Category: Southwest Airlines

Introduction

The organizational culture embraced in a business firm dictates its performance. However, a single approach to organizational culture might not deliver similar results in every organization. Southwest Airlines is a leading company that uses a people-oriented organizational culture. According to the company’s top managers, the ultimate goal of is to ensure the needs of the people are always put first. The workers are therefore empowered and encouraged to focus on their personal needs. A goal-oriented approach is used to deliver positive results (Klein, 2011). A team-based strategy is also used to ensure the needs of the external customer are addressed in a professional manner.

Internally, Southwest Airlines is associated with a powerful environment that empowers the targeted employees. The workers receive the best resources and tools in order to realize their goals. In order to deliver positive results, individuals are supported and empowered throughout the leadership process. The employees are encouraged to focus on their personal goals through continued innovation (Klein, 2011). The development of the workers plays a positive role towards promoting performance. Specific concepts such as teamwork, innovation, collaboration, and cooperation define Southwest Airlines’ culture. Rituals, gifts, and celebrations are used to empower the employees.

On the other hand, Koch Industries embraces a different approach to organizational culture. This company uses a market-based management (MBM) organizational culture (Koch Industries, 2016). This MBM approach is embraced in order to help different stakeholders realize their potentials. The ultimate goal of this organizational philosophy at Koch Industries is to guide and govern the activities of the employees. The firm uses the cultural approach to transform its workers. This practice is promoted because of its ability to produce greater value for different customers. There are specific values that characterize the firm’s organizational culture. These values include compliance, customer focus, respect, humility, integrity, change, value creation, and principled entrepreneurship (Koch Industries, 2016).

This analysis shows clearly that Koch Industries uses a different organizational culture from that of Southwest Airlines. This is the case because the workers are required to focus on the best outcomes. The company implements specific models that can improve performance and result in revenue growth. On the other hand, Southwest Airlines empowers its workers to work as teams, pursue their goals, and eventually focus on the experiences of the targeted customers (Piccolo & Bardes, 2011). However, both companies promote similar concepts such as innovativeness and aggressiveness in order to deliver positive results.

Merging the Companies

Possible Challenges

The decision to merge Koch Industries and Southwest Airlines is plausible. The proposed idea has the potential to maximize the business processes of the companies and eventually result in increased profits. However, the corporations are characterized by diverse organizational cultures. The acquisition of Southwest Airlines by Koch Industries will definitely result in new shifts in leadership practices. This development will have negative impacts on the effectiveness and performance of the employees.

At Southwest Airlines, decisions are usually made in a collaborative manner while Koch Industries relies on the ideas presented by the MBM leaders. That being the case, the decision-making process at the new firm will definitely be affected. Issues of trust might also emerge after the merger. Some of the workers at Southwest Airlines might not trust their counterparts from Koch Industries (Piccolo & Bardes, 2011). Consequently, the employees will find it impossible to work as teams.

The workers at Koch Industries embrace the concept of goal-oriented practice. According to them, profitability and positive goals are critical towards making the firm successful. The opposite is true at southwest airlines. This is the case because the company uses a team-based strategy to produce positive results. Southwest Airlines creates the best working environment whereby socialization and humor are encouraged (Whatley, 2013). This kind of practice in not encouraged at Koch Industries. These issues will definitely result in role conflicts at the new company.

The employees from the two firms might find it impossible to collaborate with one another. The processes of problem-solving, decision-making, and communication might be strained (Piccolo & Bardes, 2011). The workers will definitely become reluctant and fail to focus on the targeted business goals. The occurrence of such challenges can make it impossible for the merger to achieve its business objectives.

Strategies to Prevent Culture Clashes

When two companies merge, the chief executive officers (CEOs) mainly focus on their financial outcomes. This means that the decision to merge the cultural aspects of the companies is usually ignored. It would therefore be necessary to use powerful strategies to prevent culture clashes throughout the merger process (Whatley, 2013). The first strategy towards achieving this goal is ensuring that the values and visions of the corporations are merged. This move will ensure the firms create new values that can support every worker.

The next step is communicating these values to the workers. New behaviors, attitudes, and attitudes should be embraced in order to support the working environment. The employees can be included during the process. This strategy will make it easier for them to form new teams depending on their skill sets (Bird, 2011). The leaders in the companies should guide their respective workers to embrace the proposed values.

The new company should set measurable and attainable goals for the workers. The workers should be equipped with adequate skills and resources in order to focus on the targeted goals. The process will ensure the new workforce is aware of the targeted goals. The other important thing is to monitor the level of job satisfaction (Piccolo & Bardes, 2011). This strategy is critical because the workers have specific needs that must be addressed. The leaders will therefore offer the most desirable guidelines and skills in order to empower the workers.

The common aspects such as innovativeness should be taken seriously throughout the acquisition process. These aspects will bring the workers together and minimize the possibility of conflicts. The HR department should use a powerful code of conduct to guide the employees (Whatley, 2013). The code will ensure the workers collaborate with one another, focus on the best strategies, and support the needs of the targeted customers.

Concluding Remarks

Organizational culture defines the beliefs, practices, values, and strategies supported by a company. When two or more firms merge, it is impossible for the workers to continue using their original cultures (Piccolo & Bardes, 2011). This is the same issue that will face a merger between Koch Industries and Southwest Airlines. It is agreeable that the merger has increased chances of facing different challenges. That being the case, the leaders must use a powerful strategy to merge the cultural values and visions of their respective firms (Klein, 2011). This strategy will result in new values and workplace behaviors that can prevent culture clashes.

