You are on page 1of 18

1

SOUTHWEST AIRLINES

I. STATEMENT OF THE PROBLEM: (The rapid increase in airline carrying capacity led to a situation of over capacity) As more and more airlines chased passengers, fares were driven down to levels barely sufficient to maintain the profitability of US Airlines. II. PROGNOSIS (Background of the problem)

The 1978 deregulation of the industry, twenty nine new airlines entered the industry from 1978 to 1993. Indeed, twice since 1978 the industry has been engulfed in an intense price war first in the 1981-1983 period and then again in the 1990-1993 period. So intense did the competition become during these two periods that in 1982 the whole industry lost $ 700 million, while in the 1990-1992 period the industry lost a staggering $ 7.1 billion, more than had been made during the previous fifty years history of the industry.

III. DIAGNOSIS (Analysis of the problem) Its obviously that the hostile nature of the industry, the Southwest Airlines has not only been consistently profitable but also its performance improved during the years when its competitors were wallowing in red link. Southwest is a regional airline with a major presence in Texas. In 1992, most of the major U.S airlines had lost money except the Southwest. It reported a sharp jump in its net profit 2

$105.5 million on their revenues of $1.68 billion, and increased from $26.9 million on revenues of $1.31 billion in 1991. IV. AREAS OF CONSIDERATION: 1. The number of airlines entered in the industry. 2. The strategies or techniques to be to be used. 3. The stability of the company.

V. SWOT ANALYSIS STRENGTHS customer-oriented low cost (its low cost come from a number of sources) loyalty of its customer the dedication of His CEO (Mr. Herb Kelleher) to the company OPPORTUNITIES the airline has a very productive work force low cost (its low cost come from a number of sources) employees are willing to work WEAKNESSES no meals are served on board there are no firstclass seats

THREAT when its competitors imitate the strategy of Southwest Airlines in managing a business

hard because they feel appreciated by the top PROS management ACA 1 Good profit takes place. Limiting the They will incur success number of firms in in economic cost and the industry accounting cost ACA 2 Making good strategies and techniques to strengthen the efficiency and stability of the business (low cost) ACA 3 Good treatment to the consumers/custom ers by considering their tastes and preferences The quantity demanded and supplied will increase

CONS Consumers will experience scarcity of the certain commodity Resulting of declining business profit.

Enabling the firms to get their sympathy in patronizing their products

In somehow, the customers abuse it and resulting in violating business ethics

VI. ALTERNATIVE COURSES OF ACTION (ACA) PRESCRIPTION Recommendation: I recommend ACA #2 - making good strategies and techniques to strengthen the efficiency and stability of the business (low cost) EXPLANATION ACA #2 Can resolve the present problem in making good strategies and techniques (low cost)

CASE DISCUSSION QUESTIONS 1. What does the success of Southwest Airlines tell you about the relative importance of industry and company specific factors in explaining a companys performance? Answer: Southwest Airlines tells about the relative importance of industry due to its low cost structure and the loyalty of customers, and the approach of the employee to the customer, and the reputation for being the most reliable carrier in the industry. And in company-specific factors in explaining a companys performance, very productive and there is unity or work force between the employees; and the company operates a generous stock option plan that extends to the employees. 2. What is the basis of Southwests competitive advantage? How might it lose that advantage? Answer: The basis of Southwest competitive advantage, the companies are able to sustain low cost and also with the competitors and as well as to firm itself. The companies can truly produce low cost product, like the aircraft which flies only one type, the efficient of fuel, which keep training and maintenance costs down, thats why more passengers because of its low cost. It might lose that advantage if the company begins to increase the fare of passenger and the salary of the employee decrease.

BODY SHOP INTERNATIONAL I. STATEMENT OF THE PROBLEM: How to regain the trust of the consumers to buy the products of Body Shop International II. PROGNOSIS (background of the problems/issues)

Body shop international is a prime example of a company that is committed to being ethically and socially responsible in its business dealings. The company has based its success on the claim that none of its products are tested on animals, contain artificial ingredients, or are elaborately packaged. The products appeal to consumers who are concerned about animal right and the environment, under a program called Trade Not Aid

ISSUES: The Body shop uses many outdated, off-the-shelf product formulas filled with nonrenewable petrochemicals. Many of its products are contaminated and contain formaldehyde, an artificial ingredient. The Body shop has used ingredients in its product that have been tested on animals. Contrary to the companys claims, the body shop sources a tiny amount of ingredients through its Trade Not Aid program. Moreover, the Body shop does not pay first world wages for third world products as it claims in its publicity. The company maintains that it pays its suppliers well.

III. DIAGNOSIS (analysis of the problem) Anita Roddicks philosophy helped to turn The Body Shop into the darling of the business ethics community. However, the good feeling was rudely shattered in the fall of 1994 when a journalist, Jon Entine published an article highly critical of the Body Shop in the Business Ethics magazine. And He made claims about the company.

IV. AREAS OF CONSIDERATION 1. The products of the company appeal to consumers who are concerned about animal rights and the environment. 2. The Body Shop claims to purchase many of the ingredients for its product from Third World producers, Trade Not Aid program.

