Interorganizational Relationships Essay Sample
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Southwest Airlines has a commitment to relational coordination. This reveals a metacapacity to construct and maintain an integrated and highly efficient system in which knowledge and information are shared within and across the borders of the organization (Buller and Schuler, 2006). Since the organization reveals the capacity to combine and use various kinds of know-how, conventionally scattered around organizations, it reveals a high degree of interorganizational combinative abilities. Given the
combinative abilities. Given the fact that the organization is able to organize and connect in its everyday flights a plurality of tactical associates (airports, traffic control and producers) in a sole unique system of companies, it reveals relatively high relational capacity (Robbins and Judge, 2007).
Southwest Airlines has interorganizational relationships, relationships between itself and its environment and with other airlines. The organization operates in a very competitive environment. The environment in which it operates can be divided into various value-added stages, customer and service sections, and competitor groups (Buller and Schuler, 2006). All airlines are engaged in various value-added activities. The activities include plane procurement, plane maintenance, reservation methods, scheduling and route planning and in-flight and after-flight services. The involvement in these activities by competitors may differ (Robbins and Judge, 2007). For instance, our organization performs some in-house maintenance but does not offer post-flight services. In contrast, American Airlines has and markets its personal reservation system. Airlines compete for three key kinds of clients: travel agents, company travel managers and individuals. In order to satisfy the needs of the customers, airlines offer different services depending on their strategies. Passenger services can be grouped along various dimensions. For instance, airlines differ by physical coverage. They also differ in the structuring of the routes (Buller and Schuler, 2006).
The organization has the simplest fleet composition among its major competitors. The organization only flies Boeing 737. In selecting the fuel efficient 737, the organization established a close relationship with Boeing. The relationship allowed the organization to develop relatively favorable purchase terms. Despite the fact that the organization flies different models of 737, the cockpits are standardized. This makes it possible for any pilot to fly and for the plane to be used on any route. Additionally, so as to assist in capturing the scales of economies at a size smaller than its major competitors, the uniform fleet makeup lowers the complication of maintenance, training and servicing (Buller and Schuler, 2006).
The organization sells only 60 percent of its tickets via travel agencies. This way, the company is able to save up to 10 percent paid to the agents. This is as compared to 80 percent purchased by our competitors. Access to gates is usually a challenge to airlines. This is due to the fact that there are usually limited gates and are already taken by other companies. Our organization emphasizes on less crowded secondary airports thus alleviating the problem of the gates. Our company buys or leases gates as opposed to leasing which is done by others, enabling the organization to make use of its own crew. The organization also enjoys labor relations, being almost 85 percent unionized. The CEO has been able to persuade the union members and officers to identify with the organization (Robbins and Judge, 2007).
There are various objectives of joint ventures and strategic alliances between airlines and other companies. One of the objectives is achievement of economies of scale and learning. The other one is gaining the benefits of other firms. Risk sharing is another objective of these alliances. Survival, shaping the market and speed in accessing the market are other objectives (Robbins and Judge, 2007). There have been various joint ventures and strategic alliances between Southwest Airlines and other companies.
One of the examples is the strategic alliance that made possible the flight from Northwest Florida’s New International Airport, Near Panama City, Florida. The jet service is made possible through the strategic alliance between the organization and The St, Joe Company, one of the largest landlords and real estate developers in the United States. Another example is a joint venture that was signed between Southwest Airlines and WestJet in 2008. The joint venture was aimed at offering connecting services between the US and Canada. There is another possible alliance between Rearden Commerce and Southwest Airlines. The two companies signed a deal where common clients will be in a position to search the schedules of the airline and fares, and allow booking of the organization’s flights through the Rearden Personal Assistant (Robbins and Judge, 2007).
Code sharing enables airlines to book their passengers or to purchase seats on other companies and share the flight as though it was one of their own. This is a form of interorganizational networking enabled by computer-based technologies. This is an advantage for the airlines since it lowers the costs in low-volume routes that would require several small planes from different airlines. The passengers are loaded on a single plane and its code shared by the different companies that offer that particular flight service. Southwest Airlines has taken advantage of networking in this sense. An example of code sharing agreement by the organization is with Volaris. The agreement is aimed at allowing our organization to sell tickets on the Mexican low-cost carrier (Robbins and Judge, 2007).
Buller, P. & Schuler, R. (2006). Managing Organizations and People: Cases in Management,
Organizational Behavior and Human Resource Management. Ohio: Thompson
Robbins, S. & Judge, T. (2007). Organizational Behavior. New Jersey: Pearson.
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