References

Bird, A. (2011). Southwest: Corporate culture combines work, play. The Post and Courier. Web.

Klein, D. (2011). Creating culture that lead to success: Lincoln Electric, Southwest Airlines, and SAS Institute. Organizational Dynamics, 41(1), 35-39.

Koch Industries. (2016). Web.

Piccolo, R., & Bardes, M. (2011). The art of capital restructuring: Creating shareholder value through mergers and acquisitions. New York, NY: Wiley.

Whatley, H. (2013). Principles and dimensions of market-based management. Independent Journal of Management & Production, 4(1), 126-135.

South West Airlines Company, commonly known as Southwest, is an airline company that mainly provides single-class air transportation for leisure and business passengers. Established in 1971 as a small company in Texas the passenger airline has grown to become a large force in the American market. It was the great ideas of Herb Kelleher and Rollin King that saw the birth of Southwest Airlines.

Starting with only three Boeing 737 aircraft and flying in only three cities (Houston, San Antonio, and Dallas), today Southwest serves more than 104 million customers in a year and flies in 64 major cities across America, for “more than 3,400 times a day” (Southwest, 2008). The airline company is characterized by the use of innovative ways to meet customer satisfaction with a distinct business model that emphasizes “point-to-point” service as opposed to “hub-to-spoke service” (Reuters, 2008).

The administration and management functions of the Company are headed by the Chief Operating Officer and the President respectively. What’s more, with the success of this airline company, the business model and the corporate governance of Southwest Airlines are worth emulating by other players in the airline industry.

The services and nature of business

The nature of the Southwest Airlines Company is unique considering the general airline industry. The company offers scheduled air transportation for passengers but within the United States. It emphasizes mainly point-to-point flights as opposed to common hub-and-spoke flying. Moreover, the Company offers single-class air transportation to both leisure and business travelers. It is worth noting that Southwest Airlines Company boasts of low operation costs as compared to other players in the domestic airline industry. The focus for Southwest is to maintain quality customer service and low costs.

The Company offers, on top of its core business, cargo services and programs that supplement its mission and vision. The cargo services entail mainly transportation of goods within the United State. Additionally, the programs include Kids Korner and Adopt a Pilot program, which is designed mainly for young kids. These programs are aimed at training young children on various life skills, while at the same time having fun.

For instance, the adopt-a-pilot program trains young people on aviation-related disciplines like career planning, language arts, presentation skills, science, and math. Moreover, the airline provides for passengers to travel in groups through the Group travel program. With this program, groups of ten passengers receive discounts if, of course, they are on a similar itinerary. Additionally, the Company recognizes and targets the gay and lesbian group by flying to travel destinations that encourage this group of people to travel. Freedom Shops and Skymall are Southwest Airline’s innovative concepts that broaden their services. The Freedom Shops and Skymall allow Southwest’s customers to shop and buy various merchandise.

Investing and Finances

The Southwest Airline company, being a public company, is owned publicly. That is to say, corporates and individuals own a part of the company, but of course, have to meet certain requirements of American law. Therefore, the shareholders are the main financier of this Company, and therefore Southwest shares are available through a stock exchange platform. Thus, its shares are traded under the New York Stock Exchange (NYSE) under the ticker “LUV” ticker. The ticker is a representation of the home feel at Dallas Love Field as well as the unique warm relationships among customers, shareholders, and employees.

The Company provides financial statements for its external users. The four main financial statements include a balance sheet, cash flow statements, income statements, and Non-GAAP reconciliation statements. The balance sheet, also known as the Statement of Financial Position, indicates the assets, owner’s equity, and liabilities at a particular time. On the other hand, an income statement spells out the revenues, expenses, and net income as well as loss for a given period. The Cash Flow Statement gives a summary of the cash payments and receipts.

As of December 31, 2007, Southwest was in good economic standing in terms of its assets and liabilities. The Company had total assets of $16,772 million of which $4,443 million were the current assets. This was a marked improvement against the previous year’s total assets of $13,460 million. However, the Company did not show improvements in liabilities which were at $16,772 million at the end of 2007 as compared to the previous liabilities of $13,460.

In terms of revenues, the Company showed an improvement of almost $800 million to record at $9,861 million. All in all the company recorded profitability. Thus the net income for the year-end in 2007 was $645 compared to the previous year’s $499. This translates to about $0,84 per basic share and $0.85 per diluted share for the year ended December 31, 2007.

According to these statements, it is evident that Southwest’s business performance is impressive given the fact that the business was faced with several challenges. The profitability indicates that the company is viable for investors to invest their money. Moreover, with commitments by the management, the Company has the potential to grow further.

