Jetblue Strategic Analysis Essay Example

Jetblue Strategic Analysis Paper Strategic Analysis Of JetBlue Airways Executive Summary This report on JetBlue identifies how they have become an innovator in the airline industry by targeting customers who value a low-cost, customer conscious airline. They have formulated strategies that have enabled them to operate in a highly efficient and effective manner while realizing the importance of aligning their strategies with their environment. The report thoroughly discusses the strengths and weaknesses that the company possesses in their internal environment, followed by an in-depth analysis of the threats and opportunities of existing within their external environment. The strategy of the company is analyzed in comparison with both their internal and external environment in order to formulate possible strategic recommendations. Proper implementation strategies of the recommendations are also given to identify how the company can be better aligned with its environment and continue to grow as a highly successful company in the airline industry. Strategic Analysis of JetBlue Airways This report is an extensive analysis of JetBlue’s overall corporate strategies and how well they are aligned with their internal and external environments. It will focus on the company’s strengths, weaknesses, opportunities, and threats that exist as well as identify possible ways in which they can improve the overall efficiency and effectiveness of the organization. As a relatively new airline JetBlue has redefined the industry by utilizing a combination of low-cost and differentiation as their core strategy. Since the company’s inception in 1999 they have become an innovator of new ideas and have led other airlines to follow some of their own practices due to the overall success of the company. We will write a custom essay sample on Jetblue Strategic Analysis specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Jetblue Strategic Analysis specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Jetblue Strategic Analysis specifically for you FOR ONLY $16.38 $13.9/page Hire Writer JetBlue has succeeded as an airline that targets travelers who want a low-fare, high-value, customer service oriented flight to and from specific locations in popular metropolitan areas. To comprehend the success of the company, there are key factors that must be analyzed thoroughly in order to understand what allows them to be a competitive, profitable, and successful organization. To begin to understand JetBlue’s success as a newcomer to the industry you have to analyze their internal and external environments in comparison to their overall strategy. Strengths JetBlue’s strategy is focused on keeping costs low, while also utilizing new technology and guaranteeing customer satisfaction. The company’s strengths are what set them apart from other airlines. JetBlue’s long list of strengths begins with their pricing strategies. The customer value that is created by the company has proven to be a huge part of their success. In order to be a cost leader they started by purchasing only one model of aircraft which allows for easier and less expensive repairs and maintenance costs. Their low cost strategy also stems from the idea of eliminating any unnecessary operating costs, such as having paperless cockpits and not offering meals during flight. Differentiation has also allowed them to gain a notable advantage over the competition by realizing that customers are the most important part of the company. Customer satisfaction is a top priority within the company and all employees are instructed to make sure that all of their customers are happy at all times. The ways in which they have distinguished themselves include assigning seats with more legroom and satellite TV for all seats, offering complementary snacks and beverages, and also promoting online ticket sales and flight check-in. The organizational culture within the company is one that exhibits values, integrity, and empowerment which is a strength that most of the competition does not possess. Employees are hired based on their competencies and motivation to work in a customer-oriented environment. The company is also committed to their employees’ satisfaction and rewards are given to those who show initiative on the job. Another highly important strength is the executive level of management, which is comprised of experienced, knowledgeable people who have great leadership skills and are focused on their growth strategy and the sustainability of the company. JetBlue’s strengths are easily recognizable and they all integrate well with their corporate strategy. Weaknesses Although JetBlue is considered successful this is not to say that they do not have weaknesses that exist within the company. The small size of the company in comparison to other airlines is a major weakness that they have. Because JetBlue is relatively small they have to focus more on differentiating themselves in the industry, which could effectively lead to less popularity as the competition increases. Due to the fact that they are such a small company they also have a limited number of locations throughout the nation. Following their functional strategy of providing cheaper costs at underserved airports, they have effectively limited their potential to target customers in return. This leaves a question to be asked, if they are successful at their current locations that may not be heavy traffic areas, why could they not be just as, if not more successful in larger, higher traffic locations? Although they have expanded their hubs in a few regions