Case Analysis of Management Control System
Southwest Airlines Corporation
Southwest Airlines actually could hit the company goal on achieving profitability for consecutive 32 times which is really good compared to others airlines corporations. The company could offer low cost fares to its customer mostly through website and also provides point to point flight majoring on short haul and medium flight. Besides, to ensure the organization reach company goals, the company put more effort on creating comfortable environment and culture for its employees. The company strategy is align with Anthony and Govindarajan (2005) statement about good management control system that is created ...view middle of the document...
Thus, it creates in low efficient process and customer satisfaction. Moreover, if company use congested airport, it will increase fuel consumption because of the queuing delay.
Use point-to-point flight. Southwest uses point to point flight in which the plane travels directly to the destination. This way will reduce additional congestion charge because the airlines could bypass hubs (especially congested airports) and operates hubs more efficiently. In addition, plane will use less crew because it bypass hub. Thus, it results in more efficient cost and time management. From the customer point of view, this action offers non-stop flight, gives more choice and flexibility, and also reduces travelling time.
Set up online booking system. About 60% of passenger revenue is come from online booking system from southwest.com. This strategy is relatively cheaper than set up new booking office because it could cut employee, building, and land investment.
Moreover, in the Internet era, online booking is faster method so the customers can book the ticket everywhere and whenever they want. To push customer buy from the online booking system southwest make more interesting application such as mobile site application for booking and Ding!, a desktop application that provided exclusive deals. This system may attract more and more customer to book from Internet and make conventional booking system from the office not becoming the priority. However, conventional booking office still important in case the Internet is down but not that much. Overall this strategy could minimize operational cost in order to achieve company low cost strategy.
The pilots not belong to national union. This strategy consideration may because of the low cost strategy implementation. By choosing low cost strategy, company should sell more seats to increase profitability. However, if company choose to put the pilot belong to the union, their pilot will have limited hours to fly. So this strategy could make the pilot to fly far more hours than pilots at other airline so it is mean more flight and seat available. As the compensation, the airlines give more salary to the employee. And the salary based on the trip.
Furthermore, company uses good management control system toward employee in order to set goal congruence between company goal and employee goal as Anthony and Govindarajan stated in the book. Several management systems done by company to reach organization maximum...