Craft & Executing Strategy

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Bus 599: Strategic Management – Crafting & Executing Strategy

Date: October 15th, 2011

Abstract

The purpose of this paper is to evaluate Jet Blue Airways (JetBlue) company’s crafting and executing of strategy in an industry that has been undergoing challenging changes. These trends are unique to the industry and affect how organizations strategize to remain competitive. To do this analysis, this paper takes a deeper look into JetBlue’s strategic intent which is born of its business model. Next, the paper examines JetBlue’s financial objectives and the methodology by which they have been able to achieve those objectives. Then the paper looks at the company’s operations through the elements of its human resources, organizational culture, handling of costs (which is an industry wide problem) to find out if these elements create a competitive advantage. Finally, 2008 was an important year in the strategic direction of the company therefore the paper looks at how the strategies implemented have performed and if they will allow the company to survive thereafter.

Discuss the trends in the U.S. airline industry and how these trends might impact a company’s strategy.

The airline industry has been at the peak of a cost and profit battle for more than a few years now. High fuel and other costs have made some airline giants either file for bankruptcy or get bought up. September 11, 2001 brought another dimension to the airline industry, emphasizing security standards regardless of cost to the airlines. The industry responded by instituting many measures to pass on the cost to consumers. These measures included the check baggage fee (as an “a la cart” pricing model), fees for booking reservations by phone, fees for cancelling or changing reservations, additional fees for overweight baggage, and fees for using blanket and pillows among others. It is fair to say that the airline industry has faced a deep decline in revenues and operations can be best described as volatile because of capacity running much higher than demand.

2008 saw the industry perform weakly but by March 2009, all the airlines were experiencing losses: revenues were down and passengers’ levels continue to drop. In addition to this there is a shortage of pilots – meaning that existing pilots logged brutal hours. Customers are not satisfied with the operations of the industry in general and the services that they receive are listed as below average. The airline industry (by its corporate culture) places profits, which are determined by fuel cost and labor way above customer satisfaction and many airlines have not done enough to appease their customers. JetBlue may have understood this situation and came up with a strategy to be profitable and somewhat appease customers at the same time according to (Buchanan, F. Robert; Clinton, M. Suzanne, 2010)

Discuss Jet Blue’s strategic intent

According to (Lopez, 2009) “The company's mission and vision is just simple, to bring humanity back to air travel. The reason why the company offers strategic and innovative services to its customers like offering wholesome entertainment, food and drinks on flight is to attract more travelers through its affordable airline passes. In lieu of mission statement, a strategic set of core values is being presented by Jet Blue Airways Corporation. These core values include safety, caring attitude, integrity, fun and passion.” This mantra is played out in all aspects of JetBlue’s operations and brings customer service to an industry that seems to have forgotten about it, even instituting the Passengers Bill of Rights. The company is more customer-centered and has used IT to advance its strategy. For example, the company announced on Twitter that it was offering an “All You Can Jet” pass to book customer itineraries.

Using IT to get the lead in the airline industry, JetBlue was the first airline to be born in the internet age, from (Margulius, 2005). The company uses IT with...
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