Kamalpokhari, KTM, Nepal

www.hcm.edu.np

Master of Business Administration (MBA)

February intake 2019
Semester IV

Assignment of
Strategic Management

Submitted By Submitted To
Dikchhya Tamrakar Himalayan College of Management
MBA 4th Sem Kamalpokhari ,Ktm.
Southwest Airlines:-
Developing Human Capital on Organisational Ethics, Culture, Discipline and loyalty:
(We are discussing about a case study that leadership skill had focus strategically on human capital
(employees) to enhance them first to developed organisation culture, ethics, morale and
communication skills. It involves a Leader who put the loyalty of his employees as a key strategic
asset to achieve organizational goal by providing quality of services. He did so in the most trying his
leadership landed him in the textbooks).

In 1967, Air Southwest Co. was started by Rollin Kingand, John Parket, who were later joined by
Herbett D Kelleher. They wanted to provide the best service with lowest rates for short-haul ,
frequent flank point to point non interlining travellers. The trio decided to commence operations in
the state of Texas, connecting Houston, Dallas and San Antonio. These cities were growing rapidly
and were also too far apart for travellers to commute conveniently by rail or road. With other,
carriers pricing their tickets are high for most taxnans, Southwest sensed and attractive business
opportunities.
Southwest’s objective was to provide safe, reliable and short duration air service at the lowest
possible fare. With an average aircraft trip of roughly 400 miles, or a little over an hour in duration,
the company had benchmarked its costs against ground transportation. Southwest more focused on
short haul flying, which was expensive because planes in the air, thus reducing aircraft productivity.
Thus it was necessary for Southwest to have quick turnarounds of aircraft to minimize the time its
aircraft spend on the ground.
Since its inception, Southwest attempted to promote a close knit supportive and enduring family like
culture. The company initiated various measures to foster intimacy informality among employees.
Southwest encouraged its people to conduct business in a loving manner. Employees were expected
to care about people and act in ways that affirmed their dignity and worth instead of decorating the
wall of its headquarters with paintings, the company hung photographs of its employees taking part
at company events, news clippings, letters, articles and advertisements. Colleen Barrett even was on
send cards to all employees on their birthdays.
The organizational culture of the company was shaped by Kelleher’s leadership also Kelleher’s
personality had a strong influence on the culture of Southwest which epitomized his spontaneity,
energy and competitiveness.
His belief that Culture is the glue that holds our organization together. It encompasses beliefs,
expectations, norms, rituals, communication patterns, symbols, heroes and reward structures.
Culture is not about magic formulas and secret plans, it is a combination of a thousand things; he
used to say. Southwest’s culture has three themes, Love, fun and efficiency Kelleher treated all the
employees as a “lovely and loving family”. Kelleher knew the names of most employees and insisted
that they referred to him as herb or herbie. Kelleher’s personality charmed and they reciprocated
with loyalty and dedication. Friendliness and familiarity characterized the company relationships
with its customers.
Kelleher was so much into this culture that he once said, nothing kills your company’s culture like
layoffs. It has been a huge strength of ours. It certainly helped us negotiate our union contracts. One
of the union leaders came in to negotiate one time, and he said. “We don’t know we don’t need to
talk with you about job security”. We could have furloughed at various times and been more
profitable, but I always thought that was short sighted post September 11, 2001, when most airlines
in the US went in for a massive, southwest avoided laying off any employee.
Southwest showed its people that it valued them and it was not going to hurt them just to get a little
more money in the short term. The culture at the organization spoke about its belief in the thought
that not furloughing people breeds loyalty. At Southwest, it bred sense of security and trust. So in
bed time the organization took care of them, and in good times they’re thought, perhaps, “We’ve
never lost our job that is a pretty good reason to stick around”.
As a result, southwest was the only airline to remain profitable in every quarter since the September
11, attack. Although its stock price dropped 25% since September 11, it was still worth more than all
the other big airlines combined its balance sheet looked strong with a 43% debt to equity ratio and it
had a cash of $1.8 billion with an additional $575 million in untapped credit lines. The entire credit to
the profit was given to the loyal employee base the company had and it could be developed only as
a result of the organization culture at southwest. The company left no stone unturned to boost
employee loyalty and morale and made many a competitors to follow suit

1. What do you analyze as the most influential characteristic of Southwest’s culture?

Ans : Southwest Airlines Co.’s organizational culture promotes employee well-being, pointing to
the underlying principle that employees who are properly taken care of are the ones who
provide the highest quality of output. The company’s organizational culture supports employee
involvement, satisfaction, morale, and motivation to aim for high performance that relates to
the mission and vision.Since . Southwest attempted to promote a close knit supportive and
enduring family like culture. The company initiated various measures to foster intimacy
 informality among employees. Southwest encouraged its people to conduct business in a loving
manner. Employees were expected to care about people and act in ways that affirmed their
dignity and worth instead of decorating the wall of its headquarters with paintings, the company
hung photographs of its employees taking part at company events, news clippings, letters,
articles and advertisements. Colleen Barrett even was on send cards to all employees on their
birthdays.
Also Kelleher belief that Culture is the glue that holds our organization together is their
culture. It encompasses beliefs, expectations, norms, rituals, communication patterns, symbols,
heroes and reward structures. Culture is not about magic formulas and secret plans, it is a
combination of a thousand things; he used to say. Southwest’s culture has three themes, Love,
fun and efficiency Kelleher treated all the employees as a “lovely and loving family”. Kelleher
knew the names of most employees and insisted that they referred to him as herb or herbie.
Kelleher’s personality charmed and they reciprocated with loyalty and dedication. Friendliness
and familiarity characterized the company relationships with its customers.

So, the most influential characteristic of Southwest’s culture is treating employees as a family
member and supporting, motivating and involving every employees and provide good working
environment like a family. Also Kelleher belief that Culture is the glue that holds our organization
together and treating employee with loving and caring nature is also one of the most influenicail
characteristic.

2. Do you really think that the reason behind southwest’s profit was its culture or the leadership
was just playing it humble?
The reasons behind southwest's profit was its culture as well as also leadership plays a vital
role for its profit and achieving organizations goals. Culture of south west provide motivating,
supporting, learning, and good environment working place for employees which all could be
possible with Kelleher beliefs in culture that culture is the glue that holds their organizations
together and his treatment towards employee make working environment more friendly and
comfortable. Also Kelleher knew the names of most employees and insisted that they referred
to him as herb or herbie. Kelleher’s personality charmed and they reciprocated with loyalty and
dedication. Friendliness and familiarity characterized the company relationships with its
customers. So Both culture & leadership of kellehers leads to southwest profit
3. Do you think that following the southwest way, the other airlines would have also made
profits?
Form my point of view yes the other airlines would have also made profit by following the
southwest way and culture . Because after treating employees in good manner and providing
good working environment will help to increase the employees working efficiency and good
output & result. Friendly environment while working provide employee to behave each other in
friendly and supporting , motivating which ultimately helps to achieve the goals