Case Study on "Jet Blue"

Case Study 4 pages (1197 words) Sources: 1

[EXCERPT] . . . .

Jet Blue

In recent years, the U.S. airline industry has become a difficult one in which to operate. The most significant concern for the industry is the highly volatile cost of fuel. Fuel is one of the biggest factor inputs for airlines in terms of cost. The cost of jet fuel fluctuates roughly in line with the cost of crude oil. For airlines, cost certainty with fuel is imperative for setting ticket prices at a profitable level. To that end, most airlines choose to hedge some or all of their fuel expense. Hedging means to guarantee a price or price range by means of purchasing a derivative such as a swap, collar, future or forward contract. While hedging locks in fuel prices, those prices could go either up or down. Thus, hedging is essentially a form of gambling wherein the company chooses to minimize downside risk, typically at the cost of losing out on upside.

Another trend in the airline industry of late has been the move to specialization. Most new, non-legacy carriers are choosing either to operate as discounters or as premium airlines. In the United States, the latter are few and far between and almost all new entrants are in the discount segment of the market, JetBlue included. The strategic response to this for airlines in the discount business has been to strive to cut costs as much as possible in order to compete. For legacy carriers, their cost structures are so high that they have trouble competing on price, so must also attempt to compete on other means such as brand recognition and route saturation.

A third trend in the airline industry recently is the economic crisis. This has reduced traveler volumes at a time when airlines are faced wi

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th substantial cost uncertainty as a result of volatile fuel costs. The economic slowdown reduces business travel because companies are reducing their travel budgets and using technology such as videoconferencing as a substitute. The slowdown reduces vacation travel because fewer people have jobs and those that do feel less secure about their financial future, typically a prerequisite for taking a vacation.

JetBlue's strategic intent is to pursue its low-cost strategy. The company believes that with careful cost control in its operations and strategic hedging of between 40-70% of its fuel costs, it can compete on price with any carrier. Jet Blue also hopes to compete on service. The company feels that it has sufficient financial strength to compete with other discount carriers that may not be able to sustain price wars or that may nickel-and-dime their customers too much.

JetBlue approaches its hedging strategy by hedging only some of its fuel costs. Like most airlines, the company is averse to hedging too much of its fuel exposure because of the risk that the price drops. Such an event would give their competition a cost advantage. JetBlue believes that its hedging strategy gives it enough cost control to set competitive prices while simultaneously giving it flexibility to gain from a decrease in the price of jet fuel.

The company's other major strategic initiative will be to expand services to the Caribbean. This region represents strong growth opportunities for JetBlue, in particular during the winter months when northerners head south on vacation. JetBlue is otherwise keeping its expansion strategy relatively conservative, due to the tough economic times making it difficult for the company to justify substantial route expansion.

JetBlue's main financial objectives are to make a profit and to increase revenues. Over the years, JetBlue has been successful in its profit-making endeavors. The company was profitable in 2009,… READ MORE

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Quoted Instructions for "Jet Blue" Assignment:

“

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

2. Discuss Jet Blue*****s strategic intent.

3. Discuss Jet Blue*****s financial objectives and whether or not the company has been successful in achieving this objective.

4. Discuss Jet Blue*****s strategic elements of cost, organizational culture, and human resource practices and evaluate whether each element provides the organization with a competitive advantage.

5. Discuss Jet Blue*****s strategies for 2008 and beyond and evaluate whether or not Jet Blue will be successful implementing these strategies.

The format of the report is to be as follows:

o Typed, double spaced, Times New Roman font (size 12), one inch margins on all sides, APA format.

o Type the question followed by your answer to the question.

o In addition to the 4-5 pages required, a title page is to be included. The title page is to contain the title of the assignment, your name, the instructor*****s name, the course title, and the date.

NOTE: One of the criteria that you will be graded on is the quality of your answers, the logic/organization of the report, your language skills, and your writing skills.

The assignment will be graded using the following rubric:

Outcomes Assessed

Â· Recommend effective business strategies based on an analysis of domestic and global operating environments, market dynamics, and internal capabilities.

Â· Use technology and information resources to research issues in strategic management.

Grading Rubric for Assignment # 1 ***** Crafting and Executing Strategy

Criteria

0

Unacceptable

20

Developing

30

Competent

40

Exemplary

1. Discuss the trends in the airline industry and how it may impact a company*****s strategy.

Did not attempt assignment or did not discuss airline industry trends and it impact on strategy sufficiently.

Discussed airline trends and the impact to strategy with 70 - 79% accuracy, thoroughness, and insight.

Discussed airline trends and the impact to strategy with 80 - 89% accuracy, thoroughness, and insight.

