Organizational Behavior and Human Decision Processes
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Operating in today’s complex business environment, organizations are influenced by numerous factors including global economic transformations, technological advances, industrial disputes, mergers, changing political regulations, government intervention, increased competitiveness in all industries, diverse consumer requirements, etc. Business environment is becoming extremely complicated under global, national, and regional circumstances. Therefore, in order to meet the changing demands of the 21st century, organizations face the urgent necessity to be able to implement beneficial transformations of their structure, performance, strategies, staffing, and culture.
Radical organizational changes have become a widely utilized managerial practice in modern business. However, although a wide spectrum of models of organization change exists, all change-associated initiatives should be based on comprehensive assessment of external and internal conditions of an organization in order to select and implement the most beneficial efforts (Burke, 2011). Thus, the main purpose of the paper is to design a plan to transform the organization (Allegiant Air) based on thorough analyses, utilizing Kotter’s 8-Step Approach (Kotter, 1996). Findings of such analyses and a set of proposals will allow the organization’s executives and top managers to benefit from discerned favorable opportunities, neutralize existing weaknesses, and avoid potential threats.
Allegiant Air Airlines is one of the largest USA low-cost carriers. The company operates as a subsidiary of Las Vegas-based Allegiant Travel Company, which was founded in 1997. According to the data provided on the official website of the parental company, Allegiant Air carries approximately 6 million domestic passengers annually (5,903,184 persons in 2010 and 6,175,808 persons in 2011). In conformity with the company’s official data, “Allegiant operates a fleet of 58 MD-80 aircraft and 4 Boeing 757-200 aircraft. The company owns 2 additional 757-200 aircrafts, which are on lease to a European carrier. These aircraft are expected to be introduced into Allegiant’s fleet during the 4th quarter of 2012 and the 1st quarter of 2013” (Allegiant Travel Company Fact Sheet, 2012, p. 1). However, Air-fleets provide some contradictory information: Allegiant Air’s fleet includes 42 McDonnell Douglas (MD-80) aircrafts.
Serving a combined 79 destinations in the USA, Canada, and Mexico, Allegiant Air is steadily becoming an established brand of the low-cost flights and nonstop, scheduled service; “the carrier’s charter customers include Apple Vacations, athletic organizations, film production companies and corporations” (Allegiant Travel Company Fact Sheet, 2012, p. 2). However, despite the availability and high quality of the company’s services, today, the average passenger load factor comprises only 88.6% (Operating Statistics, 2012). Moreover, the Internet-based Allegiant Airlines complaints & reviews contains consumers’ complaints about the company’s services including the issues of “poor handling of passengers and lack of provisions”, additional costs of website booking, inappropriate baggage transportation, etc.(Allegiant Airlines Complaints & Reviews, 2012). Therefore, business practitioners and empowered personnel of Allegiant Airlines should conduct a SWOT analysis of the company and utilize techniques of a PEST Analysis while implementing initiatives associated with the organization change. “SWOT identifies strengths and weaknesses within the firm, and opportunities and threats outside the firm. The SWOT analysis provides a platform from which strategies can be developed to achieve organizational objectives” (Blythe & Megicks, 2010, p. 40). The PEST Analysis involves rigorous studies of political, economic, social, and technological environmental factors that contribute to the effectiveness or inefficiency of an organization. Being interrelated, these research methods allow business professionals to assess the intensity of rivalry and the industry context, in which Allegiant Air performs its business operations, evaluate existing and potential threats, and discern favorable opportunities of their organization.
Both the internal and external factors influencing Allegiant Air effectiveness should be evaluated from points of view of potential and valid customers, clients of the organization, share- and stakeholders, and the major competitors. Furthermore, in order to obtain reliable results, it is essential to conduct a series of analyses, each focusing on a specific service or market combination.
The initial stage of research is a choice of parameters to analyze. The external assessment of opportunities and threats facing Allegiant Air can involve the examination of the following parameters:
- Intensity of competitiveness in the industry, both domestic and international;
- Issues of legal and political nature;
- Demographic factors related to the number of potential consumers;
- Technological advances specific to the industry.
