Introduction
Globalization, organizational structure, customer services and information technology are at the core of Jetblue Airways operation that serves as the company’s key success factors. As part of leadership and culture of the organization, Jetblue Airways should embrace efficiency and innovativeness in order to ensure continuous existence and maintain competitive advantage. Actually, Jetblue Airways was known to their excellent customer services provided by their skilled staff. Customer service is an important strategic resource. As seen employees of Jetblue Airways has become one of the most valuable assets to their success. Aside from the issue of service, automation is also important in Jetblue Airways because of lead-time, innovation, and quality service controlled automatically to perform on a consistent basis (Sebastiani et. al. 2006).
Functional and Dysfunctional Control Systems of Jetblue
Due to the aim of Jetblue Airways to implement and execute low operating costs, several key policies and operating practices can be identified, which corresponds to its inexpensive operating costs. Several of these operating practices and key policies serve as the airline’s value chain and generic strategy.
Michael porter’s 5 forces - Airline industry conducts more research and development (R&D) than any other industry because air transportation is dependent to considerable degree on the quality and performance of equipment produced for the airlines and airways operators, therefore R&D is a major long-term determine of national economic growth. With this, Porter’s 5-Forces Model is useful for understanding the context of the industry, in which the firm operates (‘Porter’s Five Forces’ 2006).
In investigating rivals’ operational processes like the Jetblue Airways, Jetblue Airways may learn of new and improved methods and processes that allow it to remain competitive and increase their competitive advantage. Thus, securing information across several environmental sectors may enable a firm to gain competitive advantage or maintain its market position. According to Davies & Lam (2001), although the five forces approach provides sound theoretical basis and allows systematic analysis, it has the disadvantage of not providing how to measure and weight the many different components which determine each of the forces. Also, it is only possible to make an unambiguous judgment on the strength of a force if all the indicators ‘point’ in the same direction. If indicators contradict each other, there is the problem of how to balance them.
The intensity of competitive rivalry is keen - Basically, the intensity of competitive rivalry is keen and it affects the business operation of the company. As justified, the company still dominates the low-cost Airline but due to the escalating prices of fuels, Jetblue Airways may possibly fall down. This means that even though Jetblue Airways is still on top of the competition among other low-cost Airline company, the company is not exempted to the impact of global inflation. The company enjoys its competitive position in the region and still trying to sustain its competitive advantage among its rivals. With regards to this, the company may still need to manage and sustain the quality of their services in order to gain trust to their customers.
The threat of new entrants is not strong – According to Davies & Lam (2001), barriers to entry are related to economies of scale, the existence of learning and experience curve effects, brand preferences and customer loyalty, capital requirements, cost disadvantages independent of size, access to distribution channels and government actions and policies. The economies of scale, for instance, implies that the more scale economies, the less threat of entry in that if entrant cannot quickly get large market share, it will have a major cost disadvantage. In the case of Southwest Airlines, the threat of new entrants is not strong since Jetblue Airways already established the position in the market. The new entrants in the market may possibly have difficulties to maintain their business because of the inflation rate which lessen the treat of new entrants.
The bargaining power of customers is strong – Airline businesses have a long history–a history rich in diversity, international scope, and, above all, continuous change and adaptation. These competitive changes have forced adaptations, and in general have improved the level and efficiency of the services offered by Jetblue Airways to clients, thereby increasing service quality. Coupled with these and extensive advertising of airline companies, the customers have become informed and becoming more demanding. They have required that airline companies meet their very specific individual needs, therefore showing that clients to this industry have shaped what it is right now. This means, on an overall note, that customers have a high influence on the workings of the airline industry, as they have the ability to affect it.
The bargaining power of suppliers is weak - Similar to the results of previous variable, the bargaining power of suppliers in Jetblue Airways is also high. Basically, the fuel supplies and airplane maintenance materials use in business operation is crucial for the company. And currently, due to global inflation and the increase of prices of these supplies, this becomes a treat in business operation of Southwest Airlines.
The threat of substitute is weak – In accordance to the company efforts in maintaining the quality of their services, the treat of substitutes are weak. Actually, substitutes give high influence to the company since substitutes they can make a company lose the clients it has. But in the case of Southwest Airlines, they make sure that the substitutes won’t give them too much problem. They do this by proving that the services they offer are of best quality and are better than substitutes. They also prove that their services are better against others by comparing and contrasting it with substitutes so that clients can know the difference. The company also offer services superior than substitutes so that they can attract more clients.
Conclusion
The strategies of Jetblue Airways focus more on the management and access of information rather the creation of irrelevant airline services. For this reason, Jetblue Airways has developed a unique set of guiding principles – simplicity, cost-efficiency and effectiveness which are the main features of their organizational structure. Total commitment to these principles makes the airline services of Jetblue Airways very user-friendly to its customers. Jetblue Airways was able to achieve a broad market leadership through various acquisition deals over the years even there is a stiff competition in the market. The strategies of Jetblue Airways are focused mainly on driving the growth of its airline services and improving the company’s financial performance. These innovations have also helped secure significant acquisitions and partnerships. And more importantly, these innovations have led to the release of the potentials of the company’s employees, thus building a quality performance- based culture.
On the other hand, Southwest Airlines’ strategies in the airline industry changed for the better at the start of the new millennium and began pursuing airline service differentiation. True enough, the differentiated airline services of Jetblue Airways were able to satisfy the needs of customers through a sustainable competitive advantage. This also justified that the bargaining power of their customer is high while the treat of their substitute and new entrant is low because of their extensive efforts in maintaining the quality of their services. Moreover, this allowed Jetblue Airways to desensitize the prices of their airline services and instead focused on the values that generated not only a comparatively higher price but also a better margin since these things could help to avoid business downfall.
References
Davies, H & Lam, P (2001), Managerial Economics: An Analysis of Business Issues, Financial Times Prentice Hall, Harlow, England.
Porter’s Five Forces (2006), Quick MBA, viewed 01 July 2011, from <http://www.quickmba.com/strategy/porter.shtml>.
Sebastiani, A Joseph, S Marotta, J Grattan, F & Nemic Michael (2006), Enterprise Models Project: General Motors, Western Michigan University, viewed 01 July 2011, from <http://homepages.wmich.edu>.
Credit:ivythesis.typepad.com
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