my Qiao
Company: Southwest Airlines
SECTION 1:
In the release of 20-Year Air Passenger Forecast, the International Air Transport Association (IATA) expects 7.8 billion passengers to travel in 2036, a near doubling of the 4 billion air travelers expected to fly this year (IATA, 2017). The increased demand for international travel presents a huge opportunity for the airline industry. For many years, international flights were dominated by large carriers like United Airlines and American Airlines, and tickets are usually more expensive. As the low-cost leader in U.S. airline travel, Southwest Airlines intends to take this opportunity to expand international markets. The aim of this proposal was to expand the company’s market coverage by adding new routes to Canada. Furthermore, the expansion of international service is an important service diversification for Southwest since it mainly focuses on the domestic market.
SECTION 2: The identification of Southwest Airlines Stakeholders
Freeman defined stakeholder as “any group or individual who can affect or is affected by the achievement of an organization’s objectives and any identifiable group or individual on which the organization is dependent for continued survival” (Freeman, 1984, p. 46). The figure above presents the map of stakeholders involved in Southwest’s international expansion proposal. The internal stakeholders are shareholders, airline management, employees, whereas external stakeholders are passengers, governments, competitors, media, Boeing, airports, and the local community.
In general, I selected the stakeholders based on Kenny’s five criteria to identify key stakeholders. The five criteria are: the stakeholder has a fundamental impact on the organization’s performance, you can specify what the organization wants from the stakeholder, the relationship is dynamic, the organization cannot exist without or easily replace the stakeholder, and stakeholder has not already been identified through another relationship (Kenny, 2014). In stakeholders map, shareholders of Southwest are the owner of the company, and they have an equity stake. When planning a new route, airline management is responsible for reviewing and assessing the proposal, which makes it an internal stakeholder. The company’s relationship with consumers is dynamic, since opening new routes will directly affect consumers and their travel decision making. They are the key stakeholders also, as the driving force of the company’s profit. Governments in both domestic and foreign countries can have significant influence over the proposal due to the use of political process. If the proposal passed by governments, Southwest will have to source aircraft for the new routes, which makes Boeing a key stakeholder. As the only supplier of the company, Southwest cannot exist without or easily replace the stakeholder.
SECTION 3: Describe how you made decisions regarding whether stakeholders had high/low interest and high/low power. Provide at least two specific examples.
When assessing the stakeholders for influence and interest, stakeholders’ degree of influence translates into the relative power they have over the project, as well as the degree to which they can help desired changes to be implemented or blocked. In addition, stakeholders’ degree of interest indicates how interested they are to impress their expectations on the organization's choice of strategies. The tables below showed the ranking of the stakeholders based on the degree of interest and power.
Interest (10 = the most interest) Power (10 = the most power)
10
Airline Management
9
Consumers
8
Shareholders
7
Local community
6
Boeing
5
Media
4
Competitors
3
Airports
2
Employees
1
Governments
10
Governments
9
Shareholders
8
Airline Management
7
Boeing
6
Media
5
Airports
4
Consumers
3
Local community
2
Competitors
1
Employees
Table 1 Table 2
According to table 1, I ranked stakeholders’ degree of interest from the most to the least. When planning a new route, airline management is responsible for reviewing and assessing the proposal. They, therefore, have the greatest interest in the project. Local communities living close to airports are directly affected by this proposal, so it does have a considerable degree of interest, rating a “7”. Governments take little interest in this proposal, as a result of which their level of interest is “1”.
According to table 2, I ranked stakeholders’ degree of power from the most to the least. Governments are the authorities which have jurisdiction over the matter, the approval or rejection of the project is in their hands. They, therefore, have the highest level of power in the proposal. As the only supplier of Southwest, Boeing would have some effects on the execution of the proposal, as the result of which it levels of power “7”. Employees ranked the lowest level of power as they do not have a large of competences that might affect the execution of the proposal.
High Interest/ Low Power: Customers
In the airline industry, passenger travel demand affects the overall performance of a company. When Southwest plans to serve new destinations, it performs multiple evaluations to better understand if this is a market that consumers will value. If their needs were not met, it would let to the decline in the company’s operating profit. Furthermore, opening new routes will directly affect consumers and their travel decision making. Consumers, therefore, have high interest to impress their expectations on the company's choice of strategies. Although they are the source of the company’s profit, consumers do not have a great impact on how the company’s managed, so it does not have a high degree of power.
High Interest/ High Power: Airline Management, Shareholders
In shareholders map, shareholders and airline management who have a significant relationship with Southwest rank high in both interest and power. As the owner of Southwest, shareholders have high interest in the financial success of the company. Airline managers have a great responsibility for the company’s operating and future planning, as a result of which their degree of interest is high. When it comes to decision making, both of them would have a high degree of power due to their abilities to vote on key decisions.
SECTION 4 Analyze how you would manage each “box” (least important, show consideration, meet their needs, and key player) for the given decision you are making.
Least Important —Inform
According to the BSR article, the “least important” box is characterized by those stakeholders who have a low level of power and low level of interest (BSR, 2012). Given their level of interest and power, engagement means ensuring stakeholders are well informed about the company’s processes and outcome. The engagement strategy is to provide access to channels of information and feedback via general communications including newsletters, websites, and mail shots. The aim of this strategy is to keep stakeholders informed and potentially move them into the “show consideration” box (BSR, 2012).
Show consideration —Communicate
This box is characterized by those stakeholders who have a high level of interest but low level of power with the company (BSR, 2012). Stakeholders that fit into this category require some form of engagement strategy in order to get them involved in the company’s future planning. Potential stakeholders within this box are the local community and consumers. Given their high level of interest, I recommend Southwest to use communications strategy to manage and satisfy stakeholders’ expectations (BSR, 2012). For example, Southwest may use surveys to gather opinions and feedback from individual stakeholders. Moreover, the company can use the internet and social media to post special offers, information about services, or general announcements about the company. This approach would allow the company to gain information and feedback from stakeholders, and to inform decisions made internally.
Meet their needs —communicate
Stakeholders who a have high level of power, but a low level of interest can be classified in the “meet their needs” category (BSR, 2012). This stakeholder group is very influential due to their high levels of representation and authority. Since they may use their power in a not desired way, Southwest must put enough work in with these people to keep them satisfied. I recommend Southwest to use communications strategy to communicate project related information to those stakeholders. For example, the company may hold a series of conferences with stakeholders that allow them to comment on the proposals and identify any specific issues that needed to be addressed by the project. Given their high level of power, the company may need to consult with stakeholders regularly through phone, email, and text. Communicating more with these stakeholders will help them value engagement and potentially move them to the “key players” box (BSR, 2012).
Key players–Engage
“Key players” are stakeholders who have a high level of interest and power in this proposal (BSR, 2012). Stakeholders that fit into this category are the major drivers of change and often involved in the governance and decision making. Potential stakeholders within this box are shareholders and airline management. Given their level of importance and influence, collaboration and partnership would be the most appropriate approach for key players engagement (BSR, 2012). For example, Southwest may hold roundtables and working group meetings that bring stakeholders on a regular basis to meet and discuss on the company’s activities. This approach facilitates debates between groups with different views, and also fosters a sense of stakeholder participation and collaboration.