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International strategic management strategy
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Industry: Major Airlines
American Airlines Group Inc.
Symbol: NasdaqGS: AAL
History
American Airlines is a combination of about 82 small airlines through a series of consolidation and reform evolved: Initially, many aircraft are free to use "American Airways" as the name of co-branding. In 1934, American Airlines a financial crisis, under the leadership of E.L. Cord, the company changed its name to "American Airlines". Early days, the company's headquarters is located in Chicago, Illinois Midway Airport.
February 14, 2013, former American Airlines parent company AMR and US Airways Group merger was announced, AMR’s creditors will hold 72% stake in the new company, US Airways shareholders will hold the remaining 28% stake. The two companies immediately completed the merger on December 9 in 2013.
Management
Doug Parker, the chairman and chief
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By contrast, Southwest Airlines is 33 consecutive years to maintain profitability. Southwest Airlines is an only airline company which has longest consecutive profitable since 1973.
Management
Gary C. Kelly is the chairman and executive officer of Southwest Airlines. He joined the company in 1986 as controller. In 1989, Kelly was promoted to Chief Financial Officer and VP of Finance. In 2001, he became the Executive VP. Kelly spent 3 years on this position until he was promoted to CEO and vice chairman in 2004. He received a BBA in accounting from The University of Texas at Austin and a is a Certified Public Accountant.
Kelly became the Chairman of Board of Directors of Southwest Airlines in 2008 and replacing co-founder Herb Kelleher. And Gary C. Kelly was named one of the best CEOs in America for 2008, 2009 and 2010 by Investor magazine and serves on the President’s Council of Jobs and Competitiveness.
Southwest airlines is one of the most widely respected companies among those profiled by Firms of Endearment. They are recognized for having one of the best corporate cultures, which is emphatically encouraged from the top down. Southwest’s model clearly exemplifies the concept of servant leadership, and we will elaborate on how this creates a firm of endearment.
Despite its growing domestic network, the company didn’t offer international flights until July 2014, and even then, it only offered limited destinations (“Southwest Corporate Fact Sheet,” n.d.). Furthermore, the company’s reliance on a single aircraft is cause for concern. Southwest Airlines was also weak with technology utilization initially but has since turned this into an asset, as described later. Finally, the company has a limitation with providing customer perks due to its low-cost operations (Ross & Beath,
It is evident that the greatest strength that Southwest Airlines has is its financial stability. As known in the US airline industry, Southwest is one of those airlines who are consistently earning profits despite the problems the industry is facing. With such stability, the corporation is able to make decisions and adjust policies, which other heavily burdened airlines may not be able to imitate.
More than 37 years ago, Rollin King and Herb Kelleher got together and decided to start a different kind of airline. They began with one simple notion: If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline. And you know what? They were right. What began as a small Texas airline has grown to become one of the largest airlines in America. Today, Southwest Airlines flies over 104 million passengers a year to 64 great cities all across the country, and we do it more than 3,400 times a day.
The marketing approach of Southwest Airlines is built upon their strong business model. They have successfully managed to target two specific market segments of the airline industry while remaining profitable. Their strategy is simple, to offer frequent non-stop flights with the lowest costs which appeal to both the business and budget travelers. By segmenting their target audience to specific demographics and ticket pricing, passengers know exactly what they are getting for the price they pay.
This is why they have become a company with high retention rates. Southwest Airlines is voted “the best place to work” for a simple reason. The company invests in their employees and is committed to their values and vision through training and development.
As aviation matured, airlines, aircraft manufacturers and airport operators merged into giant corporations. When cries of "monopoly" arose, the conglomerates dismantled.
