...Assignment 1 Dr. Elile Awa CRAFTING AND EXECUTING STRATEGY Submitted by: John-Miguel Onkony Winter Quarter 2011 Strayer University Introduction This document presents an analysis of one case presented in the textbook (Thompson, A.A., Strickland, A.J., & Gamble, J.E. (2010). Crafting and executing strategy: The quest for competitive advantage: Concepts and cases: 2009 custom edition (17th ed.). New York: McGraw-Hill-Irwin.), entitled “JetBlue: A Cadre of New Managers Takes Control”. The case describes the reasons for the success of JetBlue, a three-year-old, low-cost airline, operating in the USA. Trends in the U.S. Airline Industry and their Impact on Company’s Strategy Since 2001, the US airline industry has faced an unprecedented set of challenges. Following the terrorist attacks of September 11, 2001, the airline industry reported tremendous losses and several of the largest US airlines went into bankruptcy. To recover from this situation and try to remain financially viable, many measures have been taken by airlines. As a result, the airline industry...
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...Strategic Report for JetBlue Airways Harkness Consulting Innovation through Collaboration Rosanna Smart Alisher Saydalikhodjayev Sayre Craig April 14, 2007 Table of Contents Executive Summary ………………………………………………..3 Company History ………………………………….………………..4 Competitive Analysis ………………………………………………7 Internal Rivalry …………………………………………………………. 8 Entry ………………………………………………………………………… 9 Substitutes and Complements …………………………………….. 11 Supplier Power ………………………………………………………….. 12 Buyer Power …………………………………………………............... 13 Financial Analysis ………………………………………………….14 SWOT Analysis ………………………………………………………23 Strategic Issues and Recommendations …………………..25 References ……………………………………………………………30 Harkness Consulting 2 Executive Summary From its initial flight in February 2000, JetBlue emerged into the heavily competitive airline industry as the little airline that could. While legacy carriers declared bankruptcy, JetBlue trounced its competition by offering low‐cost, customer‐focused service. Under the direction of the energetic David Neeleman, JetBlue became a major player in the airline industry. Operating domestic flights on a point‐to‐point system, JetBlue primarily manages East‐West and Northeast‐Southeast routes. While this route structure initially proved profitable for the company, rising costs and heated price competition are currently threatening JetBlue’s market share. The com...
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...JetBlue Airways: Managing Growth Case Analysis Part I: Issue Identification In May 2007, David Barger, President and CEO of JetBlue Airways, expressed the great need to slow down the airline’s growth in response to increasing fuel costs and the consequences stemmed from the Valentine’s Day crisis. As an LCC, JetBlue had to decrease its growth rate by reducing deliveries of E190 and A320 due to its weak financial position and the market’s softening demand. Considering the performance of JetBlue after the addition of E190 to its fleet, JetBlue overestimated its capacity of handling this large scale of expansion. The new CEO, David Barger was now facing with JetBlue’s key issue that he should reconsider the distribution of E190 and A320, and building long-term managing strategies for sustainable development. Besides, with a big movement of launching E190 in 2005, some small but critical problems loomed: Compensation of pilots, satisfaction of customers and employees, challenges for staff to adopt unexpected changes, complexity resulting from the integration of E190 and A320. Without experience of operating two types of aircrafts and combining them, as well as without sufficient capital, large scale of purchases of the new aircraft would definitely lead to operational failure. It was the key principle for JetBlue, which made a difference from other airline companies, that fight cancellations should be avoided at all costs. Unfortunately, this principle was...
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...JetBlue Airways: Managing Growth Case Analysis Instructed by: Prof. Jonathan Lee Section3 Team 2 Jie Yan | 103795915 | Ling Lu | 103999797 | Nan Liu | 103744807 | Renhan Zhu | 103943651 | Yishi Shi | 103956048 | 2014/10/20 Part I: Issue Identification In May 2007, David Barger, President and CEO of JetBlue Airways, expressed the great need to slow down the airline’s growth in response to increasing fuel costs and the consequences stemmed from the Valentine’s Day crisis. As an LCC, JetBlue had to decrease its growth rate by reducing deliveries of E190 and A320 due to its weak financial position and the market’s softening demand. Considering the performance of JetBlue after the addition of E190 to its fleet, JetBlue overestimated its capacity of handling this large scale of expansion. The new CEO, David Barger was now facing with JetBlue’s key issue that he should reconsider the distribution of E190 and A320, and building long-term managing strategies for sustainable development. Besides, with a big movement of launching E190 in 2005, some small but critical problems loomed: Compensation of pilots, satisfaction of customers and employees, challenges for staff to adopt unexpected changes, complexity resulting from the integration of E190 and A320. Without experience of operating two types of aircrafts and combining them, as well as without sufficient capital, large scale of purchases of the new aircraft would definitely lead to operational failure...