Although the main business activity of Southwest Airlines includes flying passengers, business operations are diverse. These operations include activities such as administration, marketing, aircraft maintenance, and outsourcing that fall under the following management categories:

Top Management

The operation of the company is made possible by a well-structured executive team that oversees the operations and administration of the airline company. The company is headed by a President and Chief Executive Officer, a position which is currently occupied by Gary C. Kelly, who is also the Chairman of the Board. Moreover, the company functions under the support of Vice Presidents who oversee various sections of the company. They include the following:

• Kevin M. Krone, Vice President of Marketing, Sales and Distribution;
• Robert E. Jordan, Executive Vice President of Strategy and Planning;
• Teresa Laraba, Vice President Ground Operations;
• Ron Ricks, Executive Vice President Corporate Services and Corporate Secretary;
• Chuck Magill, Vice President Flight Operations;
• Michael G. Van De Ven, Executive Vice President and Chief Operating Officer;
• Jan Marshall, Vice President Technology and Chief Information Officer;
• Ginger C. Hardage, Senior Vice President Culture and Communications;
• Pete McGlade, Vice President Schedule Planning;
• Daryl Krause;Senior Vice President Customer Services;
• Bob Montgomery,Vice President Properties;
• Jeff Lamb, Senior Vice President Administration and Chief People Officer;
• Rob Myrben, Vice President Fuel Management;
• Dave Ridley, Senior Vice President of Marketing and Revenue Management;
• Lori Rainwater, Vice President Internal Audit;
• Greg Wells, Senior Vice President Operations;
• Tammy Romo, Vice President Financial Planning;
• Laura H. Wright, Senior Vice President Finance and Chief Financial Officer;
• James A. Ruppel, Vice President Customer Relations and Rapid Rewards;
• Barry Brown, Vice President Safety and Security;
• Linda B. Rutherford, Vice President Public Relations and Community Affairs;
• Gregory N. Crum, Vice President Director Operations;
• Mike Ryan, Vice President Labor Relations;
• Darren Dayley, Vice President Technology Customer Experience Portfolio;
• Ray Sears, Vice President Purchasing;
• Matt Hafner, Vice President Ground Operations;
• Jim Sokol, Vice President Maintenance and Engineering;
• Mike Hafner, Vice President Inflight Services;
• Scott E. Topping, Vice President Treasurer;
• Scott Halfmann, Vice President Provisioning;
• Ellen Torbert, Vice President Reservations;
• Joe Harris, Vice President Labor and Employee Relations;
• Chris Wahlenmaier, Vice President Ground Operations;
• Laurie Hulin, Vice President Technology Aircraft Operations & Enterprise Management Portfolios
• Kathleen Wayton, Vice President Strategy and Change Leadership;
• Madeleine Johnson, Vice President General Counsel;
• Kay Weatherford, Vice President Revenue Management and Pricing;
• Leah Koontz, Vice President Controller;
• Bob Young, Vice President and Chief Technology Officer.

Conclusion

In this discussion, the analysis of Southwest Airline Company is intended to evaluate its financial standing. The discussion starts with a preview of the company’s nature of business, and explores the financial, investments elements as well as the corporate governance to conclude that the Company is viable for investing in.

References

Reuters. Southwest Airlines Co (New York Stock Exchange). 2008. Web.

Certain practices help a company grow in various areas. Good practices are important to make sure that a company reaches the top. These practices can make the difference between success and failure. Every company knows its strong points and therefore should build from there while giving employees the respect that they require. This will ensure that the company has a good internal relationship thus ensuring faster development. Good practices should be encouraged in all companies to ensure harmony to the members and growth for the company. (Libby, 1998)

Southwest Airlines has been able to create a conducive environment for every individual that is associated with the company. They have been able to incorporate fun within the work environment allowing people to relax while doing their work. This is what has attracted many people to want to work with the company from all over the country. The company’s CEO Herb Kelleher has a pleasant personality where he treats everyone with great respect. The company has been able to make solid principles with his help and this will ensure that the company prospers even when he retires. Southwest Airlines, they believe in having fun while doing their work. In this way, they build teamwork in the company that helps them make wise decisions that have contributed to the success of the company. (Libby, 1998)

The company has incorporated fun as part of its company culture. This is what gives employees motivation and having a positive approach in their workplaces. The company has managed to achieve open communication between the employees and the executive. They have been able to allow free and open interaction with everyone allowing everybody to be at ease all the time. They have gone ahead and created a team that is responsible for ensuring that the company’s spirit keeps burning. This has been greatly influenced by the company’s aim of capturing the true feelings of the employees ensuring a smooth flow of information. (Arthur, 2006)

I think that many employees would like to work in a company where they are having fun. This is because they will not be stressed in their areas of work and are free to air their views at any given moment. SouthWest company has been able to achieve this with the CEO even sending birth cards to his employees. The company marks all the holidays in style by throwing parties for the employees and encouraging them in their various jobs. The company runs all its functions and processes in a simple manner allowing everyone to understand what they are doing. This is what makes many people want to work for a fun company like this one. (Drew, & Scott, 2008)

SouthWest has maintained very high standards for its hiring procedures. Those wishing to join the company are well screened on how well they fit the company’s practices of compassion, caring, and unselfish employees. The candidates have to be team players with a strong job ethic because most of the work done is not supervised. They have to be able to withstand stress, ability to manage time, and be people with no stereotypical attitude and focused on their work. Skills are essential but are not enough in this kind of work. Training is provided in the company with many courses being offered that include Customer Care Training as well as Front- Line Leadership. (Arthur, 2006)

I think that other companies could adopt this motto because it emphasizes attitude, which is essential for employees who are hoping to perform. This helps the employees to learn and grow with the company while at the same time the company helps the employees grow in their line of work. This motto carries a lot of weight in ensuring that the company’s policies are intact. This is what is required in a company in its daily operations; people with a positive attitude towards work. This motto has helped Southwest Airline achieve great heights and thus they can follow the same. (Drew, & Scott, 2008)

Southwest Airlines has built a strong culture for the company that will enable it to remain at the top for all time. This is because they have been able to learn the essence of working together for the good of the company. They have maintained high standards due to their persistence in their work practices that allow everyone to be happy. Other companies should follow suit because this kind of culture is good practice that ensures many are successful. Companies should treat employees well because if they do their work well they lead to the growth of the company.

