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A Case Study Linking Employee Needs Satisfaction & Organizational Capabilities to Competitive Advantage

:Shruthi Das

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Larry EllisonBob MinerBruce ScottEd Gates

In the Beginning

Founded in 1971 by Rollin King and Herb Kelleher

The United States most successful low-fare, high frequency, point-to-point carrier.

The only major United states airline to earn a profit throughout the early 1990s

Having one of the most successful airline stocks

Being the only airline to ever win the industrys triple crown measures of Customer satisfaction

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Southwest Airlines has a distinct Fun and Luv Culture.

So employees capture more than average value even though they are paid

industry-average wages

Employees Work Hard Employees treat passengers Well

Southwest gets a superior cost position Southwest gets a superior service position

Southwest gets high utilization

Financial Success Strengthens the culture

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We draft great attitudes. If you dont have a good attitude, we

dont want you, no matter how skilled you are.

Kelleher says, Talking about Southwests recruiting.

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Conventional strategic approaches to Airlines

Competitors

- Hub & spoke networks

- Sophisticated Customer segmentation

- Information via computer reservation systems.

Southwest did not have any of the above ascribed rather gave more

importance on Employee commitment.

The role of employees in the operation of an airline tends to be

viewed as a possible disadvantage to be avoided, rather than a

possible advantage to be pursued.

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Another approach to Airline strategy

Value analysis Examine the creation of value.

The Value Chain The portion of Value Captured

Buyers Willingness to pay The Buyer

Firms price The Firm

Firms Cost The suppliers

Suppliers Opportunity Cost The Suppliers

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Willingness to Pay

Providing higher level of service(defined as reliability conformance).

Offering frequent departures to and from its cities.

Amusing its passengers.

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Opportunity Cost

Opportunity cost for an individual is the minimum amount of remunerationfor a given amt of effort.

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Conversion of Value through Organizational Capabilities

Operational processes.

Behavioral Norms derived from the Southwest Culture.

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Three steps to Competitive Advantage:

Creation of value

Conversion of value

Capturing of the value for the shareholders via its ability to set a price

floor due to it low cost position.

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Strategies.

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Created through employee needs satisfaction

Converted to customer and shareholder via organizational

capabilities.

Captured by the firm as a result of its cost advantage and superiorservice.

Value in Southwest Airlines

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Thank you!