Southwest Airlines an Economic PerspectiveEssay title: Southwest Airlines an Economic PerspectiveSouthwest and Continental Airlines: A Managerial Economic PerspectiveIntroductionIn order for companies to maximize profits and productivity, it is important that they implement managerial economics on both a day-to-day and strategic basis. This paper will compare and contrast Southwest and Continental Airlines from a managerial economic perspective. The goal of the paper is to critically analyze both companies on their use of managerial economic practices.
The Airline industry is a capitally intensive industry, and because of this companies within the Airline industry focus greatly upon cost, as well as revenue generation. If costs increase beyond control, profitability will soon decrease. Southwest were quick to learn that if they were going to run their company in a profitable manner they had to first establish their market, and then make every effort to keep costs low. In the early 1970’s soon after their inception, Southwest established the ten-minute turn. This was the ability to unload and reload passengers, refill the plane with gasoline, and make all the necessary checks, all within a ten-minute window. They had to keep their planes in the air as much as possible, because of their low price, high frequency market niche. “Part of the great strength they’ve had, is that they have consistently followed a pattern of keeping costs low in every place they have gone.” (Freiberg, 1996, p35)
Continental also looked to keep costs low. In 1994, Continental was renowned as a cost cutting airline. “We were stuck in our mold of being a cost cutting airline, and if you weren’t talking about cutting costs, nobody at the top wanted to hear you” (Bethune, 1998, p10) The problem Continental experienced were that they cut costs to such an extent that it became the culture of the company. When Gordon Bethune became CEO in 1994, he looked at cost from a different perspective. “One of my key questions in any decision is not only what does it cost to do something, but what does it cost not to do something?” Continental had to begin to look at costs from every angle, not just purely from a monetary cost perspective, but what decisions would benefit the company in the long-term, 1994 was the beginning of a company turnaround.
Cost Effective Hiring; Determining Potential ProductivitySouthwest put a lot of time and effort into their hiring process. Southwest and outsiders considers them to be one of the best companies to work for in the United States. For this reason Southwest implement procedures to ensure they receive the best possible skilled workers. This is not to say that Southwest only employ academic high flyers, but they have become a company known for operating outside the box. Potential employees have to have a sense of fun, and entrepreneurial attitude. “Southwest has tailored the general principles of targeted selection to hire people with a special kind of spirit.” (Freiburg, 1996, p67) It could be said that Southwest employ what other companies consider “risky workers.” Southwest look upon so called “risky workers”, as employees who have the ability and potential to take the company to the next level. Southwest allow their employees freedom and empowerment to make decisions that would otherwise be held for upper management, If employees have to side step the rules to make on the spot decisions, they are encouraged to use their own intelligence and impetus to benefit all involved.
Southwest also implement an important screening process. They look towards attitude as well as technical skills. “By hiring the right attitude, the company is able to foster the Southwest Spirit, the quality that makes employees go that extra mile if required” (Freiburg, 1996, p69) By implementing their unique screening costs, Southwest are able to boast results of having one of the lowest turnover, and highest productivity rates in the industry, justifying their methods.
Southwest implement their methods of recruiting, to positively bias their applicant pool. “We probably have 25 applicants for every job thats available at Southwest.” (Kelleher, 2003) A key to Southwest’s success in their screening and hiring process is to maintain a budget for training programs throughout the organization. Once an employee has been hired, it is vitally important for the company to invest in human capital be able to increase the productivity and motivation of that employee. In the recession that took place during the time after 2001, a number of companies cut their training and advertising budgets. Southwest on the other hand maintained their training as they continued to look long-term. “We actually increased our training budget during that time,” says Rita Bailey, former director of the University for People
. We decided to keep training at Southwest for some time, in the hope that we can provide a level playing field for our employees.
According to the Federal Workplace Commission, there are 7,340 employees in all 50 states that participate in the federal Workplace Security and Employment program. The program provides benefits, benefits, assistance and services to all Americans. When this program began in 2001 it was intended primarily to facilitate employers to work more closely with others, and for employees to work with one another without discrimination.
Although many of Southwest’s employees are currently eligible for benefits under the Workforce Security and Employment Act, it is the Federal Government that provides the most financial support. Since that time, it is the Federal Government, which is responsible for giving federal employees in the workforce and other federal resources to work to provide all the jobs they need. Of course, some jobs will also be added as a result of state and local tax incentives, but you can be sure that if you like your work, then you will get a benefit. If you are looking for a job, then you are welcome in, but it must be made available and paid for by the state that has the funds. If you are a small business or business owner or a young person looking for skilled, long-term employment then here is an excellent place to start. This is where you get the maximum amount of benefits. According to federal law, when federal workers are hired under the Workforce Security and Employment Act, they are hired on a merit-based basis. If they succeed in gaining the necessary skills and ability to gain employment benefits that are paid according to individual state and local laws, then they do not need to have a job and they can work. It is also possible for them to work under the wage-based system. In these cases however, they can be offered paid raises. If a company provides a paid salary in place, it is important not to confuse a paid job with a non-paid one. Once a worker has been hired the federal employees do not need to prove that they took the work for which they were hired and they can perform the same job for a reduced price.
At Southwest, we do have some other benefits, but the major consideration is to provide opportunities that are the most successful by providing services that will enhance the quality of life among our employees. If you are looking for opportunities on a state of the art facility or your company needs some kind of training which will help you get into an elite level job within your company, then you might qualify for some form of federal hiring from the Federal Government.
For some of the business owners, federal dollars are not the only reason they hire their employees, they are the biggest reason they choose a good company. Many of them prefer to hire workers in the United States that can get the highest quality, jobs available on the market for their country with a higher pay and lower barriers to entry. Their job is to create jobs in the United States. That’s because they want to make sure they get the highest quality, jobs available for U.S. residents. The number one reason they do their jobs is because the number of residents who are hired in them is great to attract those workers as it will give them jobs while also increasing wages and improving the quality of life for American workers.
With the federal government being