limited customer service supplements (Hitt, Ireland, & Hoskisson, 2016). The inclusion of the international destination will call for a realignment of the customer service and the human resource, which could lead to high cost of operation.

Moreover, the success of the Southwest Airlines emanates from the culture of the organization. Based on the web elements discussed in the previous section, the five dimensions could be altered when integration the acquired firm. For example, the inclusion of the Southeast and East Coast routes will require the retraining of the human resource based on the customer needs, tastes, and preferences. On the other hand, attaining the balance between the integration of AirTran Airways affairs and Southwest Airlines management of the norms and values associated with customer management, cost efficiency, team leadership, and change integration will take an extended period. 

Furthermore, structural incompatibility and limited management expertise and experience is another risk associated with the strategic move. AirTran Airlines operates not only in international markets but also uses the Boeing 717s (Hitt, Ireland, & Hoskisson, 2016). However, Southwest Airlines majorly operates the Boeing 737s. The management of the firm is based on the passenger flight attendants balance; however, for the Boeing 717s with the first class options, additional staff will be required. On the other hand, the firm has limited experience in mergers and acquisitions as compared to JetBlue. Therefore, the integration process could be costly and time-consuming with a significant implication on revenue and culture.         

4.3 Southwest Airlines Management 

The Southwest Airlines management should consider a strategic approach to the implementation of the acquisition. The organization should set performance indicators based on the key competencies and experiences in the US market, which will define significant turnover points. Since the firm has limited experience in the international market, it will be essential to consider adopting the AirTran Airways approach as a pilot technique subject to testing. The quality team should then carry an assessment of the viability and implication of the strategy on the culture of the firm. Based on the market research recommendations, Southwest Airlines should alter the system by incorporating their culture with essential process management techniques associated with AirTran with the objective of enhancing competitive advantage. Since customer service at Southwest Airlines is the best in the industry, the firm should impose the blueprints on the 30 new markets for differentiation.

Moreover, the company should consider the productivity of employees as an opportunity of managing the transition efficiently. Over the years, the workers at Southwest Airlines have played a critical role in sustaining the success of the business and market competitiveness (Hitt, Ireland, & Hoskisson, 2016). Working with the cultured spirit will ensure that the organization maintains the customer satisfaction levels within the acquired markets. Furthermore, the management of the cost of operation should be based on the yield management approach where the firm should continue to target the maximum revenue for each flight. However, the flight attendant to passenger ratio should remain stable to ensure efficient customer service. When venturing into the international market, the firm should consider the destinations initially within the AirTran Airways operation. Based on the performance over a particular period, the organization should make strategic adjustments to increase the international domain on a limited scope, unlike the expansion rate that the firm used in the local US market.              

5.0 Conclusion

In conclusion, the US Airline industry has a unique historical account associated with significant corporate shifts. The competitive nature of the market emanated from the deregulation of the sector, which attracted private investors. The level of skewed segmentation and position affected most firms that could not sustain their operation; however, the stiff rivalry was an advantage to firms such as Southwest Airlines and JetBlue. Key competencies and strategic management strengthened the competitive advantage of the successful firm. The uniqueness of Southwest Airlines culture was an advantage over the competitors. With the current need for expansion, the acquisition of AirTran Airways is a hallmark of the success of the organization based on successful implementation of the transition and integration. Nevertheless, challenges such as stiff competition from small firms, the anticipated international entry, and increasing local market coverage stands as the determinants of the future position of the company in the US Airline industry. Therefore, the level of expansion and growing revenue will be solely defined internal factors such as competitive advantage, customer satisfaction, human resource management, and cost efficiency, as well as external elements such as the economic performance of the country and the changes within the legal framework.    

References

Hitt, M. A., Ireland, R. D.  & Hoskisson, R. E. (2016). Strategic management: competitiveness & globalization: Concepts and cases. pp. 208-222. Cengage: United States.

Frelberg, K. & Frelberg, J. (1996). Southwest Airlines’ crazy recipe for business and personal success. 14 – 21. Bard Press: Austin, TX. 

Lancaster, H. (1999). Herb Kelleher has one main strategy: Treat employees well. Wall Street Journal, August, 1999, pp. B1. 

Labich, K. (1994). I s Herb Kelleher America’s best CEO? Fortune, May 2, 1994, pp. 45.

Mouawad, J. (2010). Pushing 40: Southwest is still playing the rebel. New York Times, Nov 20, 2010.