OPERATIONS ASSIGNMENT As flying becomes a commodity and as airlines strive to of
ID: 351824 • Letter: O
Question
OPERATIONS ASSIGNMENT
As flying becomes a commodity and as airlines strive to offer the lowest fares possible, Southwest is finding it increasingly hard to distinguish itself from its competition. A proposal has been made to offer a business class on its longer flights. This class would have more comfortable seats, more legroom, and complimentary magazines, movies, meals, drinks, and Wi-Fi. A toilet would be dedicated to this section. These passengers would also get priority boarding and de-boarding of flights. If the experiment is successful Southwest would consider rolling out business class on all its flights.
What does the operations function have to do to examine the feasiblity of this proposal and get ready for its implementation? Answer using the framework of the 10 key operations decisions.
What role do the other functions (specifically, Finance, Marketing, and HR) have to play in examining the feasibility of this idea and successfully implementing it?
Explanation / Answer
What does the operations function have to do to examine the feasibility of this proposal and get ready for its implementation?
A year earlier (on March 15, 2007) Southwest Airlines had reported to the FAA that it had violated an Airworthiness Directive (AD 2004-18-06) mandating fuselage inspections for structural cracks on its fleet of Boeing 737s. Under FAA rules, any aircraft violating an Airworthiness Directive may not fly, and should be grounded until the non-compliance is corrected. In this case, an FAA Principal Maintenance Inspector (PMI), who was notified of the breach by the airline, agreed with the airline’s proposal to rectify the matter within ten days, and did not require that the 46 affected Boeing 737s be withdrawn from service. Southwest Airlines continued to operate the noncompliant aircraft on 1,451 flights over the next nine days while the required inspections were conducted. When the planes were finally inspected, five of them were found to have the types of fuselage cracks subject to this specific Airworthiness Directive. The Department of Transportation’s Inspector General later estimated that Southwest had flown more than six million passengers over nine months on noncompliant planes.8
As early as 2003, one inspector from the FAA office that oversees Southwest—later to become a whistleblower—had raised concerns about the airline’s compliance with ADs, but had been unable to persuade his superiors to conduct system-wide reviews.9 In relation to Southwest’s non-compliance with AD 2004-18-06, this inspector and one other whistleblower from the same office reported the Principal Maintenance Inspector for illegally permitting the airline to continue flying non-compliant planes, and also for encouraging the airline to “self-disclose” violations under the Voluntary Disclosure Reporting Program (VDRP) in order to avoid enforcement penalties. The PMI had accepted the voluntary disclosure on March 19, 2007 despite multiple prior AD
While feasibility studies are typically conducted by business organizations, other organizations can naturally benefit from it as well. Since the study aims to discover whether an action is viable, it can help organizations to avoid costly or operationally exhausting ventures.
Even though they admitted serious problems with the Southwest CMO, FAA executives defended the agency and its methods before the congressional committee, arguing that the problems had been specific to and isolated within that office, and that they did not reflect any broader problems across the agency.
The central issue running through the April 2008 congressional hearings, and all the attendant publicity, was whether the FAA had succumbed to excessively “cozy” relationships with the airlines, routinely failed to take proper enforcement action, and allowed non-compliant airlines to escape penalties by using the voluntary disclosure programs without fixing their underlying safety problems
Feasibility studies can be used in many ways but primarily focus on proposed business ventures. Farmers and others with a business idea should conduct a feasibility study to determine the viability of their idea before proceeding with the development of a business. Determining early that a business idea will not work saves time, money and heartache later.
A feasible business venture is one where the business will generate adequate cash-flow and profits, withstand the risks it will encounter, remain viable in the long-term and meet the goals of the founders. The venture can be either a start-up business, the purchase of an existing business, an expansion of current business operations or a new enterprise for an existing business. Information File C5-66, Feasibility Study Outline is provided to give you guidance on how to proceed with the study and what to include. Also, Information File C5-64, How to Use and When to Do a Feasibility Study will help you through the process and help you get the most out of your study.
A feasibility study is only one step in the business idea assessment and business development process (Information File C5-02). Reviewing this process and reading the information below will help put the role of the feasibility study in perspective.
The study is typically used in situations where an important strategic decision needs to be taken.
This can vary and some of the example situations include:
As mentioned above, a feasibility study is often at the core of launching a business. It can be the key to launching a successful start-up, as it helps to underline the future pain points and to determine whether the plan is viable in the first place.
Overall, a feasibility study is the perfect tool for situations where the impact is likely to be big in terms of operational or economic significance.
