The Heynold

Topics: Airline, Strategic management, Decision making, Management, Avianca, Business process modeling / Pages: 2 (745 words) / Published: Feb 24th, 2015
The Heynold & Rosander (2006) article illustrates an interesting trend active in the airline industry today in which airlines are rearranging their organizations from a functional model to a hybrid model. The basic functional model follows the idea that all profit centers report directly to the CEO, who is the only individual responsible to the investors regarding profit. If there are any decisions to be made, they go through the CEO. The major difference between this model and the hybrid model is that the individual profit centers are made into their own functioning business or business units. The business units have the authority and ability to transfer resources where and when they want with some degree of autonomy, a direct reference to an increase in their differentiation as described by Jones (2013).
I think it is possible to argue both ways as to whether there is too much differentiation present in the hybrid business model. One could make the argument that there is too much differentiation, especially if a business unit directs resources in the wrong way due to poor management. The business unit might struggle and not have the ability to function without the CEO providing direct guidance. If this were the case and the business unit had too much freedom, the business unit would only hurt the company’s bottom line and ultimately be detrimental to the company. On the other side, the business could have managers in place who have the ability to provide resources and who can target strategic objectives with more freedom and insight. The hybrid model would allow the business units to function much more quickly to the needs, as they wouldn’t be waiting for approval from a CEO. If the business units were managing the tactical activities, the CEO would have more time available for other more strategic activities. I think the benefits outweigh the risk when you think about the possible gains from the hybrid model.
The support structures of both businesses would

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