An internal analysis is conducted to identify strengths and weaknesses of an organization; it involves a comprehensive assessment of a company’s resources, management, business processes, and competitiveness. The strengths should be evluated against existing and potential competitors of Allegiant Air. Team members should focus on organization’s level of weaknesses. The internal audit is aimed at evaluating the strengths and weaknesses of Allegiant Air taking into consideration the following parameters:
- Management and administration;
- Human resources;
- Marketing practices;
- Financial aspects.
The analyses of Allegiant Air were carried out on the basis of the company’s financial reports, the US governmental publications, market exploration, consumers’ reviews and comments, periodicals, and the statistical data. Thus, the research has revealed the following external factors influencing efficacy of business operations performed by Allegiant Air:
Intense competitiveness in the industry, both domestic and international. The company’s strongest competitors are the USA-based low-cost carriers, such as Southwest Airlines, Spirit Airlines, Inc., Frontier Airlines, JetBlue Airways, Sun Country Airlines (MN Airlines, LLC), and some others.
Weak global and domestic economy is still reeling from the consequences of the Global Financial Crisis (GFC).
Legal and political issues involve insufficient industry and government support, absence of official competition regulations, increasing taxes for an airline ticket, high aircraft rescue and fire fighting requirements, restrictions including Airline Passenger Protections Act (2011) and the Airport Certification Manual (ACM), etc.
Economic environmental conditions including current currency fluctuations, increased rates of inflation, growing costs of oil and fuel, and declining incomes of population can significantly decrease the company revenues.
Scientific and technological progress stipulates growing requirements for the company’s fleet in general and specific equipment in particular.
Natural and ecological factors related to the environmental pollution can enhance a variety of restrictions and, thus, make a negative impact on the company’s business activities.
Although Allegiant Air has become an established brand of low-cost flights and, “in 2010, Allegiant was ranked number one for low-cost carriers in Aviation Week’s Top Performing Airline study” (Allegiant Travel Company Fact Sheet, 2012, p. 1), transportation and others services provided by the company can be hypothetically substituted by cheaper bus and railway transportation.
The internal factors affecting Allegiant Air are such strengths and weaknesses as:
Allegiant Air offers its transportation services at a fair price. Hence, these services are widely available for consumers. However, the organization performs insufficient quantity of services and operations in comparison with its strongest competitors.
Although “the company unveiled a brand refresh in October 2010 that included a refreshed logo with a more prominent sun design and softer lines, along with a new tag line, “Travel is our deal” (Allegiant Travel Company Fact Sheet, 2012), utilized strategies of services promotion do not correspond to the company’s objectives and current market conditions; the organization’s advertising and communication strategies are inadequate.
Although Allegiant Air has acquired a good reputation amongst consumers and low-cost transportation enhances constant consumers’ demand, web-based consumers’ testimonials and reviews testify to irrelevant services provided by the organization.
The organization implements a well developed system of new personnel training; senior managers and executives of Allegiant Air are skilled, highly qualified, and goal-oriented.
Allegiant Air is constantly expanding its number of aircraft.
Although the conducted external analyses have identified weaknesses of the company and potential threats that Allegiant Air faces, a relevant effective approach to the implementation of organization change is able to promote the stable growth of the company’s annual flights, increase its revenues, improve its marketing, strategic planning, and management policies, and, thus, enhance the company profitability (Kotter, 1996; Blythe & Megicks, 2010; Robbins & Coulter, 2010; Burke, 2011).
