Also, it emphasizes on point-to-point routes with no central hub so as to avoid the delays caused by connecting flights. In addition, the aircraft turnaround time is 15 minutes facilitated by crews from different positions which gives a higher frequency of flights. The gate Is only managed by an agent and SIX or fewer ground crews. For salaries, employees are paid lower, but work more hours than those in other airlines. Therefore, SAW has utilized its aircrafts, employees and airports to lower the costs in operations. For customer service, SAW keeps its fare, in- flight services and frequent flyer club simple.
For example, passengers are only served with beverages and the club is tracked based on the number of trips flown which could eliminate the costs In keeping track of the mileages. Therefore, these approaches could economize and lower Its operating costs. Analyze Swag’s human resource management system. How does this system link to the execution of its competitive strategy? As SAW considered people as the competitive advantage, its People Department has developed a system and put great effort on the potential and existing employees.
There are 3 components in Swag’s human resource management system, Including Recruiting, Training, as well as Pay and Rewards. As for the hiring practices at SAW, the focus Is to Identify the traits that comprise effective reference and behavior, especially teamwork and positive attitude by different assessments, including interviews, peer recruiting or phone screening. This is to ensure the person would fit the company. Apart from recruitment, trainings offered to employees in SAW are comprehensive and diversified. First, it covers different levels of employees in an organization.
New hires’ training will provide background of the company and basic understanding about customer service while those for managers and supervisors would emphasize on operations and leadership. Career planning and cross-functional teamwork training will also be involved. Second, training that are not related to operations are offered. For example, some outward bound courses or Front-Line Forum could help team building and maintain company’s culture respectively. For Pay and Rewards, employees’ rate are based on their seniority.
There are no benefits like company cars or club memberships, but discounted stock purchase program and profit sharing. Recruitment and Training under the system could ensure the person suits the SAW In terms of ability and attitude and encourage two-way communication. This in turn raises their productivity, be more united as well as providing high quality, but simple customer arrive. As a result, the operating costs could be reduced by utilizing the employees and spending less effort on managing customers while satisfying their needs.
For Pay Ana Rewards, costs are lowered Day not provoking compensation program or privileges for all employees and pay based on seniority. Thus, these three components in the HARM system showed the People Department’s consciousness on costs which will be consistent with the competitive strategy to be the low-cost leader. How serious is the competitive threat from Continental and United? Please explain. What issue should Ann raise the meeting? What would be your recommendations? In y opinion, the competitive threat from Continental and United would not be serious in short term.
Although both airlines put great effort on learning Swag’s strategy in low costs and the way to serve customer, the financial results and customer satisfactions were not up to expectations. This is due to the management style, employees and corporate culture of both airlines while SAW could do well in these three aspects and its human resource management system could be consistent with the competitive strategy which lead to its success. However, the threat cannot be neglected as improvement can be done in long-run and SAW is currently enlarging TTS business scale which become more complicated in management.
Thus, the issue of maintaining SAW competitiveness and management effectiveness should be raised by Ann during the meeting. Recommendations could be in two aspects. Internally, it is to maintain the communication and relationship between employees. As SAW is expanding, open sharing of information becomes more important in a big family. Online Platform and regular gathering or celebrations are needed as two-way communication between employer and employees. Externally, it is to improve ‘Company Club’ system to provide customers incentives. Since both United and
Continental are still in the beginning stage, it is a great opportunity for SAW to create new market for potential customers and raise the loyalty of existing customers. For example, offering different rewards according to loyalty points-level and for each trip flown would earn 10 points. These accumulated loyalty points could redeem different gifts. The new reward program and the high-quality customer service provided could build a sustainable and stronger customer base. This intent is to compete with other airlines who would like to enter the low-fare industry and increase the profits of SAW while remaining low costs.