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Jet Blue Airway: Case Analysis (Strategic Audit)

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The presentation analyses a case of Jet Blue Airway. Jet Blue Airway is an airline company that operates in the United States. Background information about the company as well as a strategic audit of the company is presented. The strategic audit has to do with the internal and external analysis of the environment of the company.

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Jet Blue Airway: Case Analysis (Strategic Audit)

  1. 1. JET BLUE AIRWAY: CASE ANALYSIS (STRATEGIC AUDIT) Anna Osmanay Anatolia College –American College of Thessaloniki (ACT)
  2. 2. JET BLUE: BACKGROUND  Developed in 1998 by Neeleman and Tom Kelly.  Started operations on February 11, 2000. Business model:  Values: safety, caring, integrity, fun & passion.  Choice of operations: NYC airport (JFK)  less domestic competition, then. Positioning:  Colorful and fun airline.  Low cost company but a value player.
  3. 3. Positioning:  Leather seats instead of cloth.  Passengers allowed to choose their seats.  Provision of snacks instead of meals.  Free personal satellite TV per passenger. Operations:  Its operations  key to its low costs.  Aircraft choice  very popular and cost efficient.  Single class: Uniform level of service.  Flying to secondary cities (better business). JET BLUE: BACKGROUND
  4. 4. JET BLUE:BACKGROUND Operations:  >70% of passenger’s tickets booked from home (through internet).  Lower costs: Customer service executives  work from home (through internet). Culture:  Family like atmosphere  Positive attitude of employees.
  5. 5. STRATEGIC AUDIT Current Situation: Current Performance (good in general):  Lower debts compared to others years.  Higher capital.  Higher sales.  High earnings/share ratio. Mission: JetBlue is an award-winning airline whose mission is “to bring humanity back to air travel and to make flying more enjoyable.”
  6. 6. The airline does this by delivering value, service, style, and comfort to their customers—and to their employees, all of whom are called “crewmembers.” Objectives:  To restore the company's financial health.  To continue to grow the business, while maintaining its effective organizational culture.  To maintain their low cost profile and increase efficiency.
  7. 7. Strategies:  Low-cost strategies: 1. Cost management throughout operations (including electronic tickets, paperless cockpits, on-line check-in) 2. Only two aircraft types and a single travel class 3. Participatory leadership/management  Differentiation strategies: 1. Superior customer service 2. Tangible items include easy-to-use reservation system (ticket-less travel, pre-assigned seating, new airplanes, cabin features) 3. Employee morale, completion rate
  8. 8. Strategic Managers:  Very educated  Highly motivated & well trained  Provide a better experience to the customers External Environment/Opportunities,Threats:  Social: High demand for air travel (o), obese passengers contribute to higher fuel consumption (higher costs) (t)  Legal: Increase in labor wages & bankruptcy of many rival airlines (o), mergence of new competitors and regulations (t)  Environmental & Ethical: High oil prices (t)
  9. 9.  Political:Rising security rules and obligations (t)  Technological: Utilization of the internet for sales & new aiplanes fleet (o), reliability of the internet and system downtime (t)
  10. 10. EXTERNAL ANALYSIS (EXHIBIT 1.1) External Factors Opportunities • High demand for air travel • Increase in labor wages & bankruptcy of many rivals • Utilization of the internet • New airplanes fleet Threats • Obese passengers-higher fuel consumption • Mergence of new competitors and regulations • High oil prices • Rising security rules and obligations • Reliability of the internet and system downtime Total Scores Weight .20 .15 .05 .10 .10 .15 .15 .05 .05 1 Rating 4 4 4 3 2 3 3 3 2 Weighted Score .80 .60 .02 .30 .20 .45 .45 .01 2.83
  11. 11. INTERNAL ANALYSIS (TOTAL WS: 3.2) - EXHIBIT 1.2 Fractions Weight (Total: 1) Rating Weighted Score (WS:3.2) Opportunities JetBlue fleet maintains a new fleet of aircrafts .05 3 .15 JetBlue offer in-flight entrainment .10 4 .40 JetBlue hires the best crew in terms of skills and employees .15 4 .60 Availability of customer service management .15 4 .60 Has a very clear strategy in terms of leadership .05 3 .15 It maintains a higher net income & P/S ratio compared to industry .10 2 .20 It maintains a higher revenue & P/E ratio compared to industry .15 3 .45 It maintained a higher operating and gross profit margin .15 3 .45 Threats
  12. 12. RECOMMENDATIONS 1. Market Development: add domestic locations and fly internationally. 2. Market Penetration: by increasing advertising and expand to Social Media (eg. TV, radio, internet). 3. Related Diversification: build partnership travel website (info: Different Travel Diversification, find hotels, restaurants, hot spots etc.).

The presentation analyses a case of Jet Blue Airway. Jet Blue Airway is an airline company that operates in the United States. Background information about the company as well as a strategic audit of the company is presented. The strategic audit has to do with the internal and external analysis of the environment of the company.

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