JetBlue Airways David Slade BUS 630 Ashford University Milan Havel January 28, 2012 JetBlue Airways 1. ) What is JetBlue’s strategy for success in the marketplace? Does the company rely primarily on a customer intimacy, operational excellence, or product leadership customer value proposition? What evidence supports your conclusion? JetBlue’s strategy for success in the marketplace can be summed up, as “a leading low-fare, low-cost passenger airline by offering customers high-quality customer service and a differentiated product” (JetBlue 10-K/A Report, 2005).They believe that by offering low rates, their demand will increase, offering travelers with a low-cost alternative.
They believe that having low operating costs allows them to keep unit costs down. They also research areas that have little travel and those with high travel and high costs. This allows them to target another travel point. Offering a more luxurious travel accommodation is JetBlue’s key to staying innovative and separate from the rest. JetBlue feels that customer intimacy, operational excellence, and product leadership customer value proposition are all important.
They spend time hiring honest, friendly workers to give the ultimate in customer satisfaction, while only using one type of aircraft so that all of the maintenance required would be the same on all engines. By offering low fares and extra amenities during the flight, the company also focuses on product leadership and customer value proposition. 2. ) What business risks does JetBlue face that may threaten the company’s ability to satisfy stockholder expectations? What are some examples of control activities that the company could use to reduce these risks?JetBlue already states that they have billions of dollars in debt and will continue to have more with their fixed obligations.
“Our ability to make scheduled payments on our debt and other fixed obligations will depend on our future operating performance and cash flow, which in turn will depend on prevailing economic and political conditions and financial, competitive, regulatory, business and other factors, many of which are beyond our control” (JetBlue 10-K/A Report, 2005). Additionally, the company relies heavily on most flights going on without a hitch, which often times can become troublesome with weather delays.The company also states that the industry is extremely competitive and by operating in a new location, it drives the other airlines to offer travel to those destinations; therefore, operational costs must be kept to a minimum to allow the growth strategy to move forward. If the growth strategy is unable to happen, the company faces serious financial stress. They rely heavily on technology, and any technological mishap could cause disruption of their business. Some of their potential risks could be controlled.
For example, the company wants to ensure they have the highest quality of staff.If the company feels that their service may be disrupted by not having nice and friendly staff, they need to continue with their current hiring and training practices. They also need to have a backup in regards to their technological use. There seems to be no plan B if their system was to crash. By having no credit, the company relies heavily on cash flow. They need to obtain an open line of credit, relieving them of this cash flow burden.
3. ) How can the concept of unit-level activities be applies to an airline? More specifically, what are two examples of unit-level activities for JetBlue?What steps has JetBlue taken to manage these unit-level activities more efficiently? “Unit-level activities are performed each time a unit is produced” (Noreen, et al, 2011). With that said, every time a flight occurs there is fuel costs involved, along with the extra amenities offered to the travelers. This costs the company for every flight.
By offering those with no luggage promotional discounts, JetBlue is able to keep the cost of fuel down, citing that more weight in the air requires more fuel. Additionally, JetBlue is in he middle of acquiring updated aircrafts, as many of their aircrafts require maintenance and are luckily under warranty for most parts. However, as those aircrafts age, the warranties will expire and the maintenance costs can begin adding up. 4.
) How can the concept of batch-level activities be applied to an airline? What are two examples of batch-level activities for JetBlue? What steps has JetBlue taken to manage these batch-level activities more efficiently? An example of a batch-level activity that JetBlue applies is with the maintenance on their aircrafts.They currently use the same type of aircraft. This allows them to have more efficient training for maintenance and other flight personnel, as the aircraft would be considered “uniform” or “standard”. They are buying additional aircrafts that are upgraded than the current and will continue of using this uniform approach for these aircrafts, as well. 5. ) What is one example of a customer-level activity and an organization-sustaining activity for JetBlue? Like most airlines, JetBlue offers a customer reward program, offering travel points for loyal customers.
JetBlue, and every other airline company, must follow strict guidelines as set forth by the DOT & TSA. Failure to comply with the regulations by these organizations could essentially shut the company down, thus causing this organization-sustaining activity. Reference United States Securities and Exchange Commission, Form 10-K/A Report. (2005). Retrieved January 28, 2012 from http://www. sec.
gov/Archives/edgar/data/1158463/000104746905005739/a2153142z10-ka. htm. Noreen, E. , Brewer, P. , & Garrison, R.
(2011). Managerial accounting for managers: second edition. New York, NY: McGraw-Hill Learning Solutions.
