...JetBlue, Cases in Advanced Human Resource Management Jet Blue case study Western Governors University Abstract This paper includes discussions of the processes JetBlue initially utilized to staff their start-up airline, and the challenges faced in obtaining the desired employees to achieve the five core values which are: Safety; Caring; Integrity; Fun; and Passion. Company leadership and human resources began by working together to establish the company values in order to identify the traits desired for employees. Descriptive discussion of the recruiting efforts used, laws that needed to be considered; selection processes; appraisal systems; compensation; and benefits, are included within. When staffing the new airline began research needed to be done in advance of any recruitment efforts could starting. Hours of work were invested prior to the first interview in order to prepare to find the ideal candidates. National employment laws and statutes had to be identified in order to comply with the requirements of each. Three examples of such laws are The Equal Pay Act of 1963; The Age Discrimination in Employment act; and the 1990 Act of Americans with Disabilities (ADA). The first National Employment law that we will discuss is the “Equal Pay Act of 1963” (Mondy, 2008, p. 59). This law forbids the employer from paying employees of opposite genders different amounts, if the same job is performed; they have equal skills and...
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...Jet Blue Airways case study Introductіon Twelve years ago JetBlue was a breath of fresh air in an airline industry bogged down by the ways of legacy carriers that were unconcerned with customer service and known for price gouging. JetBlue was revolutionary. With a fleet of new planes -- all Airbus A320s, which cut down on repair costs -- a staff that worked primarily from home, and 40% of ticket sales executed online, the company emerged as the premier low-cost carrier focused on providing extra-friendly, efficient service (LaMotta, 2010). Jet blue was a discount airline carrier that offered passengers low fares; operated point-to-point systems; used two types of aircraft; served only snacks; and maintained quick turnaround times at airports. Its operating costs were low, especially compared to those of other major U.S. airline companies. In the first quarter of 2008, for example, JetBlue’s total operating expenses amounted to 12.77 cents per revenue passenger mile, compared to 20.95 cents per revenue passenger mile for Delta and 13.85 cents per revenue passenger mile for Southwest (Michael, 2010). According to (Enterprise, 2011) JetBlue Airways is a low-cost passenger airline that provides customer service primarily on point-to-point routes. The company primarily operates in the US. It is headquartered in Forest Hills, New York and employs 12,532 people. The company recorded revenues of $3,286 million during the financial...
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...Executive Summary Going public’s main advantage is to provide liquidity and access to raise capital in the future, however, it can lead to problem in control of management and is expensive. There are Free Cash Flow techniques and relative valuation techniques that we can use to value Jetblue’s share, however we are going to use the Free Cash Flow technique for this case as this is an IPO and the company had no history whatsoever that we can rely on except by using its similar competitor statistics and assumptions to value Jetblue. In conclusion, we have calculated that using Free Cash Flow technique, the share price is $57 and therefore the current range of $25 to $27 is underpriced and that they should increase it to $56 to $58. Case We can use several valuation techniques to value JetBlue’s shares which are the Free Cash Flow to Equity (FCFE) method, Free Cash Flow to Firm (FCFF) method and relative valuation techniques such as price earnings ratio (P/E), EBITDA multiple, price cash flow rations (P/CF), price book value ratios (P/Bv) and price sales ratio. An Initial Public Offering is when a company initially offers shares of stocks to the public, which is also known as going public. An IPO is the first time the owners of the company give up part of that ownership to stockholders. The advantages of Initial Public Offering are associated with liquidity, monitoring, credibility, access to markets and to be able to raise capital in the future. On the other hand, the disadvantages...
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...Jet Blue In February 2000, JetBlue started flying daily to Fort Lauderdale, Florida, and Buffalo, New York, promising top-notch customer service at budget prices. The airline featured new Airbus A320 planes with leather seats, each equipped with a personal TV screen, and average one-way fares of only $99 per passenger. JetBlue was able to provide this relatively luxurious flying experience by using information systems to automate key processes such as ticket sales (online sales dominate) and baggage handling (electronic tags help track luggage). Jet Blue prided itseft on its "paperless processes." JetBlue's investment in information technology enabled the airline to turn a profit by running its business at 70 percent of the cost of larger competitors. At the same time, JetBlue filled a higher percentage of its seats, employed non-union workers, and established enough good will to score an impressive customer retention rate of fifty percent. Initially, JetBlue flew only one type of plane from one vendor: the Airbus A320. This approach enabled the airline to standardize flight operations and maintenance procedures to a degree that resulted in considerable savings. Chief information officer Jeff Cohen used the same simple-is-better strategy for JetBlue's information systems. Cohen depended a1most exclusively on Microsoft software products to design JetBlue's extensive network of information systems. (JetBlue's reservation system and systems for managing planes, crews, and scheduling...
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...Advanced Human Resources Case Study: Assessment Code: HMP1 Student Name: Mari K. Norris Student ID: 000248937 Date: 5/7/2012 Mentor Name: Brianna Koucos Between 1999 and 2004, I resided in Fairfield, CA and worked at an International Real Estate Company that gave me the opportunity to do a lot of traveling from the Bay Area, all over the US and Internationally. Prior to that, I had done quite a bit of traveling with my Mother, who believed that a well rounded child grew up with lots of different cultural experiences. As a young adult I loved to travel, but getting there was the part that I did not like. Airlines, with not much differentiation between each one, would crowd you into a plane like cattle. It never failed that the person in front of you would lay their seat back and you would have a complete stranger in your lap for a few hours or you would feel that you were so crowded in that you would have to try to make yourself as small as possible, just so that you did not get ran over by the refreshment cart or have the person next to you touch you for the whole flight. What was lacking, and still is in most cases is customer service and respect from the company for both their employees and their customers. Because of that, you can imagine my elation in 2000 while traveling down Highway 101 in the Bay Area, to see a billboard for a new airline that believed in customer service. They stated that their planes had more legroom, that their people were friendlier...
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...JET BLUE - CASE STUDY EBS 5103 STRATEGIC MANAGEMENT Analyzing Strategic Management Cases “JETBLUE AIRWAYS” UFUK CANDAR FOYA BAHÇEŞEHİR UNIVERSITY Table of Contents INTRODUCTION 3 BRIEF SUMMARY 3 ENVIRONMENTAL ANALYSES: 4 VALUE CHAIN ANALYSIS: 10 FINANCIAL ANALYSIS: 13 SWOT ANALYSIS: 19 SPACE MATRIX: 21 TOWS MATRIX: 24 QUANTITATIVE STRATEGIC PLANNING MATRIX (QSPM): 25 CONCLUSION: 26 INTRODUCTION Within case analysis assignment, the JetBlue case is analyzed strategically in this document to set answers for following basic questions: * To make a set of recommendations based on the analysis, * To describe exactly what need to be done for success, * To explain why the proposals will solve the problems, * To suggest how best to implement the proposed solution After giving a brief summary regarding the case of JetBlue has and drawing a general picture of the company, several strategic analysis methods will be used to analysis JetBlue. BRIEF SUMMARY The economic downturn in the late 1990s and 9/11 terrorist attacks in 2001 have severe consequences on airline industry. The demand for air travel dropped and led to decrease in flights and revenue. The security costs increased. Airlines significantly reduced capacities. As a result low-cost strategies with new route services became important. Rebounding of economy by the end of year 2003, the demand for business and leisure travel was expected to grow in low-cost competition...
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...JetBlue Case Study What does it take to make money in this industry? - High load factor per Available Seat Mile (ASM) - High fuel usage - Low fuel cost - Labor utilization - On-time arrivals - Maximize Revenue per ASM - Reduce Cost per ASM - Minimize DOT (complaints) - Minimize Bags lost - # customer JVD - Be in the top JD Power or other customer surveys/reviews - Maintain a excellent Airline safety record: # of flights/safe landings - Be profitable - Maintain a high Stock Price - Maximize Airplane Utilization (hrs) - Consistently providing high service standards at in a cost-effective manner. What is jetBlue’s strategy? - JetBlue is positioned to capture business from small and medium-sized businesses as well as leisure travelers - “We’re a new kind of low-fare airline, with deep pockets, new planes, leather seats with more legroom, great people and innovative thinking. With our friendly service and hassle-free technology, we’re going to bring humanity back to air travel.” - “The strategy was to use new airplanes, offer great personal service, create a state-of-the-art revenue management system, and a single class of service with fares averaging 65% less than the competition” - Differentiation by: o being adequately capitalized from the onset o owning new aircraft and not leasing o tailoring customized employment packages to employees vis-a-vis a standardization approach o “improve the passenger experience with technology, and would ...
