A Guide to Case Analysis: Sample Case Analysis of Southwestern Airlines
By
Kubilay Gok, MS, MHRLR, PhD
Management 3050: Human Resources Management
Faculty of Management
University of Lethbridge
Fall 2010
A.) Business Strategy: Southwest Airlines Company employs a low cost differentiation strategy to compete in its service industry against its competitors. Southwest attempts to differentiate itself from competitors by integrating unique dimensions into its service and products. In other words, the business model of Southwest airlines is to offer the highest quality of customer service which capitalizes on a sense of warmth, friendliness, individual pride, and company spirit. It primarily provides short haul, high-frequency, point-to-point, low-fare air transportation service among 58 cities (59 airports) in the United States. This business model enables Southwest Airlines to maintain a low cost strategy, which cannot be matched by its competitors without assuming significant financial and other operational challenges and capital investments.
B. Alignment: An essential factor to Southwest Airlines’ success is the operational efficiency of maintaining a low turnaround time, the time required for a plane to land and take off again. Southwest Airlines achieves this operational efficiency by means of maintaining a high level of teamwork, coordination, and flexibility among different employees and occupational groups. To accomplish this advantage, the company works hard at maintaining a culture that emphasizes flexibility, family orientation, and fun. In other words, Southwest Airlines’ low cost differentiation strategy relies on building and maintaining customer loyalty through customer satisfaction which is driven primarily by means of on-time flight schedules, fewer customer complaints, and a lower ratio of lost items. In other words, the organizational structure of Southwest Airlines promotes alignment between roles, rewards, and people practices. I like to discuss my observation under the following sections:
Roles: Roles delineate the way work is designed and organized in an organizational structure. The role structure of Southwest Airlines promotes a high level of teamwork, coordination, and flexibility among different employees and occupational groups. The broad job descriptions of role structures enable and empower all employees regardless of their occupational classification at the company. Employees are given a great degree of latitude to be creative and innovative and pragmatic to solve the problems they face in regard to customer complaints or other operational challenges. The existence of horizontal and vertical communication and coordination expectations foster a positive peer pressure on each employee. The role structure also promotes the use of minds and an organizational flexibility, which in turn leads to higher level of employee commitment. What I observe is that roles are designed to support the organizational strategy and business model of Southwest Airlines because company personnel are empowered to respond to unique circumstances of their experiences with customers, which in turn helps to create a positive company image as perceived by the customers.
Rewards: The analysis of the case information reveals that reward structure relies on extrinsic as well as intrinsic elements. Reward system is designed to foster the climate of teamwork. This is accomplished by means of addressing the issues of wage compression between horizontal positions and vertical positions. Particularly CEO pay relative to that of others is something that signals the importance of all employees for the company. Although employees work harder and paid less compared to other airlines company employees, Southwest overcomes this inequity by means of discounted stock options, profit sharing, and most importantly with a policy of secured jobs. Besides these extrinsic incentives, Southwest promotes and instills a sense of
