ORGANIZATIONAL CULTURE

Organization Culture: Southwest Airlines

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Organization Culture: Southwest Airlines

Background

Southwest Airlines is one of the top passenger airlines in the Unites States of America. It is also the largest low-cost airline service provider in the world. The company dates back in March 1967. Rolling King and Herb Kelleher founded the company with the name of Air Southwest Co. as an intrastate airline. Since passenger airlines were a capital intensive sector with high bureaucratic environment, Kelleher believe he could avoid the initial cost pressures and legislative hassles by restricting its operations within the state of Texas. Having established its headquarters in Dallas, Texas, the company adopted its current name, Southwest Airlines, in March 1971.

The company struggled to survive in its initial years. It suffered losses in the early 1970s that forced the company to sell off some its aircrafts to generate cash flows for paying off salaries and other expenses. By 1980s, Southwest Airlines began to find its path to growth and began trailing an upward profitability trend. Over the years, Southwest Airlines emerged as an aggressive competitor. It spread out its wings from a Texas oriented airline service to a nationwide domestic carrier. The induction of Boeing 737 aircrafts further gave power to Southwest Airlines as a low cost passenger airline. In order to expand its networks into other regions in the United States and achieve sustainable growth, Southwest Airlines relied on acquisitions. A major acquisition since its establishment by Southwest Airlines was the takeover of Utah based Morris Airlines, which was an active competitor of the company. With this acquisition, not only Southwest Airlines was able to eliminate a competitor but also got access to the routes served by Morris Airlines, which Southwest was not serving earlier. Furthermore, Morris Airlines asset and inventories also became a part of Southwest Airlines thus expanding Southwest's fleet strength. The company eventually grew stronger enough to sustain recessionary pressures and became one of the very few companies to document profits for consecutive 31 years in a row (Lee, 19895, pp. 9-11).

Introduction

The term organizational culture is defined by the values and norms that an organization adheres to in terms of its practices and management. As the contemporary opened system theories replaced the traditional closed system ones, management theorists began to emphasize the importance of an organizational culture and the vital role it plays in the overall growth, stability, productivity and efficiency of the business. As theories supporting organic company designs and structures came in, the need to incorporate culture as a part of strategic management arose.

One important aspect of organizational culture is that it decides work environment that the company provides to its employees. The degree to innovate or dictatorial decision making, flexibility of tasks, communication and interpersonal relationships are all underlined by the overall organizational culture. This makes culture an important influence factor in the tertiary sector organizations where the nature of business is defined by people to people contact. In such organizations, where there is no physical product to ...