I also certify that this paper was prepared by me specifically for this course. 9. Student’s Signature: Instructor’s Grade on Assignment: instructors Comments: Review the 3-1 case from the Pearson book. This case study allows you to explore real world cultural issues related to the merger of two companies that basically offer the same services, but have two very different organizational structures and cultures. Note, one video has been provided here, there are many more on youth as well as a number of articles you can find via additional research. . INDIVIDUAL ESSAYS: To complete this assignment, submit an individual essay. Essays are generally two-three single spaced paragraphs. PLEASE DO NOT attach your essay and/or answers! Post them within the text area on the discussion board. ESSAY Southwest Airlines acquired Raritan Airways on May, 2011 for an estimated transaction value of over $3 billion. Since then, both airlines have been working hard to provide a top-notch, seamless travel experience for their customers.
The purchase adds new additional destinations previously not served by Southwest including cities in the Caribbean, Mexico, and Atlanta, Georgia, which was the largest U. S. City not served by Southwest. Hopefully by he end of 2014, all Raritan planes will be completely incorporated into the Southwest brand forming a single network and reaching to 97 destinations in the United States, Mexico, and the Caribbean. ([email protected] & [email protected] Network Connectivity, 2014) In an interview made prior to the completion of the merger to the President and CEO of Southwest Airlines is Gary C.
Kelly by CNN Money, he comments that the merger is the only possible way for growth and he sees it as great opportunity to take these two independent rout networks with very different destinations and virtually no overlap which presently compete very little with ACH other, and turning them into one stronger a bigger airline. Mr.. Kelly says “We are ready, We are financially healthy, We got the cash, We got the balance sheet, and we also have the revenue management technicians, and the schedule optimization in place to integrate Air-Trans’ network into our own and create significant value”.
Mr.. Kelly assures him and his company are very excited to take on this project. (Kelly, 2010) As of July 2013, it was evident that this merger hasn’t been as easy as Mr.. Kelly prognosticated. There are still all kind of obstacles to be overcome, and after 3 years the Southwest-Raritan merger is getting irritating for many regular customers that fly with these airlines. Part of the list of the many different customer complaints include conflicting information in the carriers’ reservation systems and confusion about fees between the two airlines.
The system unification of both companies into one has been one of the biggest challenges. According to an article on US Today, the slow pace is due to Southwest’s old-school computer reservation that has already become outdated as the airline’s business model has evolved. Southwest spokesman Brad Hawkins acknowledges the airline is working through some problems during the slow integration of the carriers but affirms that merger still remains on track. Untaught, 2013) QUESTIONS AND ANSWERS 1. Discuss the layers of culture that are evident in this case. Layers of culture are evident in this case. Southwest’s success is attributed in big part to its way of creating value in services through a defined corporate culture that encourages communication and team cooperation among employees. The company promotes a Fun Living attitude, claiming that a happy employee brings happy and loyal customers, and happy customers pep Southwest flying.
Company-sponsored parties like Halloween, deck, and spirit parties to keep employees motivated are very frequent, which according to their website and make it worthwhile to its employees to work hard for the Company they love, encourages the employees to enjoy the working environment, which leads to better customer service and profit increase for the firm. (southwest. Com, 2014) With the intention of welcoming employees from Air-Train to the family, and just days after Southwest Airlines announced the acquisition, the Southwest pilots union threw a party for their underpants at an airport hotel in Atlanta, an Raritan hub. Moreno, 2011) 2. What are the similarities and dissimilarities between the cultures, values and beliefs of Southwest and Raritan airlines? While Southwest and Raritan are both considered low cost airlines, the two companies do not have the same strategies. Southwest relies on simple cost and fare structures, selling one class of tickets with no assigned seating through its own website. On the other hand, Raritan has more differentiated service with a more up to date technology, using also third-party sites like Expedite and Principle to sell tickets. Southwest charges no reservation change fees or fees for up to two checked bags.
Raritan charges for reservation changes that are made after a purchase, plus additional fees checked bags. (By Acquiring Raritan, Will Southwest Continue to Spread the LIES? , 201 0) Southwest has a culture more inclined towards innovation and fun at the workplace. On the other hand, Raritan is not known for sharing these aspects of corporate culture, instead it is characterized for having a more traditional airline culture. (Moreno, 201 1) 3. What problems could arise due to the different perspectives of both airlines towards online reservation systems? What do you recommend the managers do to solve these problems?
Both perspectives must be backed by its own profit produced in numbers in order to make the right decision. Even though the comparison cannot be made on an apple to apple basis, since Southwest Airlines is a bigger company with higher annual revenues, the correct approach should be to follow whatever industry trends are being adopted. If customers like to reserve tickets through websites such as Expedite or Traceability, and not only Air-Train has shown positive outcomes, UT it also has turn into a very common practice by customers, then Southwest should seriously consider to incorporate this method of reservations to its current system. . What would you recommend managers do to ensure a smooth integration of the information systems, given the culture differences? It is well known that cultural differences is one of the biggest obstacles to overcome at the time two companies are being integrated into one, but it does not have to necessarily prevent a successful merger as long as those differences are identified in advance. It is essential to recognize that IT activities must be closely aligned with business activities of both airlines during the merger process.