University of Montana Southwest Airlines Comes of Age Case Study Paper Part I: Read “Southwest Airlines Comes of Age.” Answer the three questions that foll

University of Montana Southwest Airlines Comes of Age Case Study Paper Part I: Read “Southwest Airlines Comes of Age.” Answer the three questions that follow – in detail, in your own words, college level. Include at least two of the key terms on page 100 into your answers (2 total not 2 per question). These key terms must be in BOLD or underlined.

Part II: Research the change in CEO at Southwest Airlines referred to in the reading. Write a paragraph about your findings and why the workers miss Herb Kelleher.

Read attached documents 1, and 2.

Answer the questions attached.

Include one key term in each answer. QUESTIONS
1. What do you think has made Southwest Airlines so successful?
2. What do you think are the major challenges facing Southwest?
3. How would a strategic approach to HRM help Southwest
successfully address these challenges?
EXERCISING STRATEGY
SOUTHWEST AIRLINES COMES OF AGE
Southwest Airlines has perennially been considered a model of how an
innovative strategy combined with strong culture and a strong
relationship between management and employees can lead to business
success. The company was founded in 1967 and was built on low costs,
labor harmony, simplicity, and rapid expansion. Although labor strife
seems endemic to the airline industry, Southwest always stood up for its
workforce, which seemed unflinchingly committed to the company’s
success.
However, as the company has expanded and grown older, the original
strategy seems to be in peril. Mergers among the major airlines such as
American/US Airways, United/Continental, and Delta/Northwest have
enabled them to reduce their cost structures and come closer to
Southwest on price. In addition, ultra-discount airlines, such as Spirit
Airlines, can undercut Southwest on price. Finally, airlines like JetBlue
and Virgin America compete for Southwest’s traditional middle-class
customers.
While Southwest faces a number of competitive and technological
challenges, its labor costs stand front and center. Because Southwest is
not expanding as fast, the company cannot hire as many new employees
at the lowest rungs of the wage scale. With 83% of its workforce
unionized, Southwest now seeks to negotiate wage freezes and tighten
rules on sick time. In addition, the airline wants to hire more part-time
workers and has floated the idea of outsourcing a number of jobs.
Employees pine for the former CEO and co-founder, Herb Kelleher,
who was beloved by employees. Says Randy Barnes, a union
representative for the ramp workers, “Ever since Herb … left, this has
been more of a corporation and less of a family.”
Southwest Airlines’ challenges face every company sooner or Page 102
later. Although firm success can be sustained for a number of
years, at some point competition begins to take its toll. In addition, with
changes in leadership (Herb Kelleher retired from the CEO role and
handed it off to Gary Kelly in 2004), it is difficult to maintain the same
strong culture. This has profound effects on how people must be
managed to sustain success amid a changing competitive landscape.
In spite of these challenges, Southwest’s performance remains strong.
The airline made a record $2.24 billion in profits in 2016. In addition,
the airline will continue to expand internationally, providing new
opportunities for revenue growth.
KEY TERMS
• Strategic human resource management (SHRM) 77
• Strategy formulation 77
• Strategy implementation 77
• Goals 82
• External analysis 82
• Internal analysis 82
• Strategic choice 83
• Job analysis 89
• Job design 89
• Recruitment 89
• Selection 89
• Training 89
221
• Development 89
• Performance management 89
• Role behaviors 92
• External growth strategy 93
• Concentration strategy 93
• Internal growth strategy 94
• Downsizing 95

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