JetBlue and the New Revenue Recognition Standard SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of JetBlue and the New Revenue Recognition Standard
In May 2014, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) issued a converged standard on revenue recognition (ASC Topic 606 and IFRS 15, respectively) aimed at ameliorating difficulties associated with determining when to recognize revenue and at what amount. Prior revenue recognition standards applied broad concepts together with a variety of requirements for specific industries or types of transactions, sometimes resulting in divergent accounting for economically similar transactions. In contrast, the new standard outlined a single comprehensive model to use in accounting for revenue from contracts with customers. Although the new standard simplified the guidelines down to one framework, it also generally required firms to use more judgment and estimation than prior guidance. In its second quarter of 2014 financial statement filed with the Securities and Exchange Commission (SEC) in August 2014, New York-based airliner JetBlue Airways Corporation (JetBlue) [NASDAQ: JBLU] acknowledged the new revenue recognition standard. While it had yet to determine the full impact of adoption, changes were imminent. This case examines how companies' accounting practices are affected by broad-based new accounting standards. It is designed to introduce the new revenue recognition standard, and help students walk through an assessment of how the standard might impact a company like JetBlue Airways.
Authors :: Emily Booth, Elizabeth Blankespoor, Jaclyn C. Foroughi
Swot Analysis of "JetBlue and the New Revenue Recognition Standard" written by Emily Booth, Elizabeth Blankespoor, Jaclyn C. Foroughi includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Standard Jetblue facing as an external strategic factors. Some of the topics covered in JetBlue and the New Revenue Recognition Standard case study are - Strategic Management Strategies, Costs and Finance & Accounting.
Some of the macro environment factors that can be used to understand the JetBlue and the New Revenue Recognition Standard casestudy better are - – there is increasing trade war between United States & China, increasing government debt because of Covid-19 spendings, increasing commodity prices, increasing household debt because of falling income levels, cloud computing is disrupting traditional business models, digital marketing is dominated by two big players Facebook and Google, banking and financial system is disrupted by Bitcoin and other crypto currencies,
increasing inequality as vast percentage of new income is going to the top 1%, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of JetBlue and the New Revenue Recognition Standard
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in JetBlue and the New Revenue Recognition Standard case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Standard Jetblue, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Standard Jetblue 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 and the New Revenue Recognition Standard can be done for the following purposes –
1. Strategic planning using facts provided in JetBlue and the New Revenue Recognition Standard case study
2. Improving business portfolio management of Standard Jetblue
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Standard Jetblue
Strengths JetBlue and the New Revenue Recognition Standard | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Standard Jetblue in JetBlue and the New Revenue Recognition Standard Harvard Business Review case study are -
Diverse revenue streams
– Standard Jetblue is present in almost all the verticals within the industry. This has provided firm in JetBlue and the New Revenue Recognition Standard 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.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Standard Jetblue digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Standard Jetblue 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.
Superior customer experience
– The customer experience strategy of Standard Jetblue in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High switching costs
– The high switching costs that Standard Jetblue has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Effective Research and Development (R&D)
– Standard Jetblue has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study JetBlue and the New Revenue Recognition Standard - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Analytics focus
– Standard Jetblue 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 Emily Booth, Elizabeth Blankespoor, Jaclyn C. Foroughi 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.
Low bargaining power of suppliers
– Suppliers of Standard Jetblue in the sector have low bargaining power. JetBlue and the New Revenue Recognition Standard has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Standard Jetblue to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Standard Jetblue is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Standard Jetblue is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in JetBlue and the New Revenue Recognition Standard Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Training and development
– Standard Jetblue has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in JetBlue and the New Revenue Recognition Standard Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Organizational Resilience of Standard Jetblue
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Standard Jetblue does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Successful track record of launching new products
– Standard Jetblue has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Standard Jetblue 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.
Ability to lead change in Finance & Accounting field
– Standard Jetblue 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 Standard Jetblue in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses JetBlue and the New Revenue Recognition Standard | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of JetBlue and the New Revenue Recognition Standard are -
High operating costs
– Compare to the competitors, firm in the HBR case study JetBlue and the New Revenue Recognition Standard 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 Standard Jetblue 's lucrative customers.
