IV. Tiny machines, giant market

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Over the last decade laptop computers have continued to gain market share. In the last few years demand for these machines has

begun to increase dramatically. In 1989 sales in the United States were 570,000 units. In 1990 this rose to 830,000 units and industry experts were predicting 5 million by 1995. As they become lighter and more powerful, laptops will be replacing desktop computers more fre­quently.

A number of MNEs are currently vying for position in this mar­ket. The Japanese have the inside track because of their expertise in areas such as liquid crystal display (LCD) screens, floppy disk driver, memory chips, and miniaturization techniques. As a result, by 1991 Japanese firms such as Toshiba, NEC, Sharp, Mitsubishi, and Epson held 40 percent of the ILS. laptop market.

In an effort to ensure that they do not lose this battle, many .U.S. manufacturers are also entering into agreements with Japanese

-firms. For example, Compaq worked with Japan's Citizen Watch Com­pany to miniaturize Compaq's laptop components to fit into an 8 1/2 11-inch package. IBM has joined Toshiba to develop color laptop screens. Apple is producting a new laptop with Sony, and, AT&T is working with Matsushita Electric to build a notebook computer. Mean­while Texas Instruments is trying to get back into the market by selling laptops designed with the Japanese partner. Others are simply having Japanese firms to produce the machines for them. For example, AT&T has ordered 2,'500 machines from Toshiba, Grid, and AST Research.

The U.S. market is not the only target for these firms. The Japanese market also/has a high demand and by 1991 laptops ac­counted for 43 percent of ail personal computers (PCs) being sold. It is estimated that by 1995 this share will be -over 50 percent. Demand in Europe is also quite brisk. In 1991 one-eighth of all PCs sold were laptops. By 1995 it will be one in three. This certainly helps to explain why Italy's Olivetti is building a new line of laptops in its Nuremberg, Germany factory and has, signed a deal with Digital Equipment to pro- -vide the firm with machines for the U.S. market.

The biggest challenge in this market will be staying on the cutting edge of technology. There are now so many firms in the industry that those who do not offer state-of-the-art machines can expect their share to drop quickly. Some of the most likely developments will include improved graphics quality; color LCD screens; smaller and more sophisticated chips that will allow the

emergence of sophisticated notebook computers; smaller (1.8-inch) hard disk drives that can store more information; nickel-hydride batteries mat will have 50 percent more life that those currently operating laptops; flash memory cards that will be used in place of a hard-disk drive and reduce both power consumption and weight will be more reliable and take up less space.

Clearly, laptops are going to become smaller, lighter, and more powerful. They will replace many desktop units and dramatically change the way many individuals, including salespeople and others who are on the road constantly, do their jobs. The demand is huge and the profits are highly attractive. Unfortunately, the market is crowded and those who hope to prosper will have to remain flexible and alert to changing market conditions.

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V. SOUTHWEST AIRLINES

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As organizations, airlines tend to be rigorous in the organization and planning of their activities.  The nature of the airline industry demands effectiveness: schedules must be adhered to exactly, and procedures insuring maintenance of airplanes and training of staff need to be carefully followed.  Southwest airlines organizes its employees according to their function, or the role they play within the organization.  Each job is carefully analyzed and categorized to insure that the airline operates efficiently and consistently.

But this does not mean that things at Southwest are inflexible.  The airline also needs to operate efficiently in order to be successful.  The company's efficiency is demonstrated by the small amount of time required for employees to "turn around" an aircraft at the gate.  The industry standard turnaround time is 55 minutes; Southwest crews routinely have planes ready for departure in 20 minutes or less.

Southwest Airline's management structure is designed to carefully direct the activities of employees while still maintaining the spirit of "fun" that is the cornerstone of the airlines customer service success.

The fundamental concept of management at Southwest is the notion of a "loose-tight" design.  Within the context of tight rules of conduct, employees are encouraged to take a wide degree of leeway.  For example, the company encourages employees to make their own customer service decisions.  Employees are encouraged to try new things, knowing that they will not be punished for innovation as long as they do not violate safety standards, endanger crew or passengers, or keep a plane from taking off or landing on time.

Southwest Airline's unique approach to management starts at the top of the organization chart.  There is no doubt about who is in charge at Southwest.  Herb Kelleher's (chairman) management style has been described as a combination of thriftiness and Robin Williams-style humor and wackiness.  He is a highly visible leader whose 16-hour workdays and unflagging energy set an example for other employees.  Southwest workers who perform outstanding feats for customers have been known to justify their behavior by saying it was "what Herb would have done."

Southwest is organized in a typical hierarchical structure, with employees reporting through a line of supervisors to Kelleher himself.  While most people will not interact with the CEO (chief executive officer) on a daily basis, technology enhancements allow all the employees to keep abreast of Kelleher's activities. 

The Executive Vice Presidents, or top managers, are responsible for making strategic decisions about the future of the organization.  They make higher-level, general decisions about the directions Southwest will take in the future and the kinds of policies and procedures that should govern employees' conduct.

The Vice Presidents, or middle managers, translate top managers' goals and strategies into actual programs to be implemented within their functional area. 

Each of middle managers has a large number of line supervisors reporting to them.  These individuals direct the day-to-day activities of non-managerial personnel. These individuals must "maximize utilization of individual talents and abilities in order to accomplish department objectives."  Line supervisors focus on interpersonal relationships.  They know the job that needs to be done, and their emphasis is on assigning and directing the talents and capabilities of their personnel to best utilize their abilities and get work done effectively and efficiently.

Non-managerial personnel in the human resources area perform largely clerical duties.  Typical duties include alpha and numeric filing, phone operations, and use of a personal computer and other standard office equipment.  These individuals have limited range in the tasks they perform, and are usually assigned to perform only one portion of a project.

Assignments:

1. Identify the main principles of Southwest Airline's management process.

2. Explain Southwest's hierarchical structure: