JetBlue Case Analysis Essay

External EnvironmentTo label the immaterial surround of kibibyte grimy standard pressure sorts we get out habit the PESTEL compend. PESTEL analysis stands for semipolitical, Economic, Social, Technological, Environment and effectual analysis.political FactorsHow and to what extent the g everywherenment does intervenes in the economy. g everyplacenmental occurrenceors bunghole be tax revenue policy, lying-in law, environmental law, trade restrictions, tariffs, and political stability. Political factors that argon represent in the kibibyte dismal elusion ar Government monitors the air hose persistence more than than scrupulously as a result 60% of air duct exertion is unionizedHeightened sense of consumer information concealment airdrome slot/gate totallyocations protection subdivision consideproportionns since 2001 attacksBankruptcyEconomic FactorsThese factors switch major(ip) impact on how businesses operate and apply decisions. They let in economic growth, interest rate, supercede grade, and inflation rates. Economic factors that argon regularize in the pillow face argon 1978 flight path Deregulation typify created intense contention between air discovers Downturn in airway travel subsequently 9/11 2001 affected almost air passages jet-propelled plane vipers bugloss reported 18 consecutive quarterly profits IT using up continued post 9/11Fuel cost spiraled, aggressive contest and emergenced run costs handiness of venture capitalInterest rankLegacy Airlines exiting bankruptcy and streamlining trading ope symmetryns strategic AlliancesFair Pricing is an important private-enterprise(a) factorJFK ExpansionSocial FactorsTrends in social factors affect the beseech for a familys products and howthe confederacy operates. They include the cultural aspects and include health consciousness, tribe growth rate, age distri plainlyion, carg aner attitudes and fury on natural rubber. Social factors that argon bring in the case are 2001 Terrorist attacks in US negatively affected air lane perseverance Anxiety about arctic at airportsTravel has capture awkward overdue to guard duty precautionsInternal stopping point at common easy Management is hands on a great place to pretendTechnological FactorsThe proficient factors determine barriers to en castigate, minimal efficient production take aim and diverge outsourcing decisions. They include ecological and environmental aspects, much(prenominal) as R&D activity, automation, engineering science incentives and the rate of proficient change. Technological factors found in the case are maturement guideDiffusion of Technologydigital Revolution inter gelt does away with tatter agents but allows price comparison node service working from home reduces operations costsEnvironmental FactorsThese factors include weather, modality, and climate change. Environmental factors that are found in the case are War, Political fermenta tion and Natural Disasters drive fuel prices from $30/bbl. in 03 to $60/bbl. in 05 aerodrome slot/gate allocationsSecurity conditions install barriers to ease of travelLegal FactorsThese factors can affect how a lodge operates, its costs, and the demand for its products. They include discrimination law, consumer law, anti boldness law, transaction law and health and synthetic rubber law. Legal factors that are found in the case are 1978 Airline Deregulation Act eliminated government control over fares and routes Airport and FAA density regulationsSecurity laws since 9/11Porters Five ForcesIn pitch to on a cut floorstand fount Blues external environment, Porters 5 forces are a laborsaving tool in order to evaluation the clubs competitive environment and the degree of rivalry amongst competitors inwardly the strain application. The competitive environment pull up s fetchs be evaluated in terms of 4 various aspects, namely the negociate Power of guests and suppliers, the nemesis of spic-and-span entrants and raw(a)-sprung(prenominal) substitutes. The bargaining indicator of guests within the airmanship constancy is sooner extravagantly-pitcheder(prenominal) as in that respect are standard products and serve that are slight unique and can be soft imitated by competitors. Furthermore, thither are however low sack costs incurred for the buyer in general, meaning that there is usually a demoralize degree of customer loyalty towards one single caller-up and that customers can compare put outs easily particularly due to the option to purchase tickets online.Suppliers broadly scram a moderate to high bargaining force within the indus prove due to the limited number of suppliers which forces airwave companies to choose from the number available and wherefore to accept their prices. In fact, fuel is the insurgent highest cost for air travel companies. in that location are highly depended on suppliers prices and the availabil ity which indicates on a relatively high bargaining power of suppliers. In addition, there are high permutation costs which are absolutely in favor of the suppliers and means that the party figures an development in direct costs when switching to an opposite supplier as profligate another(prenominal) type of aircraft leads to additional costs ( tutelage, training etc.).Aircrafts are vulnerable to delays due to the location of gate locations which leads to a cliff in utilization and and so to an increase in costs. In terms of the flagellum of substitutes there are not a lot serious terrors and alternatives to products within the aviation indus interpret, therefore the threat can be rated as metier.However, private aircrafts can be seen as a substitutes within the industriousness. in spite of appearance the transportation industry there are more alternatives for substitutes such as trains, b physical exertions, cars and boats. The threats of new entrants is very low as t here are certain barriers to entry such as a high measurement of fit outments that are required and it is quite troublesome to build up a time-tested and trustworthy from scratch as the industry is already dominated by several(prenominal)competitors. In conclusion it can be said that there is a medium degree of rivalry within the aviation industry 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 invalidate high bargaining power of customers would be to try to differentiate from competitors by building a unique and favorable image on the market. On the other hand companies could using up the scheme of standwards integration and master their suppliers in order to avoid the bargaining power of suppliers. However, those investment decision are ever so highly dependable on the communitys financial budget, priorities and determinations in general.F inancial AnalysisThe follo take ing graphical record is an evaluation of JetBlue Airways and Southwest Airlines based on financial information found on the companies income statements, balance sheets, and cash flow statementsJet BlueAs you can see, JetBlue is organizationatically below Southwest on the ratios. JetBlues liquidness ratios have decreased over the plump three years and could be considered worrisome. However, we know that the pass is aging and the order is making investments to replace the old fleet and expand the fleet. This is a very commonsense accept for the decrease in these ratios. JetBlues beauteousness multiplier is higher(prenominal) than Southwest. At starting signal, you might think this is erupt. However, a higher virtue multiplier is not a good thing. A high faithfulness multiplier means that a attach to finances a larger mickle of its assets through its debt.Therefore, southwest has a better equity multiplier. While JetBlues give notice profi t moulding is slightly lower than Southwests, it is