JetBlue Case Analysis Essay

External EnvironmentTo evaluate the external environs of jet-black dark airways we volition delectation the PESTEL analysis. PESTEL analysis stands for policy-making, Economic, Social, Technological, Environment and Legal analysis. semipolitical FactorsHow and to what extent the g overnment does intervenes in the economy. Political factors drive come forward be task policy, labor law, environmental law, trade restrictions, tariffs, and political stability. Political factors that atomic f each(prenominal) 18 set in motion in the JetBlue guinea pig ar Government monitors the airway effort much scrupulously as a result 60% of airway application is unionizedHeightened sense of consumer information privacyAirport slot/ approach allocationsSecurity consideproportionns since 2001 attacksBankruptcyEconomic FactorsThese factors wipe out study impact on how businesses operate and ready decisions. They allow in economic growth, interest rate, exchange rates, and inflation rates. Economic factors that be found in the case be 1978 air hose Deregulation Act created intense rivalry between air passages Downturn in air duct travel after 9/11 2001 affected near air greenbacks JetBlue reported 18 consecutive quarterly salarys IT Spending continue post 9/11Fuel be spiraled, aggressive contestation and incr relaxationd operating apostrophizes Availability of venture capital saki RatesLegacy airways exiting bankruptcy and streamlining opeproportionns Strategic AlliancesFair set is an important competitive factorJFK ExpansionSocial FactorsTrends in cordial factors affect the drive for a ph wizrs products and howthe caller-up operates. They allow in the cultural aspects and include health consciousness, population growth rate, age distri un littleion, travel attitudes and emphasis on sanctuary. Social factors that are found in the case are 2001 Terrorist attacks in US negatively affected airline pains Anxiety about safety at airportsTravel has become awkward due to safety precautionsInternal Culture at JetBlue Management is workforce on a great place to workTechnological FactorsThe scientific factors determine barriers to en accentuate, minimum efficient production aim and influence outsourcing decisions. They include ecological and environmental aspects, such as R&D activity, automation, engineering incentives and the rate of technological change. Technological factors found in the case areAging eliminateDiffusion of TechnologyDigital Revolution mesh does away with ticket agents but allows price comparison Customer advantage working from home reduces operations costsEnvironmental FactorsThese factors include weather, climate, and climate change. Environmental factors that are found in the case are War, Political Turmoil and Natural Disasters drive fuel prices from $30/bbl. in 03 to $60/bbl. in 05 Airport slot/gate allocationsSecurity conditions build barriers to ease of travelLegal FactorsThese factors hobo affect how a fellowship operates, its costs, and the demand for its products. They include discrimination law, consumer law, antitrust law, employment law and health and safety law. Legal factors that are found in the case are 1978 Airline Deregulation Act eliminated government control over fares and routes Airport and FAA engrossment regulationsSecurity laws since 9/11 ushers Five ForcesIn arrangement to understand Jet Blues external environment, Porters 5 forces are a helpful beak in order to evaluation the communitys competitive environment and the tip of rivalry amongst competitors deep down the breeze industry. The competitive environment impart be evaluated in ground of 4 different aspects, namely the talk terms force out of guests and suppliers, the threat of new entrants and new substitutes. The bargaining world-beater of nodes within the breeze industry is kind of superior as thither are prototype products and services that are less unique and fem ale genitalia be tardily imitated by competitors. Further more(prenominal) than(prenominal) than, thither are only low switching costs incurred for the buyer in general, meaning that there is usually a scorn degree of customer loyalty towards one single attach to and that customers can equalise says easily especially due to the option to purchase tickets online.Suppliers largely nonplus a moderate to high bargaining power within the industry due to the limited number of suppliers which forces aviation companies to choose from the number available and accordingly to accept their prices. In fact, fuel is the second highest cost for aviation companies. There are highly depended on suppliers prices and the availability which indicates on a relatively high bargaining power of suppliers. In addition, there are high switching costs which are strongly in favor of the suppliers and means that the company features an increase in operating costs when switching to a nonher supplier a s dissolute an other type of aircraft leads to additional costs (maintenance, provision etc.).Aircrafts are unprotected to delays due to the location of gate locations which leads to a decrease in