V. SWOT ANALYSIS STRENGTHS The company is committed to being ethically and socially responsible in its business dealings. The product are concerned about animal right and the environment. The product are concerned about animal right and the environment. Trade Not Aid program. The company maintains that it pays its suppliers well. OPPORTUNITY They empower the employees without being in fear of them. WEAKNESSES Many of its products are contaminated and contain formaldehyde, an artificial ingredient. The Body Shop has used ingredients in its products that have been tested on animals. The company invented stories about the exotic origins of some of its products. THREATS The competitors will take advantage to the company issues It might find hard time to get sympathy to the customers 7

VI. ALTERNATIVE COURSES OF ACTION (ACA) ACA 1 Conduct press conference PROS To clear things out about the spread rumor against their shop To reveal the true issue behind this rumor To know the entire story behind this issue To regain costumers sympathy and trust to get back in their shop To prove that their products are good and is not animal tested. CONS Its too expensive.

ACA 2 Make an advertisement in magazine or in the newspaper. ACA 3 Conducting an actual testing of the product (in the mall, or in any convenient places)

Not all people have no time in reading newspaper or magazines Only Limited people can see this process and theres no assurance of their satisfaction.

PRESCRIPTION Recommendation I recommend ACA #1 - conduct a press conference

EXPLANATION ACA #1 this is the best option to clarify accusations done by Jon Entine

CASE DISCUSSION QUESTIONS: 1. Is Anita Roddick correct when she claims that it is possible to run a business in a very ethical and socially responsible manner and still give shareholders a wondrous return on their investment? Answer: Yes she is correct when she claims that is possible to run a business in a very ethical and socially responsible manner and still give shareholders a wondrous return on their investment because they are concerned about animal rights and to the environment. Even though their companies trade products, they valued good investment. 2. Is the percentage of the ingredients that come from Trade not Aid projects an irrelevant statistics, as Gordon Roddick claims? Answer: Yes, the percentage of ingredients that come from Trade not Aid is irrelevant statistic because of many lies, distortion and gross inaccuracies.

3. Evaluate The Body Shops claims to be ethically responsible in light of the ethics audit report. Answer: 9

The Body Shop claims to be ethically responsible in light of the ethics audit report, the purchases from suppliers in developing countries and poor communities increased, however in terms of raw material only 2% increased especially inputs items.

INTELLECTUAL PROPERTY RIGHTS IN ASIA I. STATEMENT OF THE PROBLEM: The piracy of intellectual property II. PROGNOSIS (background of the problem) In China, political protection for pirates of intellectual property is common. In fact, government officials, people working for the government and even the Peoples Liberation Army (China National Army) operate many factories churning out pirated products. Many operate on government owned land. Indian law gives international pharmaceutical firms five to seven year patents on process used to manufactured drugs-but not on the drugs themselves.

III. DIAGNOSIS (analysis of the problem) Due to piracy, companies doing business in Asian countries (including China, India, Indonesia, Japan, the Philippines, South Korea, Taiwan and Thailand) lose more than $ 3 billion in sales every year. Often, criminals are connected to political leaders and receive legal protection from prosecution.

IV. AREAS OF CONSIDERATION Intellectual property

10

a. b. c. d. e.

Computer software Films Books Music cds Pharmaceutical drugs

V. SWOT ANALYSIS STRENGTHS connected to political leaders receive legal protection from prosecution WEAKNESSES international companies afraid to speak out for fear of jeopardizing access to the market of these countries. high piracy rates. THREAT U.S government complains about Chinas piracy practices.

OPPORTUNITIES expanding markets and rapid economic growth arises. Asian countries remain attractive to international companies.

VI. ALTERNATIVE COURSES OF ACTION (ACA) ACA 1 Avoid political protection for pirates of intellectual property ACA 2 Implementation of laws against piracy PROS To minimize piracy To avoid/prevent partiality CONS c.The gross income of the companies who are producing pirated products will decline. The consumers of pirated products will directly affected

To lessen the people who patronizing this illegal activity The sales of original

11

ACA 3 If the consumers will not support/patronize piracy

products increase. Piracy rate decreases

Not all ordinary people can buy/afford original products EXPLANATION

PRESCRIPTION Recommendation I recommend ACA #2 - implementation of laws against piracy

ACA #2 To be able to fight against piracy through implementations of law.

CASE DISCUSSION QUESTIONS: 1. What actions can companies and governments take to ensure that products cannot be easily pirated? Be specific. Answer: To ensure that products cannot be easily pirated, there are several things to be considered such as, the products should be in high quality and it should be subjective in nature. Secondly, the government and companies must cooperate and have close relations in implementing laws and regulations against piracy. 2. Do you think that the international business community is being too lax about the abuse of the intellectual property rights in China and other Asian countries? Are international companies simply afraid to speak out for fear of jeopardizing access to the markets of these companies? Answer: Well, partly yes. Because international business companies dont have enough confidence to jeopardize their rights but they are the one who abusing the intellectual property rights. The trading relationship to other countries was not really good in terms of governance because they allowing

12

them the legal protector of prosecution in exchanging pirated products. 3. The internet is making it easier to transmit digital information around the world. This increased trade in digital communication poses a threat to intellectual property because digital property allows the manufacture of perfect clones of original works. How might the internet affect the intellectual property laws? Answer: With the advent of technology, Internet now has a vital role in intellectual property laws. It has tremendous advantages and disadvantages to the companies. One of these advantages is, the companies are able to promote their products through online trading; also the consumers will benefit on this process. Generally speaking, the use of internet in boosting the intellectual property laws is very advantageous.