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...Performance Jetblue performance since 2000-2004 had a rapid growth in profit. (Exhibit ROI). Mission, starategy and goals . Mission – Providing a customer with low cost flights with better customer experience, with upgraded planes, safety and reliability. Focus on undeserved markets (regional flights). Strategy. One of the competitive advantage is low cost comparing to legacy competitors, comfort features, no flight cancellations (in the first place), long-haul flights, point to point flights, (instead of using the old and common structure of hub-and-spoke), offering incentives for customers who choose to be technology savvy, saving costs from hiring part-time employees who worked from home, connecting larger cities with medium size cities, entering regional markets with new planes (E190). JetBlue´s business-level strategy is a mix of cost-leadership and product differentiation Resources involved in value chain Technology: new models of planes (fuel efficient) , TV screens for each seat, paperless technology (online purchases), 1 supplier who could easily adjust to preferences of Jetblue. Product Design. New airplanes were designed according to the company’s mission and goals. Manufacturing: 1 supplier, 2 different types of planes with different characteristics and capacities, Prices: up to 65% lower than legacy airlines Marketing: 2 types of customers: business and travel passengers, different customer approach. Distribution: Started with New York and...
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...Trident University International Williams Anaab Module 1 Case Assignment (Airline Market) MKT 501: Strategic Marketing Dr. Cathy Cameron 24 November 2013 Introduction In recent years, affected by natural disasters, emergencies, oil price volatility, the international financial crisis and other factors, especially the oil price, that is the most major factor of the airline cost, and still increasing, made the airline industry’s production decline sharply. The main source of profit for the airline industry are passenger and cargo revenue primarily, in addition, the fuel surcharges and exchange gains constitute the major part of its profits. According to these factors, airline companies will make an expectation development whether they can benefit or loss, and they will expect how much they will benefit or loss. However, the question that over the past 10 years, airline has lost $50bn, but it is less than the expected losses shows that the expect losses larger than actual losses Key External Factors The key external factors that affect the passenger airline industry are the economic growth, level of employment, disposable income, fuel prices, political stability, and trade regulations. If there is slower economic growth the business activity decreases and business traveling decreases. Similarly, lower disposable incomes means people cut down on traveling and this affects the passenger airline industry. When there is political instability, people...
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...Behavior in the Airline Industry. Case Analysis This case illustrates the pricing behavior of firms that are oligopoly whose market is characterized by the relative few participating firms offering differentiated or standardized products or services. Such firms in an oligopoly have market power derived from barriers of entry that wards off potential participants. As seen in the case, it is clear that because there are a small number of US Airlines firms competing with each other, their behavior is mutually interdependent – thus, the strategies and decisions by one airline management affect managements of the other airlines whose subsequent decisions then affect the first airline. In the airline industry, such oligopolistic interdependence gives rise to a strategic behavior akin to chess moves- where, for example, what is best for American Airlines depends on what Northwest Airlines does, and what is best for Northwest Airlines depends on what American Airline does. The small number of firms competing with each other in the airline industry means that one airline’s changes in price immediately affects the demand for its competitors. The case suggests that behavior of firms in an oligopoly can be one of cooperation when they all sync their strategies to the obvious disadvantage of the consumer who has few alternatives e.g. inability to substitute other forms of travel for air travel usually because of time and distance constraints. As shown by data in the case, oligopolistic behavior can...