custom and therefore to an increase in costs. In terms of the threat of substitutes there are not a lot serious threats and alternatives to products within the aviation industry, therefore the threat can be rated as modal(a).However, private aircrafts can be seen as a substitutes within the industry. Within the transportation industry there are more alternatives for substitutes such as trains, buses, cars and boats. The threats of new entrants is genuinely low as there are certain barriers to entry such as a high amount of investments that are required and it is quite difficult to build up a reliable and trustworthy from cabbage as the industry is already dominated by severalcompetitors. In conclusion it can be said that there is a medium degree of rivalry within the aviation indus try due to a rather high degree of bargaining power of customers and suppliers and a rather low threats of new entrants and substitutes within the industry. One of the remedies to turn away high bargaining power of customers would be to try to set from competitors by building a unique and favorable image on the mart. On the other consider companies could use the strategy of backwards integration and acquire their suppliers in order to avoid the bargaining power of suppliers. However, those investment decision are ever so highly dependable on the companys fiscal bud get at, priorities and goals in general.Financial AnalysisThe following graph is an evaluation of JetBlue Airways and Southwest Airlines engraft on fiscal information found on the companies income statements, balance sheets, and money flow statementsJet BlueAs you can see, JetBlue is consistently under Southwest on the ratios. JetBlues liquidity ratios devour decreased over the conclusion three years and could be considered worrisome. However, we know that the fleet is aging and the company is making investments to replace the old fleet and expand the fleet. This is a very rational cause for the decrease in these ratios. JetBlues fair-mindedness multiplier is higher(prenominal) than Southwest. At head start, you might think this is better. However, a higher fair play multiplier is not a good thing. A high fairness multiplier means that a company finances a larger portion of its assets through its debt.Therefore, southwest has a better equity multiplier. While JetBlues net profit margin is slightly trim down than Southwests, it is in line with the industry add up of 3.2%. JetBlues drive off on equity is also in line with the industry average of 8%. JetBlue has a high capital intensity ratio which is approve because, as an airline, they require a large amount of capital to operate. Overall, the fiscal ratios are set out than Southwests but they dont show any problems that dont make sense. The net profit margin, restitution on assets, and return on equity have all improved over the last three years. The cash coverage ratio is also improving. The finances see to show that the company is improving and is stable.StrengthsWhen we olfactory property at the case JetBlue shows several strengths. One of the most important is customer satisfaction they satisfy their customers by being a low-cost airline but at the same time offer excellent picture (theJetBlue Experience). They have new airplanes (that happen the operational costs low) with inflight entertainment placements, their customers get a drink and a snack and their employers are involved and motivated. JetBlue is an advance(a) company, for example they were the graduation North-American airline company that used electronic ticketing and they introduced the first paperless cockpits.WeaknessesWhen analyzing the company internally we also see several weaknesses. From the case it became choke that the compa ny had problems with facing mass cancellation a weak reservation transcription and also no baggage manipulation systems. The company got high debts because of the ascension fuel prices, and also because of the compensations that they gave their customers after making mistakes. Currently the baggage handling system works properly and their online reservation systems are also improved. some other weakness of JetBlue is that is focusses on the middle class of society, therefore they do not have many high class people that are entrust to spend more.OpportunitiesThe company is also influenced by external factors, and we will first discuss the opportunities for JetBlue. The case made name that JetBlue is getting more and more interline agreements with other airline companies. Due to this fact JetBlue will have more destinations to fly to and they can also make reservations under each others names. It is therefore wise that JetBlue go alongs making new interline agreements with the bigger airline companies. Another opportunity for JetBlue is technological improvements, since JetBlue is an innovative company they like to try new things out such as they did with the paperless cockpit. as well the deregulation of world-wide air travel and loosening laws and regulations are opportunities for JetBlue. There are a lot of regulations around air travel, especially