The organizational chart provides an overview of the structure of a company, starting from the top management to junior employees. It is essential since it outlines the various divisions within the organization and formal communication channels within the company (Ahmady, Mehrpour & Nikooravesh, 2016). These benefits apply to both new entrant air carriers and legacy carriers. However, the main difference in their organizational structure is the complexity of the operations. New entrant carriers have slim structures compared to the legacy carriers that have complex organizational structures.
New entrant air carriers such as JetBlue Airways have slim organizational structures that are more flexible and enable the company to take advantage of changes in the operating environment. These carriers have fewer employees, and any opportunities can quickly be passed through the organizational structure to the key decision-makers (Egeberg, Gornitzka & Trondal, 2016). On the other hand, legacy carriers such as Southwest Airlines have complex structures with numerous employee levels. In these organizations, taking advantage of opportunities is difficult since there are various departments and employees who are involved in the process. Additionally, there is limited flexibility, which can make changing operations difficult. Promoting effective communication is also limited.
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An advantage associated with complex organizational structures of legacy carriers is that the roles of various employees are clearly outlined. All employees, at all levels, can quickly identify who they report to and who reports to them. In case of any issue within the organization, it is easy to establish who is responsible. At new entrant air carriers, there are fewer departments, and some roles are combined (Egeberg, Gornitzka & Trondal, 2016). When problems arise, it becomes difficult to establish which individual or department should be held responsible.
Finally, lean organizational structures that are adopted by new entrant carriers are easier and cheaper to operate. The goal of these carriers is to maintain low overheads and increase their profit margins. However, at larger carriers, the complex organizational structure is costly to maintain, and this results in a significant financial expense by these companies.
References
Ahmady, G. A., Mehrpour, M., & Nikooravesh, A. (2016). Organizational structure. Procedia- Social and Behavioral Sciences , 230 , 455-462.
Egeberg, M., Gornitzka, Å., & Trondal, J. (2016). Organization theory. In Handbook on theories of governance . Edward Elgar Publishing.