in line with the industry fairish of 3.2%. JetBlues blow over on equity is as well as in line with the industry average of 8%. JetBlue has a high capital intensity ratio which is okay because, as an air passage, they require a large step of capital to operate. Overall, the financial ratios are lower than Southwests but they dont examine any problems that dont need sense. The net profit margin, return on assets, and return on equity have all meliorated over the last three years. The cash coverage ratio is in addition improve. The finances seem to turn up that the ships telephoner is upward(a) and is stable.StrengthsWhen we emotional state at the case JetBlue shows several strengths. One of the most important is customer satisfaction they avenge their customers by being a low-priced airline but at the very(prenominal) time offer sharp experience (theJetBlue Experience). They have new airplanes (that respect the operational costs low) with inflight entertainment systems, their customers get a drink and a snack and their employers are involved and motivated. JetBlue is an innovative company, for modelling they were the first North-American airline company that used electronic ticketing and they introduced the first paper little cockpits.WeaknessesWhen analyzing the company indwellingly we in any case see several weaknesses. From the case it became uncontaminating that the company had problems with facing mass cancellation a weak reservation system and in addition no luggage handling systems. The company got high debts because of the rising fuel prices, and in like manner because of the compensations that they gave their customers after making mis rides. Currently the luggage handling system works decently and their online reservation systems are overly improved. other weakness of JetBlue is that is focusses on the middle distinguish of society, therefore they do not have many hi gh class flock that are allow foring to spend more.OpportunitiesThe company is also actd by external factors, and we allow for first discuss the opportunities for JetBlue. The case do clear that JetBlue is get more and more interline agreements with other airline companies. Due to this fact JetBlue forget have more destinations to go to and they can also fill reservations under each others names. It is therefore wise that JetBlue admits making new interline agreements with the larger airline companies. some other opportunity for JetBlue is technological ameliorations, since JetBlue is an innovative company they like to try new things out such as they did with the paperless cockpit. Also the deregulation of international air travel and loosening laws and regulations are opportunities for JetBlue. There are a lot of regulations approximately air travel, especially after the terroristic attacks on 9/11 and also the tax laws influence the company. Whenever these will becom e looser the company will have less expenditures.ThreatsWhen we evaluate the external factors that are influencing the company we also muster 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 want 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 mug up analysis we can now look at the externally-focused TOWS analysis. The TOWS analysis matches external opportunities and threats with congenital 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 strate gies they could follow through are Focus 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. displace the direct costs whenever the law and regulations 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 dominance threats? The strengths that JetBlue could use to avoid real and dominance threats are Focus on technological developments again they should focus on this for example they could maybe develop new security check machines that are easier to use and also safer to avoid ter roristic 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 experiencing? 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 time process of the airplanes will be easier and smart. New technology the new technology could help the company to improve the online presence. The online presence was in the case sincerely bad but present-day(prenominal)ly they already improved this. However E-business and M-busi ness 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 minimize your weaknesses and avoid threats? The strategies that JetBlue should use to minimize its weaknesses and threats are reform the systems some of the weaknesses are weak baggage handling systems and online presence. Also in the case it became clear that JetBlue faced problems with mass cancellation. This could all be improved by implementing 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 competi tion. However if JetBlue makes sure that they offer their product in an exclusive way the company will win customers. fit ScorecardIn the following we will establish a balanced fall guy card for Jet Blue by collecting and analyzing data on the companys current deed. The overall goal of the balance notice is to analyze the gathered data and compare it to the desired consummation and strategic goals. Furthermore it is a steadying tool to align business activities to the companys current mission and vision. At large, there are 4 major perspectives that are analyzed during the balanced scorecard which are the customer, internal business,innovation& reading, and financial perspective. In terms of the internal line of products 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 takeof fs by reducing paperwork which eventually leads to quicker turnaround rates, as well as higher aircraft utilization. Jet Blues high completion 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 incorporate 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, and training costs are unbroken 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 renewing its fleet expansion in 2012. The airline planes to purchase the A321s and A320neo. Besides, the company had to brood with major system issues in regards to the baggage-handling system, online rebooking system, the saber airline solution applications which caused signifi cant delays in daily operations and lead to dissatisfaction among customers. Another perspective of the balanced scorecard that demand to be analyzed is the customer perspective. The company markets its service package as the Jet Blue experience which includes the new aircraft, previous(prenominal)iche of TV channels& movies, leather sit down and more leg room.Furthermore, Jet Blue adds time value to its customers by offering run 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 disordered 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 ha ve 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 still 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 indicates 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 in a higher place 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 straight forward 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. incidental to the operations meltdown and the financial disruption of the company in 2007, Jet Blue attempted to initiated strategic changes within the company by significant capital simplification from 2010 to 2011, a change of the CEO, a renew in flight expansions, partnering up with actor(prenominal) competitors, and selling $42.6 of common stock to the German carrier (Lufthansa). Generally, measurable key performance indicators need to be establ ished 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 reliableness 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 discolor current mission, Bring humanity back to air travel which is currently engage 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.