since inception they have done so at a slow pace. Another weakness that should be recognized is the lack of marketing and promotion. JetBlue does use some marketing strategies within the markets that they operate in, yet very few media or publication advertisements are seen outside of those markets. Opportunities The weaknesses of JetBlue could also be considered opportunities to the company. The opportunities that exist are all great ways to improve profitability and brand image, which would be consistent with their own operational strategy. Expansion into other locations including international regions is perhaps their biggest opportunity for growth. Due to the deregulation of international air travel, it would be easier to implement the same low-cost strategy for operating outside of the United States. Another idea would be to create a joint venture with another international airline in order to take advantage of the international market, which would lower risks and investment capital. Technology and the Internet can both be beneficial to their strategy. Airplane technology continues to improve in design, safety, and maintenance. These improvements allow for less fuel consumption, lower repair costs, and fewer mechanical failures. These advancements in technology would be an excellent opportunity to lessen the operating costs associated with using older models. The Internet also offers a great way to market them as being a low-cost, high-value industry leader who actually values their customers’ satisfaction. The Internet has proven to be the cheapest, most profitable form of advertisement that reaches more people than any other form. By promoting the use of the Internet for automated sales and utilizing the available technology, they can lower labor costs and increase value even further for customers. Threats Altogether the airline industry has seen increased threats from the external environment in recent years, by not formulating and implementing strategies to effectively handle the threats that JetBlue is faced with currently and in the future, they will most likely have a negative impact on the company’s sustainability. A major threat that should be of concern is the fierce competition in the industry, and the possibility of other low-cost strategies being implemented by much larger companies. The imitability of both their differentiation and cost strategies are rather high and practically any competitor can easily implement both, forcing JetBlue to sustain a competitive advantage. Due to their small size and little brand recognition they must be effective in preventing the competition from overtaking their target market. Along with the substantial threat of entry into the low cost arena, there is the rising costs of fuel and high bargaining price of suppliers in the industry. The increased inflation rates of products, as well as the economic downturn are subsequently huge threats that should be considered when implementing their future financial strategy. Security threats and increased government regulations throughout the industry create a new threat to all airlines. This has increased costs and lowered the profit margin for JetBlue and limits their ability to maintain the low cost structure as well. These threats can all have a critical impact on the company, but if they are properly planned for there is a much greater chance to succeed in the future. Strategic Recommendations After analyzing JetBlue’s internal and external environment and contrasting them with their corporate strategy, this report concludes that overall they are an efficient company that needs little improvement. Aside from the recommendations discussed above there are a few more that might slightly improve their future sustainability. Their core competencies easily distinguish them from most of the competition and those strengths are what gives them the competitive advantage to become more successful. JetBlue’s low prices are what define them and it is necessary to keep their prices low and keep the customers happy as the company grows. The first recommendation would be that in-depth appraisals in all areas of the organization should be performed non-stop. The information gained should immediately impact any area that is falling behind, and the necessary changes should be made. As mentioned before, expanding to other markets is a strategy that should be implemented quickly, but considering the needs of business travelers would also be an opportunity to attract a larger market. Maybe they could include power outlets, unlimited wi-fi access, and noise cancelling headphones all of which would appeal to both business and regular customers. A marketing strategy that emphasizes their luxurious amenities offered compared to the low-cost flights, would be an extremely effective campaign especially once the target market is expanded. Another idea might be to consider venturing into a partnership that might include a website similar to Travelocity. com allowing consumers to find hotels, restaurants, and flights from other airlines and comparing their prices to JetBlue’s. Growth is limited to the resources available, so in effect they should ensure that all their resources are utilized to the upmost efficiency. Consideration of implementing the above recommendations and continuing the practices currently in place should allow JetBlue to continue to be an innovator and a successful company in the future. They have great management, an excellent workforce, and are highly concerned about their customers’ satisfaction, all of which are aligned with the vision, mission, and strategy of the organization.