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...southwest airlines that is less expensive than its competitors, southwest airlines charge 95$ for one pet carrier, other mentioned airlines are charging a 125$ for one pet carrier. - Cashless cabin: Southwest airlines applied the cashless cabin technique to all of its units, this technique helped improving consumer’s goodwill, a traditional scenario that irritates consumers usually, buying 5$ juice and give the flight attendant a 20$ note, and wait half an hour for the change to come back. Also, this technique saved the time and reduced the jam on atm machines at airports, because travelers can dispense cash if buying items with credit card is possible. But southwest airlines is not alone, American Airlines, United Airlines, AirTran and JetBlue cabins are cashless, thus the company have no advantage over its competitors, but comparing it to Amtrak railways, southwest airlines is far ahead, Amtrak don’t have cashless cabin, which is a major drawback. - Business strategy: Southwest Airlines, only uses one type of plane: the Boeing 737. This saves Southwest Airlines millions in yearly maintenance costs and other...
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...Southwest Airlines Operations – A Strategic Perspective September 1, 2014 by Airline Editor Southwest Airlines Operations – A Strategic Perspective By Mukund Srinivasan Background: Southwest Airlines is the largest airline measured by number of passengers carried each year within the United States. It is also known as a ‘discount airline’ compared with its large rivals in the industry. Rollin King and Herb Kelleher founded Southwest Airlines on June 18, 1971. Its first flights were from Love Field in Dallas to Houston and San Antonio, short hops with no-frills service and a simple fare structure. The airline began with one simple strategy: “If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline.” This approach has been the key to Southwest’s success. Currently, Southwest serves about 60 cities (in 31 states) with 71 million total passengers carried (in 2004) and with a total operating revenue of $6.5 billion. Southwest is traded publicly under the symbol “LUV” on NYSE. Facts: * The first major airline to fly a single type of aircraft (Boeing 737s) * The first major airline to offer ticketless travel system wide including a frequent flier program based on number of trips and not number of miles flown. * The first airline to offer a profit-sharing program to its Employees (instituted in 1973). * The first major airline to develop...
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...the global rising demand, oil has increased in its value, which results in many oil price crises recently. For all those industries using large amount of oil in operation, the risk of rising oil price is an extensive problem. The most efficient method to hedge against this risk is by using oil futures contracts. Because of its effectiveness, oil futures contracts are playing a key role in risk management for a number of industries including transportation and manufacturing. This report provides principal knowledge about oil futures and its role in hedging the risk of oil price volatility. A case study of US airline industry with most updated data obtained from Bloomberg system is also discussed, which suggests the effectiveness of oil futures in risk management for most airlines companies. However, in some case, the inflexible use of oil futures may create a burden in financial costs while not producing effectiveness in risk hedging. 2 TABLE OF CONTENTS LIST OF FIGURES 3 I. INTRODUCTION In the world of industrialisation, the role of oil is becoming more and more crucial especially for transportation and manufacturing industries. Those industries consume a large amount of oil, which constitutes the major part of their operational costs. However, having gone through the three oil crises in early and late 1907s and recently in mid 2000s, those...
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...The University of the West Indies, St. Augustine Faculty of Social Sciences Department of Management Studies M.Sc. Aviation Management AVMT 6001 – Accounting for Business Decisions AVMT 6001 – Group Project 2 Managerial Accounting - JetBlue Airways Corporation Group Members: Cherrish Bridgemohan - 807001633 Rajiv Debie - 04708006 Israel Duncan - 814004144 Kenrick Duncan - 814002425 Neil Shepherd - 814004177 Signatures: Cherrish Bridgemohan ___________________________ Rajiv Debie Israel Duncan Kenrick Duncan Neil Shepherd ___________________________ ___________________________ ___________________________ ___________________________ November 16, 2014 Table of Contents I. II. Table of Abbreviations ........................................................................................................................ 5 Executive Summary............................................................................................................................ 6 III. Introduction......................................................................................................................................... 7 IV. Background – JetBlue Airways ......................................................................................................... 7 V. Management Accounting Information.............................................................................................. 8 Financial Accounting versus Management Accounting ...........................