after the terroristic attacks on 9/11 and also the tax laws influence the company. Whenever these will become looser the company will have less expenditures.ThreatsWhen we evaluate the external factors that are influencing the company we also find several threats. One of the biggest threats for the airlineindustry are fuel prices, since they are the biggest costs for an airline company. Another threat for the airline industry are terroristic attacks, after 9/11 the customers got afraid of traveling by plane. Also all the safety procedures make travelers rather command to use another way of transportation , such as the car or train. Financially the high user taxes and currency changes also influence the airline industry.TOWS AnalysisAfter evaluating the SWOT analysis we can now manner at the externally-focused TOWS analysis. The TOWS analysis matches external opportunities and threats with internal strengths and weaknesses.Maxi-Maxi StrategyHow can you use your strengths to take advantage of the opportunities? If we compare the strengths and opportunities of JetBlue, some of the strategies they could implement are localise on the technology improvements JetBlue is an innovative company and they like to try out new technologies. They can make the JetBlue experience even better than it already is. Focus on the interline agreements when JetBlue has more interline agreements with other airline companies their customers will have more choice of countries where they want to go, it will also be easier for them to make a reservation. Lower the operating costs whenever the law and regulatio ns will be in favor of the airline industry the company can lower its operating costs and therefore also lower their prices.Maxi-Mini StrategyHow can you take advantage of your strengths to avoid real and potential threats? The strengths that JetBlue could use to avoid real and potential threats are Focus on technological developments again they should focus on this for example they could maybe develop new security mea sure enough check machines that are easier to use and also safer to avoid terroristic attacks Develop the JetBlue experience there is intense competition in the airline industry, however JetBlue should differentiate itself by improving the JetBlue experience which is already known for excellent customer service, friendly personnel, new planes, entertainment systems etc. If they improve this experience and keep focusing on being a low-budget company they will winmore customers.Mini-Maxi StrategyHow can you use your opportunities to overcome the weaknesses you are exp eriencing? There are several opportunities that JetBlue could use to overcome the weaknesses that they are experiencing, such as Loosening laws and regulations whenever the regulations will be looser the turnaround process of the airplanes will be easier and faster. New technology the new technology could help the company to improve the online presence. The online presence was in the case really bad but acceptedly they already improved this. However E-business and M-business is getting more and more popular so it is always wise for a company to keep on track with this by improving their online systems.Mini-Mini StrategyHow can you background your weaknesses and avoid threats? The strategies that JetBlue should use to minimize its weaknesses and threats are Improve the systems some of the weaknesses are weak baggage handling systems and online presence. Also in the case it became slide by that JetBlue faced problems with mass cancellation. This could all be improved by implementin g ERP systems so that it is clear what is exactly going on in the company. For online presence they should have an IT department that focusses on that. Improve safety systems there are a lot of safety procedures because of the fear of terroristic attacks. The airplane industry should invest in have safer and easier systems to improve the safety of its travelers. Differentiate itself from other airline companies there are a lot of airline companies and this causes intense competition. However if JetBlue makes sure that they offer their product in an exclusive way the company will win customers.Balanced ScorecardIn the following we will establish a fit score card for Jet Blue by collecting and analyzing data on the companys current performance. The boilersuit goal of the balance visiting card is to analyze the gathered data and compare it to the in demand(p) performance and strategic goals. Furthermore it is a helpful tool to align business activities to the companys current missio n and vision. At large, there are 4 study prospects that are analyzed during the balanced scorecard which are the customer, internal business, fundament& learning, and financial location. In terms of the internal Business Perspective it becomes clear that Jet Blue has one of its major core competencies in quick turnarounds. One of the main reasons for this is the paperless cockpit innovated and introduced by Jet Blue itself. In fact, the paperless cockpit ensures faster takeoffs by reducing paperwork which in conclusion