Dhian Ayu Paramita Management Control System

Assignment
12/335910/EK/19096 Disussion !uestions
"" Case 3#1
Southwest Airlines Corporation
Question 1 : What is Southwests strategy? What is the basis on
which Southwest builds its competitive advantage?
$ne o% the goals o% the om&any is to ahie'e its goals (hih an )e seen
through the *ision# South(est+s *ision , -o )eome the Worlds Most Loved, Most
Flown, and Most Proftable Airline an )e ahie'e. )y &lanning goo. strategy#
Strategy is also nee.e. in or.er to ahie'e South(est+s goals an. &ur&ose/
(hih is ,To connect People to whats important in their lives through riendl!,
reliable, and low"cost air travel# -he main strategy o% South(est is the a&a)ility
o% the om&any to manage an. ta0e a.'antage o% its om&etiti'e a.'antage#
Ma1or om&etiti'e a.'antage o% South(est Cor&oration is its &eo&le/ 1ust li0e
urrent CE$ 2ary Kelly sai. on om&any+s o3ial (e)site 4 ,$ur &eo&le are our
single greatest strength an. most en.uring long"term om&etiti'e a.'antage5#
A..itionally/ South(estt 0ee& .e'elo&ing its sustaina)le om&etiti'e a.'antage
)y using 2eneri Com&etiti'e A.'antage# 6t (as the a.'ane. o% Mihael Porter+s
7i'e 7ore Analysis Mo.el onsist o% 8o( Cost or Di9erentiation#
a: The ow Cost Strategy or Cost eadership
South(est use. tight ost ontrol an. ost minimi;ation )y 0ee&ing their
ost o% goo.s sol. lo( )ut not as an e<hange o% satis%ation o% the ustomer#
-hey maintaine. lo( ost o&eration )y .oing se'eral %ollo(ing things in the right
(ay/ e9eti'ely an. e3iently4
1# South(est ha. no assigne. seats
2# 6t &ai. its re(s )y tri& an. use. less ongeste. air&orts = use >altimore
instea. o% ?ashington+s Dulles or @eagan:
3# 6n 200A/ South(est he.ge. a)out B5C o% its %uel an. oil nee.s an. as a
result sa'e. a)out DA55 million#
A# South(est &ilot .i. not )elong to a Eational Fnion# -here%ore they+re not
limite. )y the num)er o% Gight hours or in other (or.s South(est &ilot an
Gy %ar more hours than other &ilots at other Airlines#
5# South(est only nee. 20"25 minutes an. reHuire. a groun. re( o% %our
&lus t(o &eo&le at the gate %or ta0e"o9# >y om&arison/ it too0 Fnite.
Airlines 35 minutes %or turn"aroun. time an. reHuire. a groun. re( o% 12
&lus three gate agents to ta0e"o9#
6# South(est Airline+s lea.ing in the sales gro(th )uilt %rom 6t has the lo(est
o&erating"ost struture in the .omesti airline in.ustry an. onsistently
o9ere. the lo(est &rie an. sim&lest %ares# Contrast (ith other ma1or
Airlines suh as Fnite./ Amerian/ an. Delta/ South(est uses short"haul
an. me.ium haul an. &oint"to"&oint a&&roah =e<4 Dallas to Iouston/ 8os
Angeles to Phoeni<: instea. o% hu)"an."s&o0e a&&roah#
-he %ollo(ing Jgure 1 illustrates )oth Point"to"Point Systems an. Iu)
S&o0e Systems A&&roahes use. )y Airlines =Coo0 K 2oo.(in/ 200B:#
-his %ollo(ing ta)le 1 summari;es the om&arison o% the t(o route systems
=Coo0 K 2oo.(in/ 200B:
b! "i#erentiation
South(est has sho(e. us the goo. (ay to .i9erentiate their ser'ie
o9ering )y reating high &erei'e 'alue %or its ustomers# Su&erior Customer
Ser'ie o9ere. )y South(est is reGete. %rom their om&any mission 4
,De.iation to the highest Huality o% Customer Ser'ie .eli'ere. (ith a sense o%
(armth/ %rien.liness/ in.i'i.ual &ri.e/ an. om&any s&irit5# Aroun. 60C o%
South(est+s &assenger re'enue (as generate. )y online )oo0ings 'ia
south(est#om# 6t+s the largest airline site in terms o% 'isitors# 6n 2005/
South(est launhe. se'eral automation ser'ies/ inlu.ing DingL (hih &ro'i.e.