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...page 10 page 12 page 16 page 22 page 28 page 32 page 36 page 40 Appendix A Appendix B 00 Foreword Every airline is now a lower-cost airline. The worst financial crisis in the industry’s history over the last five years has forced all carriers to achieve cost efficiencies and higher productivity if they are to survive. Significant progress has been made in reducing non-fuel costs and in improving the efficiency of fuel use, but the challenge is on-going and central to the future prosperity of the industry. While network airlines have made significant progress in restructuring their cost base, they are often faced with a moving target. Low barriers to entry to the industry, combined with national or regional deregulation, have seen 1 new or restructured no-frills, low-cost operators (LCCs) capture a fast-growing share of regional airline markets. IATA will continue to represent, lead and serve the airline industry in identifying and delivering cost efficiencies through campaigns such as Simplifying the Business (StB) and the Fuel Action Campaign. This report provides a useful insight into where cost gaps exist and where further action is possible. It provides...
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...Kacie R. Logan Row 3 MGT 487 Sec 009 SWA case Status Analysis Southwest Airlines is a true American success story. In 1971, they began as a small company which was only able to service Dallas, Houston, and San Antonio, Texas. They have come from being a small operation consisting of only three airplanes in three cities to being one of the largest airlines in the United States operating 530 aircraft1 across 32 states2. In the past, their success has been directly tied to their commitment to customer service. Southwest Airlines, hereafter SWA, mainly competes with United, American, and Delta airlines; however, AirTran and JetBlue have also caught their attention3. The biggest competitive advantage possessed by SWA lies within their treatment of their customers. Every aspect of the company is geared towards taking care of their passengers’ needs. Through SWA, people have the ability to fly inexpensively to the places they need and want to go. Southwest Airlines has been able to keep their own costs low by flying short-haul routes, fuel hedging, uniformity among the aircraft, and the automation of many jobs. SWOT Analysis The biggest strength of SWA most definitely lies within their dedication to take care of people. The customers and profits are not the only concerns that SWA cares about. They have an extremely tight-knit culture within the company itself. The bulk of the company’s financial success is directly credited to the employees who help make the...
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...Yale School of Management 135 Prospect Street, New Haven, CT 06511 JetBlue Airways October 9, 2002 Time Frame 12 Months Recommendation SELL Recommendations: Buy: >20% Undervalued Hold: Fair Market Value Sell: >20% Overvalued “If you want to become a millionaire, start with a billion dollars and launch a new airline…” - Richard Branson, founder of Virgin Atlantic Airways Team Members: Brad Anen brad.anen@yale.edu (203) 865-6166 % Returns Over the Last 12 Months (Prices are as October 7, 2002) mike.bizzario@yale.edu (203) 675-9244 Begonya Klumb begonya.klumb@yale.edu (203) 772-0718 Carla Sayegh carla.sayegh@yale.edu (203) 773-1177 Portfolio Manager: Sean O’Dowd Sean_odowd@yale.edu Airline Index (^XAL): S&P 500: JetBlue (JBLU): (59.80)% (26.70)% (20.73)% JBLU Current Price: JBLU Target Price: $35.75 $29.44 Projected (Short) Return: Mike Bizzario 17.65% Yale School of Management Page 2 of 17 RECOMMENDATION: SELL • • • • Short-lived, well-funded track record is unsustainable in current economic climate. Threat to cost structures within airline industry due to potential invasion of Iraq and resultant oil price increases. Immediate shorting opportunity due to overvaluation as compared to the industry (JetBlue P/E ratio is higher than the industry average by 18%) valuation ratios. Height of financial performance is already reflected in the JBLU’s stock price, and we are bearish about...
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...American Airlines Strategic Report for American Airlines Jed Cullen Kevin Yamazaki Deirdre Chew April 7, 2010 April 7, 2010 Page 1 American Airlines Table of Contents Executive Summary ............................................................................................ 3 Company History................................................................................................. 4 Financial Analysis ............................................................................................... 8 Current Financial Position.................................................................................. 8 Industry Comparable Analysis ......................................................................... 12 Stock Performance .......................................................................................... 14 Management and Analyst Outlook................................................................... 15 Competitive Analysis ........................................................................................ 16 Internal Rivalry ................................................................................................. 17 Supplier Power ................................................................................................ 18 Buyer Power .................................................................................................... 19 Entry and Exit ..............
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