The organizational culture ofa firm may present a strategic opportunity for the

Question

The organizational culture ofa firm may present a strategic opportunity for the firm. Theorganizational culture includes the shared values about what isimportant and how things are done in the firm. It is the basic waythat a firm interacts with its operating environment. The costaccountant and cost accounting may have a significant impact on thefirm’s culture.

The firm’s culture willbe reflected in many places. One way the firm’s culture iscommunicated to potential customers, investors, creditors, andother external stakeholders is through their website and theirannual report. Visit the website of SouthwestAirlines. Review the homepageand choose several other pages and look for ways the organizationalculture is reflected on the pages. Then click on the “AboutSouthwest” link at the bottom of the homepage. From the menuon the left, choose “Investor Relations” and thenchoose “Annual Reports” from the menu of theleft. Download a copy of the most recent annual reportit. Read the annual report and look for clues about theorganizational culture.

Write a 1-2 page paper aboutSouthwest Airlines organizational culture, the role that costaccounting plays as par to of that culture and the cost accountantspotential impact on that culture. Provide specific examples fromand references to the materials you read in paper to illustrate theculture, and the role cost accounting plays.

Explanation / Answer

Southwest Airlines began operating in 1971.The airline industry is well-known as one of the world's most competitive. Southwest has one of the lowest operating costs of all major airlines, the reasons for Southwest's success is well recognized, it focuses on short-haul flights with an average point to point distance, no meals are served, only nuts, in-flight films, selected seats, multiple seating classes from first to economy, membership in an airline reservation system, central airports, and a hub-and-spoke route system - all previously assumed to be necessary to success. Other airlines have been jealous of Southwest's success and its relationship with its customers and employees for years. And no one seems to be able to get to the bottom line of what they do operationally and financially that makes them a success. Maybe there is nothing more, it's all just a matter of operating efficiently and keeping employs and customers happy (pp.433, 434, 435). Southwest Airlines is a very good, service oriented airline. My experience with Southwest has been quite different from other airlines which were miserable. Southwest is fun to fly, very informal, with employees who are treated well by the company, so they treat their customers (us) very well. I think you will enjoy flying southwest very much. (01) How significant is the 10 to 15 minutes turn-around time of Southwest’s aircraft in terms of savings in investment and utilization of aircraft compared to the competitors? Please explain and substantiate your answer(s). Southwest Airlines have a great management team that hires the right people. The company’s atmosphere is fun and energetic, and when the employees like working a company, those feelings passing down to the customers and numbers of people flying are increased tremendously. They are self promoting and don't partner with Sales Company’s like hotwire, price line and so forth. The Southwest faster growth rate of labor productivity compared to the private business part is one of the reasons airlines have been able to keep on profitable position with their highly unionized labor force. They get a lot of customers because their fares are cheap. This makes it difficult for new carriers to compete (pp.438, 439) (02) What challenges is Southwest facing in the future and how should they meet those challenges? Please explain and substantiate your answer(s). In 21st century announced numerous new challenges for Southwest. Current contracts have different expirations because of when they were implemented. Fare increases are in the future, but Southwest will try to offset the need to raise fares by raising revenue with projects such as in flight etc. Also, if the Boeing forecast of oil since September continued to report billions in losses, then fares will go back down, at least at Southwest. As for significant fare increases, it depends on how the price of oil is around the world. If it remains as high as it is now, then I do see that Southwest having to raise ticket prices. However, that Saudi Arabia is worried about high oil prices because if they remain high, the U.S. will cut back on its use of oil and buys less from them. Therefore they are trying to increase output so that the price of oil will drop (pp.439, 441) In the end, the biggest threat to Southwest Airlines may not be its competitors at all. The war on terrorism has hurt the industry worldwide. Better security measures have, had, and will continue to have, a significant impact on the airport experience for passengers. Security requirements are still evolving on a daily basis; to date, they have not impacted Southwest’s aircraft utilization. According to Herb Kelleher, in response to these measures, the Company has introduced its new automated Boarding Passes; it is currently not possible to assess the ultimate impact of all of these events on airline competition. For the foreseeable time, Southwest Airlines future appears bright (pp.441,443). References McGraw-Hill Irwin, Roger G. Schroeder (2008, 2007, 2004, and 2000) McGraw-Hill Irwin Companies, Inc All rights reserved. Operations Management. Contemporary Concepts and Cases. Fourth Edition. University of Minnesota Carlson School of Management With contributions form: Susan Meyer Goldstein M. Johnny Rungtusanatham. ISBN 978-0-07-337786-5. Retrieved June, 30th, 2009, from Textbook. Case Study Southwest Airlines: Singin’ the (Jet) Blues, (PG. 433-444).

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