Kotter’s 8-Step Approach
“Managers face three main types of change: structure, technology, and people” (Robbins & Coulter, 2010, p. 155). In accordance with findings of conducted analyses, technological transformations and changes in the organizational structure of Allegiant Air should be provided. Being based on the 8-step approach to organization change developed by John P. Kotter (1996), the following steps towards beneficial transformations of Allegiant Air should be implemented:
Establishment of a sense of change urgency via disclosure of results of conducted analyses. “Organizations face change because external and internal factors create the need for change” (Robbins & Coulter, 2010, p. 152). The effectiveness of business activities performed by Allegiant Air since 1999 attracts new competitors in the industry of low-cost transportation both locally and globally. Furthermore, airliine carriers associated with expensive and long-distance flights, such as the US Airways, Inc., Global Aero Logistics, Inc., Envoy, etc., are expanding their services and launching low-cost routes today although it costs millions of dollars to set up a business in the airline industry. Being aware of the company’s threats and opportunities, the intense competitiveness in the industry, and potential crises, the personnel of Allegiant Air can become extremely motivated to design and implement organization change efforts related to the structure and technology of their organization. Motivation practices should be utilized and modified in accordance with the company’s new strategic objectives.
Formation of a powerful guiding coalition team. In conformity with the Kotter’s recommendations (1996), a change initiative should be developed, promoted, coordinated, and supervised by the leadership coalition consisting of 15-20 senior managers and powerful union leaders of Allegiant Air. All members of the coalition should possess leadership skills. A leader is able to involve people in diverse activities, creating a highly motivating environment and assisting them to determine objectives and reach them. Managers as leaders should be able to promote their business unit efficiency, organizational culture, and economic agility. Managers as leaders should be able to promote their business unit efficiency, organizational culture, and economic agility. Leadership involves experimentation, innovative approaches, failures, risks, rewards, and steady movement towards a specific vision and a set of goals.
Development of “a clear vision expressed simply” (Kotter, 1996) and strategies to achieve it. A powerful vision statement should consist of no more than some sentences and sound persuasively. A vision of Allegiant Air transformations should be clarified and promulgated so that employees of the organization clearly understand new strategies and make their efforts to support and promote organization change.
Communication and promulgation of the vision. Communication of Allegiant Air vision should inspire and motivate the organization’s personnel to adopt transformations and modify their behavior and attitude to responsibilities in accordance with new objectives and strategies. Motivation practices are one of the most significant aspects associated with leadership. A great number of surveys have indicated that the relationships between employees and their supervisors in an organization are critical elements affecting employee’s motivation and satisfaction (Lian et al., 2012).
Empowerment of Allegiant Air personnel to implement the vision. Employee’s empowerment is one of the most influential factors contributing to organization efficiency. Being empowered at work, employees of Allegiant Air will perform their duties and fulfill responsibilities more effectively and, thus, promote their organization’s profitability via change initiatives. Therefore, it is essential for HR managers of Allegiant Air guiding coalition team to identify deliberate strategies to promote and facilitate employee’s empowerment.
Generation of short term wins. “Short-term performance improvements help transformations” (Kotter, 1996, p. 122). Well-planned short-term goals should be recognized by the guiding coalition. In order to motivate and satisfy employees, a well-designed reward program of the company should involve tangible rewards, such as competitive pay, incentives, and benefits, opportunities for professional and personal growth, and fair organizational policies and practices. A reward system should be perceived by Allegiant Air employees as relevant to their efforts and inputs. The organization should support and encourage its employees’ innovative approaches, initiatives, and hard work.
Consolidation of improvements and development of new initiatives. Being achieved, short-term wins promote an increase in credibility and justify implemented transformations. Therefore, this step should include activities to develop new policies associated with the designed vision of Allegiant Air. New projects, such as technological advances or expanded services, can be planned.
Institutionalization of the implemented change initiatives. Interconnections between new achievements of Allegiant Air and organization change should be articulated and emphasized. Structural improvements, growing profitability, costs reduction, and all successes should be associated with the implemented transformations within the organization. Being confident that their efforts contribute to the general profitability of the organization, employees improve their job satisfaction, increase efforts, and, thus, promote the development of their company. Leadership development is an integral component of this stage.
In conclusion, despite today’s extremely complicated business environment, organizations can increase their effectiveness and avoid potential threats via organizational transformations. Senior managers and executives of Allegiant Air “must be ready to efficiently and effectively manage the changes facing their organization or their work area” (Robbins & Coulter, 2010, p. 154) in order to promote the company’s steady development. New strategies and transformations developed and utilized by the company’s experts should correspond to the organization’s strategic objectives and current market conditions.