JET BLUE - CASE STUDY
EBS 5103 STRATEGIC MANAGEMENT
UFUK CANDAR FOYA
Table of Contents
BRIEF SUMMARY 3
ENVIRONMENTAL ANALYSES: 4
VALUE CHAIN ANALYSIS: 10
FINANCIAL ANALYSIS: 13
SWOT ANALYSIS: 19
SPACE MATRIX: 21
TOWS MATRIX: 24
QUANTITATIVE STRATEGIC PLANNING MATRIX (QSPM): 25
Within case analysis assignment, the JetBlue case is analyzed strategically in this document to set answers for following basic questions:
* To make a set of recommendations based on the analysis,
* To describe exactly what need to be done for ...view middle of the document...
No meal service and no paper tickets also were exploited to decrease the time on ground as short as possible. Instead of choosing most popular airports, underutilized airports were chosen to have quicker operations.
Regarding differentiation strategy, JetBlue provided “new aircrafts with leather seats, simple and low fares, free live satellite TV, pre-assigned seating and reliable performance.” Flying larger planes on longer routes helped cost advantage. More legroom was another qualitative item for passengers. Lack of over booking served all customers not left behind and to fly, which was one of the key features of JetBlue valuing time and appointments. Internet selling instead of travel agents and selling non-refundable tickets helped JetBlue to have control on sales.
JetBlue invested in employees and formed a good team with competitive compensation packages to satisfy employee satisfaction, as a result leading customer satisfaction. Underlying factor of customer satisfaction was the productive workforce of caring, passionate, fun and friendly people serving for customers.
After success of low-cost and differentiation strategy, competitive reaction was invoked. The big players reacted with same strategies. As a result of many movements of major airlines and huge retaliation from Delta Air and United, JetBlue had to withdraw from Atlanta in December 2003.
This raised the questions when the market was getting crowded and further growing was becoming constrained:
1. Could JetBlue continue its spectacular growth?
2. Were its competitive advantages sustainable?
a. PESTEL FRAMEWORK:
“PESTEL model involves the collection and portrayal of information about external factors which have, or may have, an impact on business.”
1. Deregulation of the US airline industry in 1978 ushered in competition in the hitherto protected industry. Several low-cost, low-fare operators entered the competitive market after the deregulation.
2. Terrorist attacks on the World Trade Center and Pentagon on September 11, 2001 severely affected the airline industry that security concerns and security costs increased.
3. The economic downturn in the late 1990s had severe consequences on the airline industry that the demand for air travel dropped leading decrease in flights and revenues; increase liquidity concerns.
4. Several major airlines filed for bankruptcy. Many airlines significantly decreased their capacity, reduced their routes and postponed purchases of new aircraft. Some airlines reported a 50% reduction in routes and flight frequency. All these events provided opportunities for the low-cost carriers not only to increase the number of flights but also to introduce services on new routes.
5. The low-cost carriers grew from carrying less than 10% of domestic air traffic in 1990s to carrying...