Aligning sales with marketing
– It come across in the case study JetBlue and the New Revenue Recognition Standard that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case JetBlue and the New Revenue Recognition Standard can leverage the sales team experience to cultivate customer relationships as Standard Jetblue is planning to shift buying processes online.
Workers concerns about automation
– As automation is fast increasing in the segment, Standard Jetblue needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Standard Jetblue supply chain. Even after few cautionary changes mentioned in the HBR case study - JetBlue and the New Revenue Recognition Standard, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Standard Jetblue vulnerable to further global disruptions in South East Asia.
High cash cycle compare to competitors
Standard Jetblue 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study JetBlue and the New Revenue Recognition Standard, is just above the industry average. Standard Jetblue 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study JetBlue and the New Revenue Recognition Standard, it seems that the employees of Standard Jetblue don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Slow to strategic competitive environment developments
– As JetBlue and the New Revenue Recognition Standard HBR case study mentions - Standard Jetblue takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the JetBlue and the New Revenue Recognition Standard HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Standard Jetblue has relatively successful track record of launching new products.
Low market penetration in new markets
– Outside its home market of Standard Jetblue, firm in the HBR case study JetBlue and the New Revenue Recognition Standard needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Standard Jetblue is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study JetBlue and the New Revenue Recognition Standard can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Opportunities JetBlue and the New Revenue Recognition Standard | 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 and the New Revenue Recognition Standard 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. Standard Jetblue can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Better consumer reach
– The expansion of the 5G network will help Standard Jetblue to increase its market reach. Standard Jetblue will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Standard Jetblue 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 Standard Jetblue to hire the very best people irrespective of their geographical location.
Learning at scale
– Online learning technologies has now opened space for Standard Jetblue 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.
Buying journey improvements
– Standard Jetblue can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. JetBlue and the New Revenue Recognition Standard 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.
Using analytics as competitive advantage
– Standard Jetblue has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study JetBlue and the New Revenue Recognition Standard - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Standard Jetblue to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Standard Jetblue can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Low interest rates
– Even though inflation is raising its head in most developed economies, Standard Jetblue 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.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Standard Jetblue in the consumer business. Now Standard Jetblue can target international markets with far fewer capital restrictions requirements than the existing system.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Standard Jetblue in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Developing new processes and practices
– Standard Jetblue can develop new processes and procedures in Finance & Accounting 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 Finance & Accounting industry, but it has also influenced the consumer preferences. Standard Jetblue can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Creating value in data economy
– The success of analytics program of Standard Jetblue has opened avenues for new revenue streams for the organization in the industry. This can help Standard Jetblue to build a more holistic ecosystem as suggested in the JetBlue and the New Revenue Recognition Standard case study. Standard Jetblue can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats JetBlue and the New Revenue Recognition Standard External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study JetBlue and the New Revenue Recognition Standard are -
Technology acceleration in Forth Industrial Revolution
– Standard Jetblue has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Standard Jetblue needs to keep up with the evolution of technology in the Finance & Accounting sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Standard Jetblue in the Finance & Accounting sector and impact the bottomline of the organization.
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.
Stagnating economy with rate increase
– Standard Jetblue 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Standard Jetblue with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Standard Jetblue can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Standard Jetblue is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 and the New Revenue Recognition Standard, Standard Jetblue may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
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. Standard Jetblue needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
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 Standard Jetblue business can come under increasing regulations regarding data privacy, data security, etc.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Standard Jetblue will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Environmental challenges
– Standard Jetblue 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. Standard Jetblue can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Regulatory challenges
– Standard Jetblue needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Finance & Accounting industry regulations.
Weighted SWOT Analysis of JetBlue and the New Revenue Recognition Standard 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 and the New Revenue Recognition Standard 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 and the New Revenue Recognition Standard 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 and the New Revenue Recognition Standard 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 and the New Revenue Recognition Standard 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 Standard Jetblue needs to make to build a sustainable competitive advantage.