ASIAN VALUES UNDER FIRE I. STATEMENT OF THE PROBLEM; Cultures in Asia are in the midst of an identity crisis II. PROGNOSIS (background of the problem) Pulling in one direction is a traditional value system derived from agriculture-based communities and extended families that is, elements of a culture in which relatives take care of one another and state run welfare system are unnecessary. Pulling from the opposite direction is a new set of values emerging from manufacturing- and finance-based economieselements of a culture in which worker must often more to faraway cities to find work, sometimes leaving family members to fend for themselves.

III. DIAGNOSIS (analysis of the problem) Some parents even encouraged brand-consciousness among their teenage children because it signaled family-wide success.

13

Polls of young people showed them holding steadfast to traditional values such as respect for family and group harmony. Continued to believe that parents should have much to say about how hard they study, about how they treat family members and elders, and about their choice of friends.

IV. AREAS OF CONSIDERATION Asian values that must be considered: a. Respect for family and group harmony. b. Believe that parents should have much to say about to their children how hard they study. c. About how they treat family members and elders and about their choice of friends.

V. SWOT ANALYSIS STRENGTHS Asian culture esteems family loyalty so highly. respect for family and group harmony WEAKNESSES some observers say that talk of an Asian way of doing business was overstated and misplaced. they argued that belief in the importance of family became the practice of NEPOTISM beliefs in the importance of relationship is became cronyism

14

OPPORTUNITY many Asians, it seems, wants modernization but also want to hold on to traditional beliefs and values.

THREATS Asian businesses themselves continue to introduce Western management practices. some parents even encouraged brandconsciousness among their teenage children. Examples. (western brands) GUCCI HANDBAGS

VI. ALTERNATIVE COURSES OF ACTIONS (ACA) ACA 1 Practice the Asian values when entering a business firm PROS It shows the importance of the family Inculcate the importance of communication and relationship among people Relatives take care of one another CONS It can cause Nepotism ( having partiality) and Cronyism( doing favor only to the selected people)

ACA 2 Using the Traditional Value System derived from AgricultureBased communities

No improvements

15

ACA 3 Adapting modernization and at the same time practicing good and effective beliefs and values

The people still practicing certain beliefs and enable to maintain right conduct. Increasing the capability as an individual to effectively acquired new information Upgrading the quality of learning and develop our skills.

Some of our traditional values and beliefs were being neglected.

PRESCRIPTION Recommendation I recommend ACA #3 - adapting modernization and at the same time practicing good and effective beliefs and values.

EXPLANATION ACA #3 The people might be able to be determine in valuing character.

THINKING GLOBALLY: 1. If your international firm were doing business in Asia, would you feel partly responsible for these social trends? Is there anything that your company could do to ease the tensions being experienced by these cultures? Be specific. Answer: If my International firm were doing business in Asia, I will take in consideration the current trends in business to incur success. What technology should we implement and how long should we allow for it to be implemented. We know if we don't change with the times and the new innovative technologies, we will struggle for continued success. Current trends include managers that manage the

16

work and not the people. Work is more predictable than people. Rather than trying to manage people so strictly, managers are living in the light and kindness with employees as they are real people; their own neighbors 2. In your opinion, is globalization among the causes of the causing incidence of divorce, crime, and drug abuse in Asia? Why or why not? Answer Yes. Because globalization has several participants argued that Asian states have played a key role in promoting globalization in the region. And some countries argued that until the financial crisis, regional governments perceived globalization as a tool for enhancing national power. The people who experiencing this tend to violate the morality as an individual. 3. Broadly defined, Asia comprises over 60 % of the worlds population- a population that practices Buddhism, Confucianism, Islam, and numerous other religions. Given the fact that there are considerable cultural differences between countries such as China, India, Indonesia, Japan, and Malaysia, is it possible to carry on a valid discussion of an Asian values? Why or why not?

Answer: Yes. Its possible to carry on a valid discussion of Asian values for innovation of values. This may varied a clear discussion about their individuals values that will enable them to adapt their good business ethics in managing businesses. 4. Consider the ff: statement: Economic development and capitalism require a certain style of doing business for the 21th century. The sooner Asian cultures adapt the better. Do you agree or disagree? Explain. Answer: I disagree with this statement because capitalism deals with the type of managing a firm wherein only the company manipulates and decided to the industry. When we adapt this business style, it would be better if the Asian culture should be able to manage a certain unique

17

business style. So that the business industry grow on its own.

18