e<lusi'e .eals#
E'entually/ su&erior ustomer ser'ie reate. )ran. loyalty to this Airlines#
Strong )ran. loyalty o% their ustomer ma0e South(est as 201A+s -ra'eller
Choie Airline )y -ri&a.'isor an. (ell 0no(n as lea.ing the in.ustry in ustomer
satis%ation sine 2005#
Question $ : %ow do Southwests controls systems help e&ecute
the 'rms strategy?
Management Control System o% the South(est Com&any (as .esigne. to
assure that &eo&le ta0e in their &erei'e. sel%"interest are also in the )est
interest o% the organi;ation or in other (or.s to ahie'e the goal ongruene#
-(o o% the ma1or inGuenes on goal ongruene are the Culture an. *alues#
South(est is %amous %or its ulture4 ,the .e'elo&ment/ im&ro'ement/ an.
reJnement o% the originality/ in.i'i.uality/ i.entity an. &ersonality o% a gi'en
&eo&le#5
-hey also .e'elo&e. their &eo&le )y highly ommitte. to their om&any 'alues 4
Warriors Spirit
?or0 Iar.
>e ourageous
Dis&lay urgeny
Perse'ere
6nno'ate
Servants %eart
7ollo( -he 2ol.en @ule
A.here to the Prini&les
-reat others (ith res&et
Put others Jrst
>e egalitarian
Demonstrate &roati'e Customer
Ser'ie
Em)rae the S?A 7amily
(un)*+ing Attitude
Ia'e 7FE
DonMt ta0e yoursel% too seriously
Maintain &ers&eti'e
Cele)rate suesses
En1oy your (or0
>e a &assionate -eam&layer
Wor, the Southwest Way
Sa%ety an. @elia)ility
7rien.ly Customer Ser'ie
8o( Cost
-he strength o% the ulture an. 'alues are reGete. through the
&ersonality an. high &er%ormane o% South(est+s em&loyees an. the
&er%ormane o% the om&any itsel%# South(est reruite. their em&loyee in a
uniHue (ay/ they use &eers sreene. an.i.ates an. on.ute. inter'ie(s
=&ilots hire. &ilots an. gate agents hire. gate agents:# -he om&any inter'ie(e.
its to& em&loyees in eah 1o) %untion =&ilots/ gate agents/ )aggage han.lers/
groun. re(: an. i.entiJe. their ommon strengths in or.er to i.enti%y to&
an.i.ate# -hey hire. %or attitu.e as muh as a&titu.e/ em&loyee (ho an .o
things (ell (ith laughter an. grae as note. )y CE$ Kelleher#
Another ma1or inGuene on ontrol is Management Style# -he %oun.er o%
South(est/ %ormer CE$ Ier) Kelleher/ (as .ee&ly ommitte. to a &hiloso&hy o%
&utting em&loyee Jrst# Ie )elie'e. that as long as the em&loyees are satisJe./
ha&&y/ .e.iate. an. energeti/ they+ll ta0e real goo. are o% the Customers#
Ia&&y ustomers (ill )e a loyal an. re&eater ustomer an. this is the real
ha&&iness that an )e )rought %or the sharehol.ers# South(est has )een o9ering
&roJt"sharing to its em&loyee sine 19NA (hih ena)le em&loyees to o(n a)out
10C o% the om&any sto0 South(est em&loyees (ere among the highest &ai. in
the in.ustry an. the turno'er in the Com&any is 'ery lo(#
Wor,s Cited
Coo0/ 2# E#/ K 2oo.(in/ O# =200B:# Airline Eet(or0s 4 A Com&arison o% Iu)"an."
S&o0e an. Point"to"Point Systems Airline Eet(or0s 4 A Com&arison o% Iu)"
an."S&o0e an. Point"to"Point Systems# The $ournal o Aviation%Aerospace
&ducation ' (esearch/ 52K56# @etrie'e. %rom
htt&4//ommons#erau#e.u/gi/'ie(ontent#giP
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