Managing Change in an Organization: A Case Study on Southwest Airlines

Executive Summary

The process of change management is important in an organizational environment. The success of the Southwest Airlines has been emanating from the local market with little emphasis on the international potential. This proposed change, therefore, has presented the need for the firm to increase market access into Canada and Mexico to enhance the profitability of the enterprise. The move is expected to increase the current 12% average growth rate with an estimated change of 5-7%. Nevertheless, the move could impact the human resource culture as well as the structure of the management process. However, through sustainability, monitoring, and evaluation, the company will register significant improvement.

Introduction

The process of change management is one of the critical areas in corporate enterprises that require comprehensive assessment, planning, and implementation (Huy, 2002). The changing internal and external environment associated with any business venture calls for the strategic alignment of the structure and process based on the needs and objectives of the organization (Todnem, 2005). One of the key concern has been the ability of the management to achieve the expected outcome using limited resources and risk minimization. Scholars and corporate analysts have been keen to assess the factors to be considered when seeking to implement any change in a company. Southwest Airlines is one of the organizations in the United States air travel sector with a rich history associated with change and transformation. In this excerpt, we propose the internationalization of the operation of the firm for maximum profitability and competitive advantage.

Review of Organizational Change Management

Scholars have defined change management as the activities undertaken to revive the direction, structure, and the abilities of an organization to cope with the needs of the stakeholder (Burnes, 2004; Moraan and Brightman, 2001). Most perspectives have been based on the expectation of the customers; however, the employees, the management, the investors, and the government form part of the change process parties. According to Rieley and Clarkson (2001), it is not possible for one to separate the structure of the organization from the strategy when dealing with change management. The centrality of change within an organizational setup has been assessed to relate to the needs of competent skills that are relevant for planning and implementation. Based on such findings, scholars have shown how the need for competence and experience is critical for sustainable change outcomes (Senior, 2002). The use of technology has impacted the change process with the level of efficiency being the measure of success. However, the leadership effectiveness and the knowledge of the workforce are part of the dimensions that have attracted scholarly assessments (Nelson, 2003). The social and demographic trends and the influence on the expectations and the preferences of customers are part of the dimensions that have justified change implementation.

Worth pointing out is that the need for change is unpredictable and reactive based on the circumstances that characterize the activities of an organization. Luecke (2003) argues that the process of change is initiated when a crises present itself; however, such postulates have been subjected to critics since organizations have implemented change to enhance their operations rather than resolve a crisis. On the other hand, researchers have noted a 70% chance of success for different types of change being implemented in an organization. One of the key concerns of the managers and implementers is the desire to sustain and adapt the firm to constant change without altering the objectives and increasing the cost of operation. However, the internal and external influence of companies in the corporate sector is different from one organization to another (Balogun and Hope, 2004). The challenge of risk assessment has seen change implementation being characterized by flaws that affect the level to which managers attain the performance metrics. A study that evaluated the success of change in organization noted that, over the past 25 years, many projects had been associated with failures because of internal and external limitations. However, through strategic planning, implementation, monitoring, and evaluation, managers are in a position to transform the resources into efficiency and sustainability (Carnall, 2003; Pettinger, 2004; Doyle, 2002).

Overview of Southwest Airline and SWOT Analysis

Southwest Airlines is a company in the United States that specializes in short haul and low-fare carriers across the main cities in the country. The firm started its operation in Texas and had been increasing the access cities over the years. The firm has enhanced the level of competitiveness and growth by offering low-cost services as well as limiting the cost of operation. Such moves have assisted the firm to maximize the profits (Garrison and Keller, 2008). Remarkable achievements associated with the company include the 2013 revenues that amounted to over $5,937 million and the introduction of the Passenger, Freight, and Other Categories of flight. The firm has enjoyed growing revenue and operating capital through profits and acquisition that are the hallmark of expansion.

