Airlines Globalization and Technology Improving Term Paper

Pages: 6 (2977 words)  ·  Bibliography Sources: 4  ·  File: .docx  ·  Level: College Senior  ·  Topic: Transportation

The relationship of the customers may also be seen as beneficial, with many loyal customers returning to the company time after time. The organization has a loyalty scheme, which is not unusual for airlines, but for passengers to travel frequently it provides additional benefits which are likely to attract customers back to the same airline in order to gain the benefits associated with royalty (Kotler & Keller, 2011).

The acquisition of AirTran has created more resources, including knowledge resources, particularly with reference to international flights, as the company already had some international experience. The knowledge resources and experience that are gained has helped the organization expands away from just domestic flights, with the company now flying to the Caribbean and Mexico (Southwest Airlines, 2014).

The differentiation in terms of experience provided through interaction with employees, and a high level of efficiency would support further expansion of the airline. The ability to gain efficiencies and the lack of other companies with similar resources and advantages on international routes may indicate international expansion is a potentially viable idea. There are currently no low-cost carriers flying between the U.S. And Europe, and opportunities another destinations may benefit from a company that is able to provide a pleasant journey


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Southwest Airlines is unusual, as it has two mission statements, one general mission statement, and another with a statement on employees. The main statement says that "the mission of Southwest Airlines is dedication to the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride, and company spirit" (Southwest Airlines, 2014). The element of good customer service is highly aligned with the good employee relations, and reflects concepts such as the service value chain (Cook, 2008). When employees are happy, motivated, and feel appreciated, they are more likely to provide a high level of quality of customer service (Cook, 2008). The corporate culture is also aligned with the concept of friendliness and individual pride. The underlying support mechanisms, including the Internet website, and custom interfaces, also designed to provide high-quality customer service, through empowerment of the customers, with smooth and error-free systems. Investments in areas such as technology to upgrade the booking systems, and investments in cockpit software are also enhancing experience for passengers (Southwest Airways, 2014).

The importance of the employees is seen with the statement, first formulated in 1988, directed to the employees, where the company states that they are "are committed to provide our Employees a stable work environment with equal opportunity for learning and personal growth. Creativity and innovation are encouraged for improving the effectiveness of Southwest Airlines. Above all, Employees will be provided the same concern, respect, and caring attitude within the organization that they are expected to share externally with every Southwest Customer" (Southwest Airways, 2014). This commitment towards employees demonstrates the importance of the employment relationship, and supports the source of differentiation in terms of corporate culture and experience provided for passengers. It also helps to enhance the overall employment relationship, the commitments towards meeting the needs of individuals, equality, and providing an outward demonstration of appreciation for employees, all of which are aligned with the human relations school of thought associated with higher levels of motivation and staff performance (Buchanan & Huczynski, 2010).

The company does not have a specific vision statement, but it maybe argued division, which indicates the way in which a company seeks to perform, may be encapsulated within the mission statement of the employees. Therefore, the mission statements may be seen as highly aligned with the operations of the company, specifically targeting one of the areas to which there is a source of competitive advantage through differentiation.


Stakeholder Influences

Primary stakeholders include the employees and the customers. The employees have an influence, their expected to deliver the service, and in return there is a high level of employee support for employee needs. The employees are also encouraged to be innovative and creative, so may be seen as a source of competitive intelligence, as well as potential new developments which will help the organization to continue developing. The acquisition of AirTran brought to new employees, with different attitudes, used to a different culture. However, the ploys of both countries appear to have been integrated, and rather than enforcing on culture on another, there is a hybrid culture that has emerged, which is predominantly that of Southwest, but has facilitated the integration of the intellectual capital that has helped the organization expands into international markets.

Customers are essential to the organization, and therefore primary stakeholder. Customers have multiple, and often conflicting needs, they want high-quality service, but also one low-cost, they want enjoyable services that are easy, but also want efficient services. All of these needs may not be satisfied easily, but Southwest appears to have been able to create a balance between the different requirements, where they converge at a level that provides satisfaction for most customers. The expansion into international markets reflects the demand for the Southwest into new markets. The ease of switching airlines by customers, and increase competition which may encourage them to switch, has also seen the company invest significantly in the loyalty program as a way of trying to retain customers in order for them to make repeat purchases (Southwest Airlines, 2014; Kotler & Keller, 2011). It maybe argued that along with the employees, the customers are the most important stakeholder group for the organization.

The shareholders are also primary stakeholder group. Street shareholders will usually invest in an organization in order to gain a return, either as a capital return as the share price grows, and/or as dividends. The operating efficiency that supports a low-cost carrier position and the corporate culture that maximizes the productivity of the employees also supports the creation of profit. This reason, the company has been one of the most profitable airlines within the history of the U.S., with only a few quarters showing losses. Employees and customers appear to be more important stakeholders, but it is also recognized that by satisfying these first two groups of stakeholders, the shareholder group may also be satisfied.

The company sought to influence government, which is a stakeholder, are both a national and local level. For example, Southwest Airlines was a highly active influence in influencing local Texas legislation, and the repeal of The Wright Amendment which had been passed in 1979, and limited the destinations to which airlines could fly to only local states. The act was finally repealed on 13 October 2014, and now the airline is benefiting by expanding services out of Dallas to more distant destinations, such as Washington, Denver, Orlando, and Chicago (Southwest Airlines, 2014). The governance stakeholders exert a high level of influence on the organization, including constraining controlling the operations through regulation and legislation. However, companies demonstrate an ability to challenge some types of regulation.

There are many other stakeholders, but these generally have a lower level of influence. Suppliers of service, such as airports with the supply of landing slots, are very important, and may allow the organization to offer flights at attractive times. The influence of third-party supplies, such as maintenance engineers, has been reduced through the provision of services in-house.



Overall, it maybe argued that Southwest Airlines is in a very strong position. There different elements of the operations are all strongly aligned. Furthermore, an examination of the company through the I/O model and the RBV model indicate potentially similar strategies in order to improve performance and enhance profits from the use of current resources, while taking advantage of environmental factors, to expand internationally.


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Buchanan, D; Huczynski, A, (2010) Organisational Behaviour, Harlow, FT/Prentice Hall

Carey, (2014, Oct 14), Steep Learning Curve for Southwest Airlines as It Flies Overseas, Wall Street Journal, accessed at

Cook Sarah, (2008), The Essential Guide to Employee Engagement: Better Business Performance Through Staff Satisfaction, Kogan Page Publishers

Gittell, JH, (2005), The Southwest Airlines Way, McGraw-Hill

IATA, (2014, Oct 2), Demand for Air Travel Picks-up in August [press release] accessed at

IATA, (2014), Economic Performance of the Airline Industry, accessed at

Lieberman, Marvin B; Asaba, S, (2006), Why Do Firms Imitate Each Other? Academy of Management Review, 31 (2), 366-85

Maxon, T, (2014, May 5), Southwest Airlines to replace its reservations system, Dallas News, accessed at

McCartney, S, (2014, April 1), A Radical Cockpit Upgrade Southwest Fliers Will Feel, Wall Street Journal, accessed at

Morrison, Steven A, (2001, May), Actual, Adjacent, and Potential Competition: Estimating the Full Effect of Southwest Airlines, Journal of Transport Economics… [END OF PREVIEW] . . . READ MORE

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