References

Arthur, D. (2006). Recruiting, interviewing, selecting & orienting new employees (4^th Ed), AMACOM Div American Mgmt Assn.

Drew.G, & Scott B. (2008). “Records: Southwest Airlines flew ‘unsafe’ planes”. Web.

Libby. S. (1998). “Why and how Southwest Airlines uses consultants” Journal of Management Consulting. Web.

Incentivizing is a method of rewarding employees for their work, based on a comparison of work efficiency and remuneration. An essential issue in this area is the significant excess of wage growth over labor productivity that leads to a decrease in the incentive function of the salary. The system should give people a sense of confidence and security, include effective incentives and motivations, and ensure the process of reproduction.

Incentives for business can solve employees’ problems, satisfy their values, and be instruments of administrative influence. Apart from the prevalent material methods, there are a significant number of non-material approaches of rewarding motivated employees. These include various types of benefits, non-financial incentives, and activities (Prince et al., 2020). Employees who are well motivated achieve better results and trust their employer.

Before introducing any motivational programs for employees in an organization, the manager or HR must clearly define their goals and objectives. As a rule, the goal is to increase employees’ loyalty to the company and improve their performance. However, the list of tasks is more significant: first of all, it is the employees’ professional development. Some programs improve staff skills, address weaknesses, and enhance performance. (Prince et al., 2020). Achieving new skills should be encouraged: if an older employee did not know how to use a computer and learned to use it after a few months, this achievement should be noted.

Secondly, incentive programs help ensure the stability of employees. Staff turnover can be very damaging to business: beginners can work less efficiently than already experienced employees. Furthermore, vacancies that are always open create a bad reputation for the firm – people wonder why everyone leaves. A loyalty program should create a desire among employees to work in the firm as long as possible (Prince et al., 2020). Finally, stimulation allows employees to achieve the highest possible performance. An employee with a higher level of motivation produces better results.

In the face of rapidly changing business processes, motivation and incentive programs can and should be continually adjusted. An approach that has worked for some time may well stop working if some key parameters have changed. Therefore, to maintain the corporate spirit at a high level, managers and HR departments need to monitor market and labor trends, as well as innovations in the field of staff motivation.

Reference

Prince, N.R., Prince, J.B. & Kabst, R. (2020). National culture and incentives: Are incentive practices always good? Journal of World Business, 55(3), 1-13. Web.

Southwest airlines’ primary business function is the transportation of cargo and passengers. The airline has made use of sustainable and efficient strategic management principles which have given the company good performance records, despite the recession, terrorist threats, and the high fuel prices that shook the airline industry. These were achieved through the company’s main principle of low operational costs, high cash flows, and low borrowing from domestic and international markets (Southwest airlines, 2010). These principles are the products of the strategic management plans laid down by their finance office.

All internal and international financial decisions and management plans are directed by the office of finance and chief financial officer (Forbes, 2011). This office is headed by Laura Wright H. who is the senior vice president at southwest airlines and a member of the planning committee and has served in this position since July 2004 (Forbes, 2011). Before this, Laura Wright served as the vice president for finance and the treasurer of the company from June 2001 to July 2004 (Forbes, 2011). This post had been preceded by the post of treasurer from the year1998 to 2001, assistant treasurer from 1995 to 1998, and as the director of corporate finance from 1990 to 1995 (Forbes, 2011). Laura has been with southwest airlines for over two decades, following her employment in 1988 as the director of corporate taxation. This implies that as the vice president in charge of finance, she has a wealth of experience in corporate finance, international financial markets and is familiar with the managerial principles and vision of the company.

Strategic financial management plans have been associated with the ability of the low-cost carrier to enjoy increased profit margins during the turbulent global financial crisis. One of the financial strategies used to maintain the airline in the international financial market is position logic, where the airline successfully linked its resources together to reinforce activity systems (Southwest Airlines, 2011). Southwest’s management plans of finances involved the use of readily available resources, like the purchase of a single type of plane, the use of less popular airports and gates to increase their market position against competition. This strategy has defined the airline as a model of a low-cost airline.

The finance office has also been very innovative in the creation of financial management tools, which reduced risks to the airline within the domestic and international markets. The finance office had discovered that by 2007, the largest expenditure apart from salaries was fuel cost. To maintain its leverage as a low-cost carrier, the airline finance team adopted financial and derivative instruments in the famous 10-K report (Brooks & Chance, 2010). Under Laura Wright, the company has been using this financial instrument for its long and short-term financial plans. The company uses fuel derivatives to reduce its fuel costs against market fluctuations like the credit crunch. Southwest Airlines’ financial plan makes use of a combination of financial instruments like purchased call options, fixed price swap agreements, and collar structures, which protect over 70% of its expected fuel requirements (Brooks & Chance, 2010). This percentage is about the price of oil per barrel and any refinery margins. The company had placed fuel derivative contracts, for 55% of expected fuel consumption at $51 per barrel for the year 2009, a further 30% for 2010 at the rate of $63 per barrel. For 2011, the company invested in fuel derivative contracts at over 15% at the price of $64 and over 15% at $63 for 2012 (Brooks & Chance, 2010). This financial plan cushioned the company from the high fuel prices of 2008, which had shot to $140 per barrel (Brooks & Chance, 2010). This price was three times what the company had paid for fuel through its fuel derivative plan. Fuel derivative plans are also referred to as fuel hedging, a concept southwest Airlines has effectively used to reduce the financial risk it would face in the current volatile global financial markets (Southwest Airlines, 2011).