leads to quicker turnaround rates, as well as higher aircraft utilization. Jet Blues high goal rate is another significant competence of the companys business operation (rate of 99.6 % compared to 98.3% at major airlines).Furthermore, the Jet Blue would keep operating costs low by integrating a less costly plane, the A 320, which is significantly less costly than the Boeing 737. In addition, the A 320 is more fuel-efficient, requires less maintenance costs, an d training costs are kept at a lower level which leads to an overall decrease in operating costs and enables the company to offer less costly tickets to the end-customer. However, Jet Blue aims at revitalizeing its fleet expansion in 2012. The airline planes to purchase the A321s and A320neo. Besides, the company had to deal with major system issues in regards to the baggage-handling system, online rebooking system, the sabre airline solution applications which caused significant delays in daily operations and lead to dissatisfaction among customers. Another perspective of the balanced scorecard that needs to be analyzed is the customer perspective. The company markets its service software as the Jet Blue experience which includes the new aircraft, variety of TV channels& movies, leather seats and more leg room.Furthermore, Jet Blue adds value to its customers by offering services such as priority boarding. The company, in fact positions itself as a low-price company, but focuses strongly on customers services (the Jet Blue experience) as well. This strategy enables the company to differentiate themselves from their competitors and adds unique value to their products. However, after the operations meltdown of 2007, customers upset trust in the company. For the future, significant changes are needed to restore customers trust. In terms of the companys financial perspective it can be said that companys liquidity ratios have been decreased over the past 3 years and could be considered worrisome, however, as Jet Blue plans to replace its fleet there is a reasonable cause for the decrease. Furthermore, Jet Blues equity to debt ratio is even below the average which indicateson a lower amount of equity financed by banks and is therefore favorable.Jet Blues return on equity and net profit margin are in line with the industry average and therefore refer to stability. The net profit margin, and return on equity have all improved over the last three years which indic ates on the profitability of the company. The cash coverage ratio has improved as well which refers to Jet Blues liquidity. Also the return on assets ratio has been improving and is preceding(prenominal) the industrys average (3% compared to 2.46 % in 2013) which refers to a preferable efficiency of the company. The finances seem to show that the company is improving and is stable. Regarding the innovation& learning Perspective it becomes apparent that Jet Blue launched several solutions and systems. The paperless cockpit, for instance, that has been explained in a paragraph above is one of the innovations that Jet Blue launched on the market. In addition, less-congested airports reduced the airlines turnaround time.Other innovations that facilitated operations and made services more customer-friendly are the tickets and mileage statements that do not require paper anymore. gibe to the article Jet Blue airlines getting over the blues , innovation has been everywhere. Subsequent t o the operations meltdown and the financial breakdown of the company in 2007, Jet Blue attempted to initiated strategic changes within the company by significant capital reduction from 2010 to 2011, a change of the CEO, a renew in flight expansions, partnering up with former competitors, and selling $42.6 of common ancestry to the German carrier (Lufthansa). Generally, measurable key performance indicators need to be established in order to evaluate the companys performance. The financial ratios are the means within the balanced scorecard to evaluate the companys perspective. The customer perspective could be evaluated in terms of market share, customer satisfaction scores, and customer loyalty scores.The internal business perspective can be measured in turnaround rates and completion rates for instance. Number of innovations, an improvement index, or number of employee suggestions can be used to put the innovative& learning perspective into tangible terms. As a result, the company needs to restore customers trust and loyalty, improve on internal operating systems in order to regain former financial strength in the future. Especially, the reliability of the companys operating system needs to be secured in order to avoid anothermajor meltdown in the future. Furthermore, the company needs to find adequate strategic changes in order to ensure compliance with Jet Blues current mission, Bring humanity back to air travel which is currently act by a low-cost strategy in combination with a strong focus on customer-services and compare current performance to desired performance, however the companys goals and targets do not become clear from the case.