What role do the other functions (specifically, Finance, Marketing, and HR) have to play in examining the feasibility of this idea and successfully implementing it
One aspect of our topic includes the broad understanding of an organizational strategy. A strategic HR role means that HR professionals are proactive in addressing business realities and focusing on future business needs. Also, from the text Human Resource Management an organization’s strategy is the way they are going to compete successfully and thereby survive and grow (Mathis & Jackson, 2010). I felt it would be great to start out with an example of how effective HR management takes part in a successful business. Therefore, I picked to look into the strategy of Southwest Airlines and how they have been able to stay profitable after September 11, 2001, which caused a decline in the demand of flying
Human resource managers are well positioned to play an instrumental role in helping their organization achieve its goals of becoming a socially and environmentally responsible firm – one which reduces its negative and enhances its positive impacts on society and the environment. Further, human resource (HR) professionals in organizations that perceive successful corporate social responsibility (CSR) as a key driver of their financial performance, can be influential in realizing on that objective. While there is considerable guidance to firms who wish to be the best place to work and for firms who seek to manage their employee relationships in a socially responsible way, there is a dearth of information for the HR manager who sees the importance of embedding their firm’s CSR values throughout the organization, who wish to assist the executive team in integrating CSR into the company’s DNA. And as high profile corporate failures such as Enron make all too clear, organizations that pay lip-service to CSR while neglecting to foster a CSR culture run the risk of damaging their corporate reputation if not their demise. Indeed, HR’s mandate to communicate and implement ideas, policies, and cultural and behavioural change in organizations makes it central to fulfilling an organization’s objectives to “integrate CSR in all that we do.” That said, it is important to understand that employee engagement is not simply the mandate of HR.
The fact that these individual practices will not likely lead to sustainable competitive advantage does not imply that these practices are unimportant and thus, HR executives can ignore identifying the best practice for each of the various HR activities. The failure to invest in state-of-the-art selection, training, and reward systems can result in a firm having a competitive disadvantage among human resources. In addition, a series of temporary competitive advantages gained through constant innovation is still quite valuable to the firm. However, the challenge for HR is to develop systems of HR practices that create a synergistic effect rather than develop a set of independent best practices of HR (Becker & Gerhart, 1996; Gerhart, Trevor, & Graham, 1996; Lado & Wilson, 1994; Wright & Snell, 1992; Wright et al., 1994). This requires a changing mindset from the traditional subfunctional (selection, training, appraisal, compensation, etc.) view of HR to one where all of these independent subfunctions are viewed as interrelated components of a highly interdependent system. The interrelatedness of the system components make the advantage difficult, if not impossible for competitors to identify and copy. It also requires investing time and energy into developing systems and structures for integrating various HR practices such that they
Understand the value of people in the firm and their role in competitive advantage.
Knowing the economic value of the firm’s human resources is a necessary precondition before any HR executive can begin to manage the function strategically. Reichheld (1996) notes that people contribute to firms in terms of efficiency, customer selection, customer retention, customer referral, and employee referral. People play an important role in the success of any firm, but which people do so and how may vary across firms. This knowledge is a necessary starting point for any HR executive to act as a strategic partner.
Understand the economic consequences of the human resource practices in a firm.
Once an HR executive understands the specific ways in which the firm’s people provide value, it is necessary to examine the value that HR provides or can provide. Recent research has uncovered a relationship between HR practices and the financial performance of firms (Delery & Doty, 1996; Huselid, 1995; 1996; McDuffie, 1995; Welbourne & Andrews, 1996; Youndt, Snell, Dean, and Lepak, 1996). While this research is promising, more research is needed on how, exactly, this impact is gained. We believe that there are two basic ways
Understand how the human resources and human resource practices in your firm compare to those in competing firms.
The previous two questions focus the HR executive’s attention internally within the organization. However, in a competitive environment, one cannot ignore the actions of competitors, and this is also true of HR. Therefore, it is necessary to examine the HR functions of competitors to gain an understanding of what HR practices and relationships define the present competition. However, this information is only valuable so far as it is used for developing strategies for changing the competitive landscape to your firm’s advantage.
Understand the role of the human resources function in building organizational capability for the future.
A constant tension exists in the trade-offs between focusing decision making and resource allocation on the short and long term in most organizations. This conflict also exists within the HR function. Many HR functions are struggling so hard with meeting current needs that they have little time to explore long term organizational plans. However, this tendency must be broken if HR executives want to play the role of strategic partner
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