Producing sustainable competitive advantage Essay examples

8695 Words Mar 29th, 2014 35 Pages
஽ Academy of Management Executive, 2005, Vol. 19, No. 4

Reprinted from 1995, Vol. 9, No. 1

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Producing sustainable
competitive advantage through
the effective management
of people*
Jeffrey Pfeffer
Executive Overview

Achieving competitive success through people involves fundamentally altering how we
think about the workforce and the employment relationship. It means achieving success
by working with people, not by replacing them or limiting the scope of their activities. It
entails seeing the workforce as a source of strategic advantage, not just as a cost
…show more content…
In 1978, competitors sought to bar flights from
Love Field to anywhere outside Texas. The compromise Southwest wrangled permitted it to fly
from Love to the four states contiguous to Texas.6
Its competitive strategy of short-haul, point-topoint flights to close-in airports (it now flies into
Chicago’s Midway and Houston’s Hobby airports)
was more a product of its need to adapt to what
it was being permitted to do than a conscious,
planned move—although, in retrospect, the strategy has succeeded brilliantly. Nor has Southwest succeeded because it has had more access

November

to lower-cost capital—indeed, it is one of the least
leveraged airlines in the United States. Southwest’s planes, Boeing 737s, are obviously available
to all its competitors. It isn’t a member of any of the
big computerized reservation systems; it uses no
unique process technology and sells essentially a
commodity product—low-cost, low-frills airline
service at prices its competitors have difficulty
matching.
Much of its cost advantage comes from its very
productive, very motivated, and by the way, unionized workforce. Compared to the U.S. airline industry, according to 1991 statistics, Southwest has
fewer employees per aircraft (79 versus 131), flies
more passengers per employee (2,318 versus 848),
and has more available seat miles per employee
(1,891,082 versus 1,339,995).7 It turns around some
80% of its flights in 15…

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