1. What is Southwest’s competitive strategy? What are the sources of its success? How does it make money?
Southwest has a short-haul and low fare flight business model. In order to realize this model, it depends on low cost structure such as focusing on airports underutilized and close to a metropolitan area like LOVE Field in Dallas. It also utilize only fuel-efficient single aircraft model Boeing 737, leading to additional reduction of maintenance cost. To cut cost, it doesn’t provide meal service or any assigned seating. Simultaneously, Southwest is famous for high level customer services. Additionally, it defines and broadens its market broadly so that considers people who may drive their car as potential customers. In summary, lowering the fares and increasing frequency of flights are key drivers of making money.
2. What are the foundations of Southwest’s competitive advantage? Even though its competitive advantage is on the basis of low cost structure, most important source of Southwest’s competitive advantage lies in its people, carrying out its remarkable productivity, which is far ahead of other airlines’ one and cannot be easily imitated. People in Southwest share its culture such as team spirit, fun, family, dedication, cost consciousness and so on.
3. How are these sources of competitive advantage produced and sustained by what the organization does and how it does it?
Southwest’s leadership initiated building its culture. Kelleher and senior management team’s philosophy has permeated the organization. They uphold its culture of ‘having fun’, which leads to satisfaction of employees, its organizational solidarity, dedication and flexibility. His consistent efforts to promote and maintain its culture is main source of sustaining the organizational vitality.
4. To what extent are Southwest’s sources of advantage difficult to imitate and likely to persist over time?
Southwest’s sources of advantages truly...
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