Currently, the firm is associated with an operating cost of about $181 million. The firm is ranked as the top market share dominator for the low-cost carriers for the top routes in 100 cities. The company has an average growth rate of about 5% with a corresponding competitive advantage regarding customer service. Southwest Airlines is dedicated to quality and innovation; however, the focus of the firm is the operation of low-cost alternatives in the airline industry in the United States (Garrison and Keller, 2008). Although the rate of competition is high, the organization has remained steadfast based on financial stability and market coverage. One of the advantage that the firm enjoys in the corporate strength and opportunities in the sector. Nevertheless, the threats, as well as the weaknesses in the market, prevent the firm from achieving the desired objective and profitability targets for long run sustainability (Garrison and Keller, 2008).

Worth noting is that the treats for the Southwest Airlines emanate from the stiff competition. Northwest, American West, AirTran, and JetBlue have significant market share control. Moreover, the escalating cost of operation in a hindrance to achieving the profit targets, which is a common scenario among the low-cost carriers. In most cases, the commercial airline environment is affected by the changes in the economic stability as well as unstable external occurrences such as attacks and insecurity. Nevertheless, the Company is proud of the sensible expansion trend, which is the primary strength. The management has also focused on the quality of service, efficiency, and cost management.

Nevertheless, several factors are clear regarding the operation of the Southwest Airlines. The firm has concentrated in the local market with limited room for strategic development. Working with no alliances in the industry is associated with high cost of operation, which is another weakness of the managerial approach in the company. The services do not include the transfer of baggage outside the system of the enterprise. Such cases affect the experience of the customers. On the contrary, the organization has several opportunities for growth. The inclusion of the smaller cities and the internationalization of the operation is one of the major changes that the firm can undertake to enhance the level of the generated profit. Vertical integration of the collaborators can be an asset for the business (Garrison and Keller, 2008). The existence of societal values and the changing customer expectation calls for the diversified management, which is another opportunity for the firm to implement long-term goals and strategies.

Background, Justification, and Objectives of the Proposed Change

Background and JustificationThe economic challenges that have been affecting most of the low-cost carriers in the United States have indicated the need for a firm financial baseline for an organization to be successful in the sector. Southwest Airlines has survived numerous economic downturn periods. The strategic approach to customer management and cost reduction has enabled the firm to attain sustainable profits. However, based on the overview above regarding the organization, the operations of the company have been limited to the major cities in the United States. Furthermore, the company has restructured the operations into three broad categories; however, the changes in customer expectations and the acquisitions of other firms call for the restructuring of the operations of the company (Great, 2015; Garrison and Keller, 2008). The internationalization and expansion of access to other smaller cities will enhance the financial stability and growth of the enterprise. Moreover, the profit growth percentage has been stagnant, which justifies the need for change to market approach and coverage.

Short-Term and Long-Term Objectives

The proposed internationalization of the operations of the Southwest Airlines seeks to enhance the 12% average annual profit to 15%. The current focus is the Dallas Love Field Airport, which connects to 50 cities. The total flights currently stand at 180; however, the proposed internationalization seeks to increase the daily flights to 300. The domestic carriers only accounted for an average of 6% growth in 2016 which poses a possible decline in the rate of growth. However, the internationalization of the operations seeks to increase the rate of growth by an average of 5 7%. The international destination being covered include flights to Aruba, Jamaica, and the Bahamas (Great, 2015). However, the construction of the Houston Hobby Airport has proved to be a potential hallmark for expansion. Therefore, by creating a network to serve the adjacent cities from the Houston Hobby Airport will enhance the international presence by increasing the domestic customer base. The following objectives define the proposed change for Southwest Airlines.

Short-Term Objectives

To establish more routes from the Houston Hobby Airport to adjacent cities for a broader domestic network

To increase the domestic flight to smaller cities

Increase the internal flights from 180 to 250 daily

Long-Term Objectives

To set a primary airport in Mexico that will serve the major cities in the region

To establish a central flight hub in Canada to act as the prototype of the Dallas Love Field Airport in the United States.

To kick start the international operation from 11 flights to 50 flights daily from the two region...