Southwest Airlines Competitive Advantage

Southwest Airlines is competing against other airline companies for customers. That is why it is essential that Southwest Airlines enforces strategies that allows them to outperform other airline companies. This gives them a competitive advantage, which is defined in the textbook as the achieved advantage over rivals when a company’s profitability is greater than the average profitability of firms in its industry. (Hill, Schilling, & Jones, 2017) The higher the profitability levels are of Southwest Airlines along with the higher the profit growth of Southwest Airlines when compared to other airline companies, will see if they have a competitive advantage over their rival competitors. In order to have high profitability levels than their competitors,

So, if prices are too high, there will be a large number of seats that are left open on flights, but if prices are too low, Southwest Airlines will have full flights, which could create aggravation among travelers as well so low profit levels for the company. So, identifying these aspects when setting their seat prices will be a huge advantage for the company. Southwest Airlines also needs to recognize the atmosphere of their flights. Having friendly flight attendants, creating a “comfy” design, and offering a number of on flight amenities will allow the atmosphere of a Southwest Airlines flight to be a positive one. Comparing these aspects to other rival companies and ensuring that they are at the forefront will give the company a high level of competitive over their rivals. When that is met, Southwest Airlines can then strive to sustain their competitive advantage, which is when a company’s strategies enable it to maintain above-average profitability and profit growth for a number of years. This will allow Southwest Airlines to continue to pave the way in the airline

According to the textbook, economies of scale are reduction in unit cost attributed to large output. (Hill, Schilling, & Jones, 2017) There are a few sources that come out of economies of scale. The first of those being cost reductions gained through mass-producing a standardized output. (Hill, Schilling, & Jones, 2017) This is something that is slightly difficult to do in the airline industry due to making an aircraft is not an easy process. There is a lot of time and money put into each and every aircraft that is built. So, although Southwest Airlines gets new regularly, aircrafts are simply something that cannot be mass produced. The second of those bring discounts of bulk purchases of raw material inputs and component parts. (Hill, Schilling, & Jones, 2017) This is a huge advantage to Southwest as there are copious amounts of products that go into making an aircraft. Although Southwest Airlines themselves are not making the aircrafts, it allows their manufactures cost to remain low due to they are buying products in bulk. The third of those being the advantages gained by spreading fixed production cost over a large production volume. (Hill, Schilling, & Jones, 2017) Again, aircrafts are not a simple process. Big aircraft companies such as Boeing and Airbus produce aircrafts as quick as possible. It does indeed help though, when Southwest Airline deals with just