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Continental created Continental Lite, which directly replicated some of Southwest’s activities, such low-cost fares with no first-class seating or meal offerings. In so doing, they alienated travel agents, a large source of clientele for their core business with low commissions, and they mismanaged their existing business customers who valued service associated with the Continental name. By imitating only a few individual activities, without the whole system of Southwest’s low-cost, high convenience strategy, they lost a great deal of money and loyalty.
Porter argues that although operational effectiveness (OE) is essential, it will never differentiate a company and provide long-term profitability the way strategy does...
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