Discussed airline trends and the impact to strategy with 90 -100% accuracy, thoroughness, and insight.

2. Discuss Jet Blue*****s strategic intent.

Did not attempt assignment or did not discuss Jet Blue*****s strategic intent sufficiently.

Discussed Jet Blue*****s strategic intent with with 70 - 79% accuracy, thoroughness, and insight.

Discussed Jet Blue*****s strategic intent with with 80 - 89% accuracy, thoroughness, and insight.

Discussed Jet Blue*****s strategic intent with 90 - 100% accuracy, thoroughness, and insight.

3. Discuss Jet Blue*****s financial objectives and the related success.

Did not attempt assignment or did not discuss objectives and related success sufficiently.

Discussed some of Jet Blue*****s financial objectives and related success with 70 - 79% accuracy, thoroughness, and insight.

Discussed most of Jet Blue*****s financial objectives and related success with 80 - 89% accuracy, thoroughness, and insight.

Discussed all of Jet Blue*****s financial objectives and related success with 90 - 100% accuracy, thoroughness, and insight.

4. Discuss the strategic elements of cost, organizational culture, human resources practices and evaluate if each provides a competitive advantage.

Did not attempt assignment or did not discuss sufficiently the strategic elements of cost, organizational culture, and human resource practices. Also, did not evaluate sufficiently if the elements provide a competitive advantage.

Discussed some of the strategic elements and evaluated if the elements provide a strategic advantage with 70 - 79% accuracy, thoroughness, logic, and insight.

Discussed most of the strategic elements and evaluated if the elements provide a strategic advantage with 80 - 89% accuracy, thoroughness, logic, and insight.

Discussed all the strategic elements and evaluated if each element provides a strategic advantage with 90 to 100% accuracy, thoroughness, logic, and insight.

5. Discuss Jet Blue*****s strategies for the future and the successful implementation.

Did not attempt assignment or did not discuss strategies for the future and successful implementation.

The strategies of the future were discussed with 70 - 79% accuracy, thoroughness, and insight.

The strategies of the future were discussed, with 80 - 89% accuracy and appropriate information was discussed.

The strategies of the future were discussed with 90 to 100% accuracy and all appropriate information was identified and discussed clearly.

6. Clarity

Did not complete the assignment or explanations are unclear and not organized.

(Major issues)

Explanations generally unclear and not well organized.

(Many issues)

Explanations generally clear and/or organized. (Minor issues)

Explanations very clear and well organized.

(Added helpful details.)

7. Writing ***** Grammar, sentence structure, paragraph structure, spelling, punctuation, APA usage.

Did not complete the assignment or had 8 or more different errors in grammar, sentence structure, paragraph structure, spelling, punctuation or APA usage. (Major issues)

Had 6 - 7 different errors in grammar, sentence structure, paragraph structure, spelling, punctuation or APA usage. (Many issues)

Had 4 - 5 different errors in grammar, sentence structure, paragraph structure, spelling, punctuation or APA usage. (Minor issues)

Had 0 - 3 different errors in grammar, sentence structure, paragraph structure, spelling, punctuation or APA usage.

*****

How to Reference "Jet Blue" Case Study in a Bibliography

“Jet Blue.” A1-TermPaper.com, 2010, https://www.a1-termpaper.com/topics/essay/jet-blue-recent-years/778751. Accessed 6 Jul 2024.

Jet Blue (2010). Retrieved from https://www.a1-termpaper.com/topics/essay/jet-blue-recent-years/778751

A1-TermPaper.com. (2010). Jet Blue. [online] Available at: https://www.a1-termpaper.com/topics/essay/jet-blue-recent-years/778751 [Accessed 6 Jul, 2024].

”Jet Blue” 2010. A1-TermPaper.com. https://www.a1-termpaper.com/topics/essay/jet-blue-recent-years/778751.

”Jet Blue” A1-TermPaper.com, Last modified 2024. https://www.a1-termpaper.com/topics/essay/jet-blue-recent-years/778751.

[1] ”Jet Blue”, A1-TermPaper.com, 2010. [Online]. Available: https://www.a1-termpaper.com/topics/essay/jet-blue-recent-years/778751. [Accessed: 6-Jul-2024].

1. Jet Blue [Internet]. A1-TermPaper.com. 2010 [cited 6 July 2024]. Available from: https://www.a1-termpaper.com/topics/essay/jet-blue-recent-years/778751

1. Jet Blue. A1-TermPaper.com. https://www.a1-termpaper.com/topics/essay/jet-blue-recent-years/778751. Published 2010. Accessed July 6, 2024.