Southwest Airlines
Southwest Airlines’ Corporate Strategy & Control System
Southwest Airlines became one of the most admired airlines in the world based on their dedication to their customers and the corporate strategies their leadership instituted. Their leadership created a different corporate culture that CEO Herb Kelleher and his company are devoted to the philosophy of putting employees first (Govindarajan, pg. 115). In doing so, Southwest was able to instill a management control system that relied on their employees and empowered them to achieve the overarching goals of their company and its shareholders. Southwest’s main strategy to be the best airline in the world through customer satisfaction, low cost and simple fares, and profitability are supported by their management and the control system they have put in place. CEO and founder, Herb Kelleher, dedicated his company to promoting an invigorating workplace for his employees. “If they’re happy, satisfied, dedicated, and energetic, they’ll take real good care of the customers. When the customers are happy, they come back. And that makes the shareholders happy” (Govindarajan, pg. 115). Southwest’s value chain of profitability stems from creating a prominent workplace that reflects on their customers who in turn create happy shareholders by spending their earnings on Southwest’s services. Southwest’s corporate strategy is monitored and regulated by their management control system. This system is the process by which managers influence others to implement the organization’s strategies. In Southwest’s case, their leadership promotes hard working, fun, high- energy, local autonomy, and creativity through training and management style, while working towards overall profit. This culture created numerous benefits for the company in many ways. Southwest’s operations are a prime example of such. Most airlines used a “hub- and- spoke” approach but Southwest set themselves apart from other major airlines by
Southwest Airlines became one of the most admired airlines in the world based on their dedication to their customers and the corporate strategies their leadership instituted. Their leadership created a different corporate culture that CEO Herb Kelleher and his company are devoted to the philosophy of putting employees first (Govindarajan, pg. 115). In doing so, Southwest was able to instill a management control system that relied on their employees and empowered them to achieve the overarching goals of their company and its shareholders. Southwest’s main strategy to be the best airline in the world through customer satisfaction, low cost and simple fares, and profitability are supported by their management and the control system they have put in place. CEO and founder, Herb Kelleher, dedicated his company to promoting an invigorating workplace for his employees. “If they’re happy, satisfied, dedicated, and energetic, they’ll take real good care of the customers. When the customers are happy, they come back. And that makes the shareholders happy” (Govindarajan, pg. 115). Southwest’s value chain of profitability stems from creating a prominent workplace that reflects on their customers who in turn create happy shareholders by spending their earnings on Southwest’s services. Southwest’s corporate strategy is monitored and regulated by their management control system. This system is the process by which managers influence others to implement the organization’s strategies. In Southwest’s case, their leadership promotes hard working, fun, high- energy, local autonomy, and creativity through training and management style, while working towards overall profit. This culture created numerous benefits for the company in many ways. Southwest’s operations are a prime example of such. Most airlines used a “hub- and- spoke” approach but Southwest set themselves apart from other major airlines by
References: Anthony, R. & Govindarajan, V. (2007). Management Control Systems, 12th ed. New York, NY; McGraw- Hill Irwin