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Southwest Airlines Competitive Rivalry

900 Words4 Pages

In an industry where customer experience sets stage for competition, the airline industry is a highly competitive industry characterized by business rivalry and unstable profits margins – considering that customers are awash with a tyranny of choices to choose. Since its inception in 1967 Southwest airline has remained a force to reckon with in the airline industry as noted by its trend of running a profitable business since 1973 (Seth, 2012). It is not with serendipity that Southwest airline is the largest air carrier of domestic passengers in the US as recognized by the department of transportation (Southwest, 2016). So, what differentiates Southwest airline from other carriers? The five force industry analysis model will be used to address …show more content…

Competitive rivalry is determined by the number of existing competitors.
Threat of substitute products or services determines the ease with which customers can switch between products and services.
From the lens of Porter's competitive strategies, Southwest airline has successfully differentiated itself from other airline carriers as a leader in the market share of domestic air travel. This success is broadly attributable to its exemplary leadership that has been engrained in the airlines core management style and its innovative business strategies that is admired even in other sectors.
According to Fuld (2014), “… get to know your rivals”. This is a business strategy not only to find the weak spots of your competitors but also helps you work on your strength, form relationships and encourage employees to monitor rivals. This resonates with some aspects of Southwest airlines’ tools of success that have enabled it to be a model within the airline industry. In an industry where customers are awash with a tyranny of choice – many alternative airline carriers to choose from, Southwest airline has continued to closely learn from what their competitors are doing to make them better. This is evident in their business model of attracting passengers by offering convenient flying schedules, flying passengers from point to point, and by offering exemplary customer …show more content…

Using data analytics to predict their fuel consumption and the fluctuations in prices in the petroleum industry, Southwest airline recognizes the bargaining power of its suppliers and has sets up mechanisms to manage price fluctuations. For instance, considering that airline industry are large consumers of fuel, Southwest airline recognized the importance of guarding against price fluctuations in the petroleum industry. They are using fuel hedging – a contractual purchase model that large fuel consuming companies use to reduce fluctuating prices (Pae,

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