The company has also laid down several risk management strategies that enable it to manage international financial market risks like interest rate, credit and financing, and liquidity risks. To handle these risks, the airline has adopted a capitalization conservative strategy that allows it to grow steadily within the American market. This capital conservative strategy prevents it from seeking resources outside America, and which are readily available in the local market (Brooks & Chance, 2010). To cushion its profit fluctuating interest rates of banks and lending institutions, the airline maintains modest financial leverage and strong business. These are designed to allow it to grow steadily and profitably without huge lending margins. Moreover, this strategy has allowed the company to enjoy their ‘A’ credit rating with S&P and a high ‘Baa1’ with a moody rating for unsecured fixed-rate debt (Brooks & Chance, 2010). The company maintains a very low debt ratio and uses market-sensitive instruments like interest rate swaps to avoid solvency and bankruptcy. They also make use of the redemption of floating-rate debts to maintain their high credit rating (Southwest Airlines, 2011). Lastly, the company has aggressively invested in high money markets, certificates of deposit, and grade commercial paper to reduce the risks of international financial markets.

References

Brooks, R. and Chance, D.M. (2010). Introduction to Derivatives and Risk Management (9^th Ed.). NY: Cengage learning.

Forbes.com (2011). Laura H. Wright: Senior Vice President, Finance and Chief Financial Officer. Web.

Southwest airlines (2010). The Mission of Southwest Airlines. Southwest.com. Web.

Southwest Airlines (2011). 2010 Financial Statistics. Southwest.com. Web.

Amazon.com, Inc. is a company that specializes in providing online retail purchasing services. North America, International, and Amazon Web Services are the company’s three main segments (AWS). Retail sales of consumer items and subscriptions through North American-focused websites such as www.amazon.com and www.amazon.ca are included in the North America division. Retail sales of consumer items and subscriptions are available through international-focused websites in the International sector. Amazon Web Services sells computing, storage, databases, other AWS services to start-ups, corporations, government organizations, and academic institutions all over the world.

Amazon dominates the markets it serves, particularly in e-commerce and cloud services. It has a number of competitive advantages and has emerged as the obvious e-commerce leader as a result of its size and scale, which allows it to offer consumers an unrivaled range of low-cost items. The company’s remarkable growth in the retail sector continues to be fueled by the secular shift toward e-commerce (Kelty, 2018). When compared to its main competitors the most recent analysis indicates mixed performance, as, eBay Inc. climbed 0.23 percent to $74.67, Alphabet Inc. Cl A lost 1.77 percent to $2,728.98, and Walmart Inc. fell 0.11 percent to $139.38, respectively. Amazon’s trading volume (1.8 million) was 1.0 million lower than the 50-day average volume of 2.8 million (Kelty, 2018). Nevertheless, historically the firm has demonstrated high numbers and financial profitability.

Southwest Airlines is a competitor in the airline business that promotes itself as a low-cost carrier that values its customers. These two characteristics form the foundation of their company. It’s what separates them from big rivals like Delta/Northwest, Continental/United, JetBlue, and Allegiant. Deregulation has allowed for increased travel as a result of government regulation. As a result, there are more customers joining the business than ever before. As more people enter the market, more competitors emerge to meet their needs. Southwest Airlines has maintained its market dominance by continuing to offer affordable rates while maintaining a caring attitude toward customers.

Southwest Airlines Co. (NYSE:LUV) had 3.18 million shares moved in the most recent trading session, with a beta of 1.22. The company’s most recent share price was $53.92, down -$0.12 or -0.22 percent from the previous closing, bringing the company’s market worth to $31.97 billion. LUV is presently trading at a discount to its 52-week high of $64.75, representing a discount of almost -20.09 percent. The 52-week low for the stock was $37.48, implying that the current value has increased by 30.49 percent since then. Southwest Airlines Co.’s average daily trading volume is 7.43 million shares on a 10-day basis, with a 3-month average of 7.34 million shares.

Based on a mean score of 2.00, the shares of Southwest Airlines Co. earned a consensus recommendation rating of Buy. If we look at the data even more closely, we can see that 0 out of 22 analysts rank the stock as a Sell, while 3 others rate it as Overweight. LUV was classified as a Hold by 2 analysts, a Buy by 17 analysts, and Underweight by 0 analysts. Southwest Airlines Co. is anticipated to have a loss of -$0.07 per share in the current quarter.

