Strategic Management - Strategy Formulation Analysis - Case Study Example

Academia Research d 26th April 2009-04-25 JET BLUE- CORPORATE STRATEGY JET BLUE IS LOW COST AND STANDARDIZED DOMESTIC AIRLINES WITH BESTOF FACILITIES & SERVICES. THE COST IS AFFORDABLE, SERVICES STANDARDIZED, FREE OF UNNECESSARY FRILLS. JET BLUE HAS BEATEN THE COMPETETION AND IS GOOD PROFIT EARNER EVEN DURING RECESSION. IT HAS POTENTIALITIES TO GO INTERNATIONAL BY VERTICAL & HORIZONTAL INTEGRATION THOUGH IT IS A COSTLY PROPSITION FOR THE COMPANY Corporate strategy of Jet Blue Three types of corporate strategy adopted by a company are 1.

Directional—Growth, Stability and Retrenchment. 2. Portfolio--products and business units.3. Parenting—,resource allocation and centralized management of business units. Directional strategies of growth, stability, and retrenchment   Three levels of directional strategies are Growth, Stability and Retrenchment. Growth strategies that include mergers, acquisitions and strategic alliances are usually considered to be healthy.  Jet Blue adopted the growth oriented strategy of concentration that brings growth within current product line that is low cost airlines.

Stability is considered to be mind soothing because no one will be able to penetrate into the business and damage the stability if the company is well anchored. Jet Blue made itself safer by adopting strategies of low cost and high value product, which the biggest of its competitors could not pierce into. The stability of the company made it to boldly adopt innovative measures to ensure better profitability in the midst of loss environment for others. (Dutta, Sanjib and Regani, Shirisha , Case 17, Jet BlueAirways Success Story P2 P9 .

Jet Blue adopted the concentric strategy by which diversification takes place by acquiring or developing new products or services closely related to its core business or technology to enter one or more new markets. Whatever Jet Blue did or adopt, these were centered round airlines business only and the service it provided to its customers. Jet Blue started concentrating on important and strategic moves from the very start of the business, the first and foremost being the airport to run through.

The company did not select the beaten track of using the domestic airports but the international JFK where they had eliminated the competition form domestic airlines because JKF was an international airport. (Dutta, Sanjib and Regani, Shirisha , Case Studt 17, Jet BlueAirways Success Story P4 Differences between vertical and horizontal growth as well as concentric and conglomerate diversification . Vertical integration is the method of adding to the product line or distribution channel. This strategy brings about greater economies of scale, which ultimately provides control on cost and reduction in per unit of expenditure and improved level of prices and distribution.

Jet Blue adopted several measures of cost-cutting important being reduction of the turnaround time of time of flights, which reduced the time spent on the ground. Jet Blue flights were ready for their next trip in about 35 minutes. Horizontal growth strategies focus on expanding the distribution of products or services to new geographic locations.  Horizontal integration consists of working with competitors or acquiring new products. Jet Blue adopted Horizontal integration to identify poorly served routs by other airlines and by concentrating on improvement of services in those rotes maintained better growth.

Jet Blue took up routes like West Coast, Northeast and Florida not taken up by competition. Jet Blue options to enter a foreign country .  There is opportunity for the company to diversify by acquisition or mergers with other international fliers and go international. It is very costly and not very common. Jet Blue at present is a successful and revenue earning company but cost involvement in acquiring an airlines company to go international is far bigger subject. Jet Blue used international airport New Yorks John F.

Kennedy to operate. They had best of planes bought on high cost. Their operation was one of the best. Manpower was well trained and customer-oriented. Other operational system and process like simplified check-in processes, electronic check-ins, simplified baggage handling, plans to expand to longer hauls and provide better flight experiences were available that could enable them to go international. Jet Blue is the first company to introduce safety measures of international standard. Dutta, Sanjib and Regani, Shirisha ,Airways Success Story P3 Background, P9 Looking Ahead Past, Present & Future Jet Blue was started in 1998 by David Neelemam from Salt Lake City Utah.

He had his initial career in sales. His career in airlines goes through travel agency which he started by chartering flights to transport prospective clients to the Hawaiian island. He later clubbed with June Morris and started charter operation in 1984 in the name of Morris air. He later started his own Jet Blue on the same business philosophy in which he introduced several expansions. Today the company is one of the most successful low cost companies to earn profits in the face of loss making big airlines.

Jet Blue has all the potentials to go international by vertical integration and acquisition. Dutta, Sanjib and Regani, Shirisha ,Airways Success Story P3 Background The low cost strategy may sometimes turn dangerous when recession might be over, and competitors matched the services of Jet Blue. Low margins then may not be productive because the company may not be able to provide comparable services at lower cost. Jet Blue can continue following the low cost high standard strategy use in the past successfully.

Differentiation strategy which made the company look different such as individual TV attached to each seat, leather cushioned sets, On line reservations and all those can be retained. Reservation system the company introduced can be extended for other Airlines as well. This will reduce the cost of manpower down. Dutta, Sanjib and Regani, Shirisha ,Jet BlueAirways Success Story P5,P9 The company already had the best planes in its fleet along with trained manpower. The company should easily enter into international flights with humble beginning and grow by introducing the best kind services they are known for providing.

With Jet Blue growing at a very rapid pace, its real success would be in replicating the same model successfully on a larger scale. Jet Blue does have comparable first class service, but can extend its services to other segment of passengers who have money and means to pay for luxury services with differential treatments. Reference: Ayse Kucuk Yilmaz The Corporate Sustainability Model for Airline Business EuroJournals Publishing, Inc. 2008 2.CorpStrategy www.geocities.com/lwudkewych/CorpStrategy.html 3.Chapter 6Corporate Strategy. www.eiu.

edu/~minnis/mgt4360/notes/concept_06.ppt