Case Study Description of JetBlue Airways: Managing Growth
Considers the situation facing David Barger, President and CEO of JetBlue Airways, in May 2007 as he addresses the airline's need to slow its growth rate in the response to increasing fuel costs and the effects of major operational crisis for the airline in February 2007. In 2005, JetBlue-typically viewed as a low-cost carrier (LCC)-made a move that is often considered antithetical to the LCC model. Specifically, JetBlue moved from a single aircraft type (i.e., the Airbus 320, or A320) to a fleet with two types of aircraft by adding the smaller Embraer 190, or E190. Students are initially asked to consider the impact of this decision on JetBlue's operations strategy and business model. They are then asked to consider how the reductions in aircraft capacity growth should be spread across the two plane types. This discussion hinges not only on issues of aircraft efficiency but also on those of operational focus and the ultimate competitive priorities of the airline as a whole.
Swot Analysis of "JetBlue Airways: Managing Growth" written by Robert S. Huckman, Gary P. Pisano includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Jetblue Aircraft facing as an external strategic factors. Some of the topics covered in JetBlue Airways: Managing Growth case study are - Strategic Management Strategies, Manufacturing and Technology & Operations.
Some of the macro environment factors that can be used to understand the JetBlue Airways: Managing Growth casestudy better are - – challanges to central banks by blockchain based private currencies, geopolitical disruptions, increasing household debt because of falling income levels, increasing inequality as vast percentage of new income is going to the top 1%, there is backlash against globalization, increasing energy prices, cloud computing is disrupting traditional business models,
increasing commodity prices, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of JetBlue Airways: Managing Growth
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in JetBlue Airways: Managing Growth case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Jetblue Aircraft, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Jetblue Aircraft operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of JetBlue Airways: Managing Growth can be done for the following purposes –
1. Strategic planning using facts provided in JetBlue Airways: Managing Growth case study
2. Improving business portfolio management of Jetblue Aircraft
3. Assessing feasibility of the new initiative in Technology & Operations field.
4. Making a Technology & Operations topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Jetblue Aircraft
Strengths JetBlue Airways: Managing Growth | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Jetblue Aircraft in JetBlue Airways: Managing Growth Harvard Business Review case study are -
Analytics focus
– Jetblue Aircraft is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Robert S. Huckman, Gary P. Pisano can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Ability to lead change in Technology & Operations field
– Jetblue Aircraft is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Jetblue Aircraft in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Jetblue Aircraft digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Jetblue Aircraft has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Diverse revenue streams
– Jetblue Aircraft is present in almost all the verticals within the industry. This has provided firm in JetBlue Airways: Managing Growth case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
High brand equity
– Jetblue Aircraft has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Jetblue Aircraft to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Superior customer experience
– The customer experience strategy of Jetblue Aircraft in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Successful track record of launching new products
– Jetblue Aircraft has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Jetblue Aircraft has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Low bargaining power of suppliers
– Suppliers of Jetblue Aircraft in the sector have low bargaining power. JetBlue Airways: Managing Growth has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Jetblue Aircraft to manage not only supply disruptions but also source products at highly competitive prices.
Cross disciplinary teams
– Horizontal connected teams at the Jetblue Aircraft are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Highly skilled collaborators
– Jetblue Aircraft has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in JetBlue Airways: Managing Growth HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Organizational Resilience of Jetblue Aircraft
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Jetblue Aircraft does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Sustainable margins compare to other players in Technology & Operations industry
– JetBlue Airways: Managing Growth firm has clearly differentiated products in the market place. This has enabled Jetblue Aircraft to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Jetblue Aircraft to invest into research and development (R&D) and innovation.
Weaknesses JetBlue Airways: Managing Growth | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of JetBlue Airways: Managing Growth are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study JetBlue Airways: Managing Growth, is just above the industry average. Jetblue Aircraft needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Capital Spending Reduction
– Even during the low interest decade, Jetblue Aircraft has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study JetBlue Airways: Managing Growth, in the dynamic environment Jetblue Aircraft has struggled to respond to the nimble upstart competition. Jetblue Aircraft has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Increasing silos among functional specialists
– The organizational structure of Jetblue Aircraft is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Jetblue Aircraft needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Jetblue Aircraft to focus more on services rather than just following the product oriented approach.
Skills based hiring
– The stress on hiring functional specialists at Jetblue Aircraft has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Interest costs
– Compare to the competition, Jetblue Aircraft has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Products dominated business model
– Even though Jetblue Aircraft has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - JetBlue Airways: Managing Growth should strive to include more intangible value offerings along with its core products and services.
High cash cycle compare to competitors
Jetblue Aircraft has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Lack of clear differentiation of Jetblue Aircraft products
– To increase the profitability and margins on the products, Jetblue Aircraft needs to provide more differentiated products than what it is currently offering in the marketplace.
High operating costs
– Compare to the competitors, firm in the HBR case study JetBlue Airways: Managing Growth has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Jetblue Aircraft 's lucrative customers.
High bargaining power of channel partners
– Because of the regulatory requirements, Robert S. Huckman, Gary P. Pisano suggests that, Jetblue Aircraft is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Opportunities JetBlue Airways: Managing Growth | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study JetBlue Airways: Managing Growth are -
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Jetblue Aircraft can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Buying journey improvements
– Jetblue Aircraft can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. JetBlue Airways: Managing Growth suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Building a culture of innovation
– managers at Jetblue Aircraft can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Technology & Operations segment.
Learning at scale
– Online learning technologies has now opened space for Jetblue Aircraft to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Jetblue Aircraft to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Jetblue Aircraft to hire the very best people irrespective of their geographical location.
Leveraging digital technologies
– Jetblue Aircraft can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Jetblue Aircraft can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Jetblue Aircraft to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Developing new processes and practices
– Jetblue Aircraft can develop new processes and procedures in Technology & Operations industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Technology & Operations industry, but it has also influenced the consumer preferences. Jetblue Aircraft can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Loyalty marketing
– Jetblue Aircraft has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Technology & Operations industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Jetblue Aircraft can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Jetblue Aircraft can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Jetblue Aircraft is facing challenges because of the dominance of functional experts in the organization. JetBlue Airways: Managing Growth case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Threats JetBlue Airways: Managing Growth External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study JetBlue Airways: Managing Growth are -
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Jetblue Aircraft can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study JetBlue Airways: Managing Growth .
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Jetblue Aircraft needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Jetblue Aircraft in the Technology & Operations industry. The Technology & Operations industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study JetBlue Airways: Managing Growth, Jetblue Aircraft may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Technology & Operations .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Jetblue Aircraft with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Jetblue Aircraft business can come under increasing regulations regarding data privacy, data security, etc.
Environmental challenges
– Jetblue Aircraft needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Jetblue Aircraft can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
High dependence on third party suppliers
– Jetblue Aircraft high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Consumer confidence and its impact on Jetblue Aircraft demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Easy access to finance
– Easy access to finance in Technology & Operations field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Jetblue Aircraft can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Jetblue Aircraft.
Stagnating economy with rate increase
– Jetblue Aircraft can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Weighted SWOT Analysis of JetBlue Airways: Managing Growth Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study JetBlue Airways: Managing Growth needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study JetBlue Airways: Managing Growth is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study JetBlue Airways: Managing Growth is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of JetBlue Airways: Managing Growth is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Jetblue Aircraft needs to make to build a sustainable competitive advantage.