In the financial market, Amazon is known for exponential cash flow growth on a year-by-year basis. The key statistic grew from 0.2 percent in 2014 to 2.1 percent in 2015, putting the corporation in more respectable territory in its aggressive retail sector. While investors are clearly satisfied with the year as a whole, considering the stock’s substantial gain in the previous 12 months, the fourth-quarter numbers were worse than expected, prompting a sell-off. Analysts anticipated Amazon to announce $35.7 billion in sales and $1.56 in earnings per share for the quarter; however, the firm reported $35.7 billion in revenue and $1 in earnings per share. Analysts anticipated Amazon to announce $35.7 billion in sales and $1.56 in earnings per share for the quarter; however, the firm reported $35.7 billion in revenue and $1 in earnings per share (“Yahoo is now a part of Verizon Media”, 2021). Long-term investors were rewarded handsomely for the company’s great success in 2015, even after Friday’s sell-off, due to the consumers.

Starting with standard free cash flow measurements, one may look at Amazon’s investor presentation for the second quarter of 2016. Cash flow from operations less capital expenditures on property and equipment, including internal-use software and website development expenses, is how Amazon defines free cash flow. Surprisingly, Amazon’s management clearly states that the company’s long-term goal is to increase free cash flow. Using leases rather than acquiring assets to optimize free cash flow might be a reasonable and prudent approach from this standpoint. Amazon’s financial goal, as seen by their annual report for 2015, is on long-term, sustainable increase in free cash flows per share. Increasing operational revenue and efficiently managing working capital and cash capital expenditures, including our decision to buy or lease property and equipment, are the primary drivers of free cash flows.

The company’s free cash flow for the year ending in the second quarter of 2016 was $7.3 billion, up 68 percent year over year. Calculating free cash flow and then subtracting “principal repayments of capital lease obligations” and “principal repayments of finance lease obligations,” which are both included in cash flow from financing activities in the cash-flow statement, yields free cash flow less lease principal repayments. This statistic calculates free cash flow after accounting for Amazon’s lease payments in cash. During the year ended June 30, free cash flow less lease principal repayments was $3.9 billion, up 65 percent from the same time the previous year.

Similarly, Southwest Airline’s cash flow has increased within the established period between 2015 and 2016. Southwest’s adjusted earnings reached a new high of $2.4 billion, or $3.52 per share, in 2015. In the meantime, the company’s operating margin (excluding exceptional items) increased to 20.1 percent (“Southwest Airlines Co. (NYSE: LUV): A Disaster In The Making Or A Gold Mine?”, 2021). In 2016, the firm expects to achieve even better earnings and margins. Earnings growth is, without a doubt, a major driver of free cash flow expansion. Southwest Airlines has stronger profits growth potential than many of its airline sector peers, despite its already excellent profitability.

To begin with, Southwest Airlines sells almost all of its tickets in the United States. As a result, it will continue to profit from the robust domestic travel market and will not be affected by currency rate changes in foreign operations. Second, Southwest has been losing a lot of money on fuel hedging lately. The business plans to pay $1.95 to $2.00 per gallon for jet fuel for the entire year of 2016 (“Southwest Airlines Co. (NYSE: LUV): A Disaster In The Making Or A Gold Mine?”, 2021). That’s a lot more than the going rate. After 2016, these hedging losses will be considerably reduced.

As a consequence, even if oil prices climb to $60 per barrel in the next year or two, Southwest’s average fuel price will remain relatively unchanged from what it expects to pay in 2016. Meanwhile, the company’s fleet renewal initiatives will focus on increasing fuel economy. Most other airlines, on the other hand, would spend more for fuel if oil prices rose to $60 per barrel compared to 2016. Third, Southwest Airlines is replacing its decades-old domestic reservation system with a new, cutting-edge system with expanded capabilities. Southwest anticipated a $500 million increase in yearly operating profits from the new system by 2020.

References

Kelty, A. (2018). The Rise of Amazon. Retrieved 14.10.2021 from Scholarly Commons – Discovery Day – Daytona Beach: The Rise of Amazon (erau.edu).

Southwest Airlines Co. (NYSE: LUV): A Disaster In The Making Or A Gold Mine?(2021).

Yahoo is now a part of Verizon Media. (2021).

Introduction

Southwest Airlines is a successful company in demand by a considerable number of people. It has a unique strategy, and price quality, and speed are its apparent elements. Southwest Airlines proposes affordable flights between medium-sized cities and major secondary airports (Zou & You, 2020). Check-in takes minutes, and the grade of assistance is always outstanding, with all employees being friendly and fast. I have used the service of Southwest Airlines and other companies, including Emirates. It is worth noting that Emirates provides comfortable and reliable flights; all employees are responsible for the items and comfort of the passengers (Saed et al., 2020). The company coordinates schedules and luggage transfers, so there is no reason to fear it. Nevertheless, flight delays and long check-ins still occur despite the relatively high ticket price.

Southwest Airlines does not provide meals, baggage tracking, or other premium benefits. However, it offers cheap, convenient, and fast service on specific routes. Boarding takes an average of 15 minutes, and automated ticketing right at the gate allows one to avoid contacting a travel agent and paying extra fees (Zou & You, 2020). The company is also responsible for canceling and rescheduling flights, which means that it is reliable. The companies have distinctions, but they both have satisfactory and reliable services. Delays happen everywhere, while Southwest Airlines is a much more budget-friendly option. This airline’s standardized fleet, consisting exclusively of Boeing 737s, increases maintenance efficiency (Zou & You, 2020). It has taken a unique and valuable strategic position based on a specific set of activities. On routes served by Southwest Airlines, full-service companies can never offer the same ease of travel or the same low prices. These competitive advantages allow them to hold a position in the marketplace and remain favored.

