Todays Business Environment of JetBlue - Case Study Example

Today’s Business Environment of JetBlue Background JetBlue is a low cost career (LCC) based in New York and it was established in 2000. Since its inception during the unstable period following the September 11 attacks, the airline managed to grow and gain a competitive advantage over the other competitors. Its operations were key to its low costs since it operated Airbus A-320 aircraft which was easy to maintain. The airline operated secondary routes and offered first class service to its clients such as free snacks, beautiful aircraft with leather seats, also harnessed new information and communication technology to lower costs and it had a culture which significantly prioritised the interests of both the clients and the employees. Indeed, business has been growing as a result of the strategy but the problem is that it is not fully sustainable in the long run which has influenced the airline to seek leadership changes. Today’s business environment is characterised by an increasing intensity in competition, rapid technological changes as well as the ever-changing needs of the customers and the employees. Success in this dynamic and competitive environment depends on the extent to which the organisation develops, implements, monitors and evaluates its business strategy (Temtine, 2001:1 as cited in Roussow 2003). At times the organisations fail not because of the strategy but the execution of the strategy. Thus the aim is to develop a strategic management and competitive advantage plan in order to ensure the viability of the airline in the long run. Analysis Against all odds, JetBlue managed to gain a competitive advantage since its inception due to different reasons. Through embarking on value chain, the organisation managed to attract many customers since it was rated as one of the airlines offering best service. The concept of value chain entails that value chain entails that any business ought to separate its business systems into various activities which can add more competitive advantage to its operations (Robinson 1997). For instance, the aim would be to offer the customers with first class service which would be valuable in other activities to the customers. Part of the system of value chain involves identification of the customer needs as well as generation of sales. There would also be need to offer support to the customers after the services have been sold to them. The primary activities of value chain would also involve infrastructural development which can support the control systems as well as company culture. Offering customised services such as entertainment facilities is a noble idea which has greatly helped the airline to gain a competitive advantage. However, JetBlue recorded a drastic drop in profits in the last quarter of 2004. The rising fuel costs adversely impacted on the operating expenses of JetBlue and it could not increase its fares to recover some of the unprecedented costs pushed up by the rising fuel costs. The aviation industry particularly the LCCs was also witnessing a steady increase of competitors and the fares were generally lowered which negatively impacted on JetBlue’s operations. Industrial factors such as competition also negatively affected the operations of JetBlue which had been enjoying a competitive advantage since the period of the September 11 attacks in US. It had been enjoying the weakened state of the other airlines after the attacks to boost its own growth. Competitors such as United and US Air, United Airlines and Delta had been slashing their fares. JetBlue also experienced internal factors such as rising labour costs as it was attempting to maintain its aging aircraft. In a bid to maintain its differentiation policy, JetBlue continued to upgrade its aircraft through improving on comfort by removing some of the seats to expand the space. It also continued to offer complimentary snacks and beverages in unlimited quantities contrary to what the other LCCs were doing. Its new Embraer-190 aircraft contributed to its operational problems. The planes were delivered two weeks after schedule which resulted in the cancellation of several flights and it can be noted that the employees lacked familiarity with the aircraft which also impacted on the operations since some flights had to be rescheduled or cancelled. However, a close analysis of the operations of JetBlue shows that their advantages are not sustainable in the long run. While they are optimistic about gaining competitive advantage over the other rivals by virtue of offering differentiated products, the strategy does not broadly take into consideration the industrial factors which affect all the organisations operating in a particular business environment. The environment in which the organisations operate is ever-changing and measures should be put in place so as to ensure that the organisation keeps pace with these changes. There are certain unprecedented changes that are neither predictable nor avoidable hence the need to constantly scan the environment in which the organisation is operating. Recommendations Competitive advantage There are many successful business organizations in the market that are strategically so viable to such an extent that rival competitors can hardly exceed their performance. Such stable status can be achieved only when they apply certain strategies that can hardly be imitated by the competitors for long-term survival and stability, which is known as competitive advantages. In order to survive in the long term, Porter (1985) has argued that a firm needs to have sustainable competitive advantages. There are two sources of competitive advantage namely; cost advantage and differentiation. It is recommended that JetBlue should adopt the differentiation strategy for its long term survival. This is so because the aviation industry particularly LLC has many competitors hence the need to be unique. In a differentiation strategy, an organisation seeks to be unique from other competitors in the industry where it offers products or services that are valued by the customers. An organisation strives to select one or more products with attributes that are perceived as important by the customers and it attempts to uniquely position itself in the market in order to meet such unique needs. Disaster preparedness strategy It is also recommended that JetBlue should put contingent measures to cushion the severe effects of weather in the event that there are storms which can disturb the smooth flow of air traffic. Up to date weather forecasts would allow the organisation to notify the clients on time should there be any changes that may take place which can affect air traffic. In order to avoid an embarrassing situation, the above mentioned company should readily provide necessary information should there be any invertible changes which cannot be controlled by human beings such as weather changes. Indeed the change of weather is a natural phenomenon which cannot be controlled by any human being and it would be folly for such a reputable airline like JetBlue to lay all the blame on unprecedented weather changes. Given that weather can change at any moment, this information would be very important and it would be pertinent for JetBlue to gather all the necessary information about how other rival competitors cope with such a situation. Change leadership It is recommended that JetBlue should change its leadership given the experiences it encountered especially after 2004. Some of the problems encountered during this period can be traced back to the strategies adopted upon inception of the airline. There is need for new leadership breath a new lease of life into the organisation’s strategies. New leaders are likely to bring in new ideas which can redefine the goals and vision of the organisation. Implementation Implementation is particularly concerned with transforming ideas into action in order to achieve the set goals. Once the airline has identified the products and services which can be differentiated, the management has a role to implement this strategy and ensure that it is offered to the customers. The management also has got a role to train the employees to meet the standard expectations with regards to implementation of the above recommended strategies. Implementing a strategy requires sharing knowledge which calls for reorientation of all the people involved. This is followed by monitoring to check if all the strategies are going according to plan. There should always be room for proper adjustments so as to ensure that goals set in the plan are achieved. References Porter M.E. (1985), Competitive Advantage; Creating and Sustaining Superior Performance. New York: The Free Press. Robinson W (1997), Strategic Management and Information Systems, 2nd Edition, Prentice Hall, UK Rossouw D (ED), 2003. Strategic Management. Cape Town. NAE. Read More