JetBlue the Next People Express - Case Study Example

 Flight and crew scheduling systems, reservation, and call-center systems all need to be upgraded if the airline wants to retain its passenger share. Parallels are already being drawn to People Airline Express, another low-cost carrier that sank without a trace in 1997 under similar constraints as are being faced by JetBlue today. JetBlue however, still has something going for it in the form of a healthy balance sheet, and $699 million in cash. It has also restructured its ambitious growth plans as it tries to consolidate its operations.

CommentsThe problem JetBlue is facing is basically that, "rapid expansion [has] outstripped management's ability to keep everything together". Rough and ready methods, suitable for small, low-cost operations contribute to profitability. But these methods start falling apart when the size of the operations cross a certain optimum level. At this stage JetBlue risks having the same overheads and union problems, as do other larger carriers, thereby nullifying the advantage of being a low-cost carrier.

ReferencesBusinessWeek, Mar 12, 2007. p 48.AVON: MORE THAN COSMETIC CHANGESIn October 2005, after six years of double-digit growth, Avon sales suddenly slumped all over the world as, "the global diversity that had long propped up the company's performance suddenly began to weigh it down". This sudden drop in profits took management and shareholders by surprise and share prices went down by as much as 45 percent. Since then, CEO Andrea Jung has been trying to figure out how to re-energize the company.

One of her first recommendations was that "managers must make decisions based on fact rather than intuition". Reorganization of Avon's management structure was also high on the agenda, resulting in trimming unnecessary management levels, going in for centralized manufacturing and other initiatives, and a more hands-on approach. Savings from various measures were re-channelized into advertising resulting in an increase in the advertising budget from $136 million in 2005 to $249 million in 2006.

At the annual conference in February 2007, executives were surprised to discover how 'out of touch' they had been with the essentials of their own company. The overall results of all these efforts were evident from the 39 percent increase in its share prices, showing that Avon was well on the path of recovery.CommentsAvon had committed the cardinal sin of being out of touch with the market. Even when facts and figures were showing the true state of affairs, Avon executives were still telling analysts that the company would record healthy growth.

In trying to globalize its operations, economies of scale were being overlooked, and overseas operations were being run quite independently of each other. All these shortcomings affected the bottom line.