Panera Bread’s History and Initial Strategy

Panera Bread is a bakery chain that has become a source of inspiration for entrepreneurs worldwide. Its success story consists of a string of mergers and acquisitions. The original idea was to set up a chain of cookie stores, but it soon became clear that the concept needed to expand. Ron Shaich made the risky decision to consolidate business with unscrupulous vendors, and thus Panera Bread was born (Goudreau, 2014). Shaich is considered a leading figure and stakeholder in forming café bakeries as a separate self-sufficient niche in the fast-casual segment. He understood the need to reconsider fast food and create something unexplored, more rewarding, and impressive. The company’s strategic vision possessed the understanding that competitive advantage is the most crucial element of success, so there is a need to create exceptional products and evolve.

Panera Bread’s Current Strategic View

The company’s current strategic plan has similar features and consists of actively introducing advanced production technologies and communicating the idea of healthy food and pure products. It also concentrates on the mass segment, fast, and quality service (Negowetti et al., 2020). Panera Bread uses technology to automate old processes and invent new retail models. It offers numerous options for ordering, shortening wait times, and increasing comfort. This concept is prominent, so the only recommendation is to improve flexibility and expand the menu of establishments to increase the number of consumers.

Best Planning Process Practices

The conditions of the modern world change rapidly, but the planning process always includes equally crucial stages. They consist of the problem statement, its expansion, and implementation (Morden, 2017). The most challenging for me is always the process of development, which involves an assessment of risks and the search for resources. In this situation, the practice of visualizing a goal is valuable. Visual perception provides a more accurate understanding of the processes, making planning, control, and management more convenient and precise. Another practice is to assess the strengths and weaknesses of the idea, which many companies use. A concrete example is Lenovo, whose employees spend a lot of time studying the possible risks and putting them on paper. Various practices guide everyone, but they all have the common goal of making planning more effective.

References

Al Saed, R., Upadhya, A., & Saleh, M. A. (2020). Role of airline promotion activities in destination branding: Case of Dubai vis-à-vis Emirates Airline.European Research on Management and Business Economics, 26(3), 121-126. Web.

Goudreau, J. (2014). Here are the epiphanies that made Panera a $4.5 billion restaurant chain. Insider. Web.

Morden, T. (2017). Principles of management. Routledge.

Negowetti, N., Ambwani, S., Karr, S., Rodgers, R. F., & Austin, S. B. (2022). Digging up the dirt on “clean” dietary labels: Public health considerations and opportunities for increased Federal oversight.International Journal of Eating Disorders, 55(1), 39-48. Web.

Zou, L., & Yu, C. (2020). The evolving market entry strategy: A comparative study of Southwest and JetBlue. Transportation Research Part A: Policy and Practice, 132, 682-695. Web.

Southwest Airlines significantly differs from other companies in this field by implementing a model, which reduces the expenditures in many aspects and makes flights more affordable to the broad public. In addition, the company aims to develop and improve this strategy in the long run by attracting more passengers to travel without significant costs. Although this model sounds prospective and profitable, other airlines do not adjust their operations to this effective model and do not plan to do it.

The reason for it is the fact that these other airlines are intended to serve customers of other income and values. As for Southwest Airlines, its potential clients imply people of low income or people, who are willing to save money on transporting from one point to another (Ren, 2020). Their priority is reaching their destination with the best possible price regardless of conditions, or they will be satisfied with economy class service. However, there are customers, who appreciate comfort, and it appears to be the major value for them. These people may have specific health problems and need additional attention from flight attendants or special conditions. In addition, it may involve celebrities, who adhere to privacy while traveling somewhere. These categories of customers are ready to pay more money in order to fly in comfortable conditions or receive premium service. In other words, companies have a different targeted audience, and for this reason, there is not a necessity to change business models.

However, it should be mentioned that Southwest Airlines encounter some risks on the market. Positioning itself as a low-cost option, the company has to maintain an appropriate level of prices in accordance with the prices of competitors (Asahi & Murakami, 2017). Therefore, there is a risk of receiving low revenue or do not have it at all. In addition, Southwest Airlines cannot cancel a flight even though only half of the tickets are sold, which also threatens its profit.

As every company during economic crises, Southwest Airlines is highly likely to lose part of its usual revenue, though it may appear to be relatively resistant. During economic hardships, the average income of the population decreases, so they will probably adhere to tickets of low prices. In case some companies attempt to copy Southwest Airlines, the business may win the competition via its authority and stable quality of service (Speta, 2016). Therefore, the company will be prosperous in the long run.

References

Asahi, R. & Murakami, H. (2017). Effects of Southwest Airlines’ entry and airport dominance.Journal of Air Transport Management, 64, 86-90. Web.

Ren, J. (2020). Fare impacts of Southwest Airlines: A comparison of nonstop and connecting flights.Journal of Air Transport Management, 84. Web.

Speta, J. B. (2016). Southwest Airlines, MCI, and Now Uber: Lessons for managing competitive entry into taxi markets. Transportation law journal, 32(2).

Introduction

While it is essential for a company to understand its goals, the final results are unreachable without a clear step-by-step plan. Southwest Airlines is no exception to this rule, as there are many complex changes that the company must accept in order to remain at the top of low-cost air travel companies. This essay aims to analyze what steps must be taken by Southwest Airlines to optimize its operations in accordance with the SWOT analysis from the previous paper.