Other airlines approached the economic crisis by limiting their service or letting go of employees, whereas Southwest tackled the problem by offering workers secured positions for lower wages. Though the circumstances were not ideal, overall employees responded positively to the option of keeping their jobs. They also promote internal marketing strategies within the workplace. Southwest has a clear vision which employees strive to be a part of. In fact, part of their vision is in the best interest of their employees, as a common mantra within the company is, “customers come second… and still get great service.” They offer a casual work environment. This approach not only benefits the employees comfort, but also coincides with the company’s easy-going brand image it wishes to portray. Employees are at ease in at their job and overall enjoy what they do. Southwest also makes a point to attract the desirable candidates for their positions. They emphasize teamwork. Employees are encouraged to help each other out to strive toward a common goal. Employees are often rewarded for their achievements as well. As seen in exhibit 1, these strategies to keep employee satisfaction high, are factors that keep loyal employees within the company.5 Southwest makes every attempt to keep employees content as they believe happy employees lead to happy customers. Southwest has
The short haul traveler is the backbone in which Southwest was built upon. The market for short distance airline flights was large enough to allow Southwest to maintain a profit for over 30 consecutive years. Shorter flight times allowed for more flights to take place per day. With the industry average sitting at one or two flights per day, Southwest set itself leaps apart by averaging 10 to 12. Maximizing utilization and minimizing ground time were the key elements to Southwest's profitability.
This was a sad day for everyone in both the immediate and extended “Delta family,” a day perhaps as sad in its own way as the death of Mr. Woolman almost 40 years before. The sadness mixes with fear by employees and retirees, their families, stockholders, customers, vendors, taxpayers, governments and all others among the tens of thousands impacted by the bankruptcy. Leadership decisions by Delta’s Board and CEO’s over a long period of years laid the foundation for Delta to be in a position where the factors would have a large enough impact to result in bankruptcy. By promoting Ron Allen to CEO, primarily because he had moved up the chairs in the company through Beeb’s efforts, the Board showed their lack of awareness of the need for a strategist to deal with the fundamental changes taking place in the airline industry. Then the Board brought in Leo Mullin and gave him free rein for 6 ½ years to turn a cash rich company into one in such poor shape financially that his successor had to turn to expensive sources of money to keep the company
Although many companies are in business to make a profit, Southwest claims that their primary goal is not profit maximization. However, they have been consistently profitable by making air travel affordable to those who previously could not afford it (Freiberg, 1996).Southwest says the customer comes second, showing their devotion to employees. By taking care of their employees, the company encourages employees to take care of the customers. Employees are...
Southwest has comprehensive strategy and they work with harmony. They are low cost airlines which make the customer feel like royalty. Southwest have a winning strategy is proven by their profit year after year even thought they had economy crisis. Since 1973 Southwest reported a profit each year even when they lost billions of dollars from the year 1980 to 2009 because of the low operating cost strategy, low fares and customer service. Since the start of Southwest they have stay faithful of keeping low cost across the industry. Their value in corporate culture reflected through their prices and customer service.
I. Introduction Southwest Airlines has come from an underdog to being one of the best airlines in the industry. This reputation translates from its strategic management of resources. The Co-founder and former CEO, Herb Kelleher, established a unique corporate culture that leads to high customer satisfaction, employees’ morale, and is one of the most profitable airlines in the industry (Jackson et al., 2012). Corporate culture concentrates on empowering the workforce. It shows through Southwest Airlines core values that “happy employees lead to happy customers, which create happy shareholders” (Jackson et al., 2012).
1- Issues The main issue of this case is the lack of profits of the airline industry, an industry that should be more than profitable due to the large amount of customers, the necessity of using airlines’ services and the high prices charged by most of these airlines. What we are going to deal with is, why is this happening? And how is American airlines dealing with this problem?. To be able to discuss how American airlines wants to regain profitability, we must identify and analyse different issues such as, the company’s background, the airline industry as a whole, the demand for air travel, the marketing strategies, the distribution systems, pricing policies etc.
It all started in 1971, when Rolling King and Herb Kelleher decided to challenge the existing rut of charging high prices for air travels. They considered the railways and roadways their competitors and decided to offer cheaper travel for smaller routes. The company was incorporated in 1967, apart from initial entry troubles, Southwest has been the only US airline to have earned profits since 1973. The eccentric company’s outlandish way of conducting themselves has been the sole reason for Southwest Airlines to succeed in a highly competitive and packed industry.