Implementation of Changes

As has been discussed, the company has a number of issues related to its outdated policies. While Southwest continues to show profits, there are signs that suggest that the firm’s strategy must be reassessed and reimagined. The company has built a highly optimized value chain, yet it needs some additions, such as new destinations, services, and planes. Its fleet and its employees are the primary sources of change, although new leaders can provide an instant result as well.

Southwest Airlines has many weaknesses and threats related to its connection with Boeing. Although the company made attempts to break this connection in the past by trying out Airbus A220, the new deal with Boeing proves that Southwest is unable to make such a change instantly (Koenig, 2021). The company must find a way to keep its strength intact since, for example, maintenance costs for Southwest remain relatively low through the usage of Boeing planes (Inkpen, 2017). Another step towards the desired changes is to establish a new deal with the company that can provide planes alongside their parts, preferably ones that will enable new services, such as cargo transportation.

Changes in leadership positions can help Southwest with this process. It has been recently announced that the CEO of the company, Gary Kelly, will transfer his post to the current executive vice president, Robert Jordan (Shapiro, 2021). This crucial change is supposed to bring a new perspective on the company’s development and help it with revising its course of action. This step can instantly change the direction of the company.

Employees possess the power to change the company as much as its leaders. Currently, the company’s pilots are well-trained to pilot Boeing planes only, making it difficult to implement other types of aircraft (Inkpen, 2017). There might be a necessity to sacrifice this strength due to the uncertainties introduced by the recent lockdown. The lack of training among staff to pilot planes from other manufacturers can prevent Southwest from expanding into cargo transport and from providing in-flight services that some customers wish to have. A more diverse skill set will significantly benefit the pilots, as they are especially sought after by the labor market (Arnold, 2021). Therefore, one of the initial steps must be setting up additional training courses for pilots.

Conclusion

In conclusion, there is a need for Southwest Airlines to revise its approach to cost optimization through the gradual implementation of new services that will give the company more stability through diversity. It is vital for the company to begin the preparations for changes in the fleet ahead of time by providing training courses for its pilots. Then, the changes in the leadership of Southwest will offer a fresh look at its current deals. One of the deals that must be reviewed is the close partnership with Boeing. These changes will enable Southwest Airlines the ability to fully diversify its portfolio, making it more stable and resilient to sudden crises.

References

Arnold, K. (2021). Even airlines like Southwest are having a harder time recruiting new workers. MSN. Web.

Inkpen, A. (2017). Southwest Airlines. Thunderbird: School of Global Management.

Koenig, D. (2021). Southwest Airlines orders 100 Boeing 737 Max planes. Yahoo News.

Shapiro, A. (2021). Southwest Airlines’ travel demand rises above 2019 levels. MSN. Web.

Leaders of large companies must constantly develop internal processes. This allows them to have a beneficial effect on both employees and customers. As a result, all these stakeholders are satisfied and more willing to cooperate, shop, work, and perform other activities (Riggio, 2013). Southwest Airlines is an outstanding example of an organization with streamlined processes and a healthy corporate culture. However, there is always room for improvement, so the current state of affairs can be changed for the best. One of the problems to be addressed is the lack of a formal union-management structure of consultation and representation processes. The purpose of this paper is to discuss ways to address this issue and improve the company.

In this case, the company’s management structure acts as an Independent Variable, and the number of issues resolved by the unions is a Dependent Variable. Thus, this study hypothesizes that the organization’s existing governance structure can fine-tune processes so that unions tackle more issues with better results. This is essential for the company’s development and prosperity, as it allows employees to influence processes from the inside. They see weaknesses and come up with ways to address them, thereby improving the functioning of various areas of Southwest Airlines’ operations.

To conduct the research, it is necessary to study the organization’s current structure and collect complete information about the work of the unions. Probably, already now in other departments of the company, interaction has been established in one way or another. Therefore, these developments can be useful for this case. After that, based on this information, it will be possible to create a unified system of communication with company managers and develop rules for interaction. This system will need to be tested across all stakeholders and run to achieve maximum satisfaction for each.

To gather information about the current state of affairs, it is necessary to examine the interaction between leaders and representatives of the unions. To do this, one can communicate with these people personally, having previously compiled a questionnaire, and study the documents that record past appeals and subsequent changes. This will allow us to find out at what stage of development the interaction is now. After that, we can create a survey for all stakeholders. It should include questions about how communication between leaders and unions is organized and what changes are needed. Thus, we will better know the strengths and weaknesses and find new ideas. It will be useful to study competitors’ experiences, for example, by collecting data on the Internet. This will speed up the process of developing an interactive system and avoid the mistakes of other companies.

I assume that this work’s result may be the development of a unique system of inquiries from unions to the managers of Southwest Airlines. This system can be electronic or paper-based. Its use will lead to more productive interaction between different parts of the organization. It will probably be useful not only for the unions but also for other divisions of Southwestern Airlines. Thus, the company will be able to listen more closely to employees’ wishes and resolve incoming requests faster and more efficiently. This will have a beneficial effect on internal processes and, as a result, on the customers’ satisfaction. Consequently, Southwest Airlines will become a priority choice of travelers and will be able to differentiate itself from the competition.

Reference

Riggio, R. E. (2013). Introduction to industrial-organizational psychology, 6^th ed. Pearson.