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...JetBlue case study Strategic Objectives A strategic objective of an organization is a broadly defined objective which the company has to reach to make its strategy success. We can distinguish eight major groups of these goals: Financial resources Physical resources, Human resources, Market standing, Innovation, Productivity, Profit requirements and Social responsibility.1 Although JetBlue had some issues during their operations they mostly succeeded in reaching its strategic goals. In 1998 as the company was established by Neeleman, he raised 160 million dollars of capital from investors like Western Presidio Capital. This was a really strong start for a new firm in the aviation industry. In 2001, just three years after the company’s start, they were growing so rapidly that the possibility of an IPO came into consideration to fund its expansion plans. After the terrorist attacks on 11/9 it had to be postponed. The U.S government granted the Aviation industry a $15 billion bailout and JetBlue also gained its part from it so they could go on with their expansion plans.2 After the events a lot of airliners went bankrupt as the people were afraid of flying. JetBlue quickly identified those routes which were abandoned by the bankrupted firms, so for example they started to fly every day on the week to Florida. This helped them to stay and succeed on the market. As an innovation JetBlue always used new aircrafts and flew to airports which were considered...
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...JetBlue Case Study Just 2 years after its inception in April 2002, JetBlue Airways remained profitable and was growing aggressively despite the terrorist attacks that occurred in September 2001. Together with co-lead manager Morgan Stanley, the JetBlue board was ready to set a price range, which they initially decided should be $22-$24, but facing excess demand, they increased the price range from $25 to $26. However, most of the group anticipated huge demand. In 1999, CEO David Neeleman announced his business plan and was convinced it would be successful on account of his strong commitment to innovation in people, policies, and technology. He attracted David Barger, former VP of Continental Airlines, as JetBlue’s president and COO and John Owen, former VP and treasurer of Southwest Airlines, as JetBlue’s CFO. He had strong support by many, especially the venture-capital community. He swiftly raised $130 million in funding from high profile firms such as Weston Presidio Capital, Chase Capital Partners, and Quantum Industrial Partners. The main problem facing JetBlue managers was the pricing policy. Morgan Stanley reported that the deal involved a severe excess of demand. Given this fact, some thought that the current pricing range was too low and that by raising the price, it would instill confidence into the market. In contrast, some thought raising the price would endanger the success of the deal. Management thought a successful offering involved not only raising short-term...
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...JetBlue Case Study 3/7/2013 1. A need is a state of felt deprivation that includes basic physical needs for food, clothing, warmth, and safety; social needs for belonging and affection; and individual needs for knowledge and self-expression. Marketers did not create these needs; they are a basic part of the human makeup (Kotler and Armstrong, page 6). A want is the form human needs take as they are shaped by culture and individual personality. Wants are shaped by one’s society and are described in terms of objects that will satisfy those needs (Kotler and Armstrong, page 6). A demand is human wants that are backed by buying power (Kotler and Armstrong, page 6). JetBlue customers demonstrate the physical need for snacks and beverages by showing the company that they enjoy the free snacks and beverages that are being offered by the company. The customers may want the brand name snacks and beverages and the demand is demonstrated by the customer having the buying power to purchase Dunkin Donuts coffee, Terra Clue Chips and Chocobilly cookies. JetBlue customers also demonstrate the need to be comfortable while flying by wanting extra leg room and more space. The demand is demonstrated by the customer having the buying power to pay an extra $10 dollars to reserve one of JetBlue’s “Even More Legroom” seats, which offers more space and a flatter recline position. Another example JetBlue customers demonstrate is the need to be entertained while on a flight in the event...
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...Adam Scott Jet Blue Case Analysis MKT 320 5/25/13 Statement of Problem On February 14, 2007, a winter storm in the northeast snarled JetBlue operations nationwide. In New York at JFK International Airport, hundreds of passengers were left stranded on multiple planes for up to 10 hours. This service interruption resulted in JetBlue paying out millions of dollars in passenger refunds as well as employee overtime and other costs associated with the winter storm. In addition to the financial impact on the airline, and more importantly, JetBlue’s stellar reputation for excellent customer service received a massive hit resulting in a loss of confidence by investors and a plummeting stock price. Can JetBlue maintain the company culture and achieve the goal of excellent customer service as the company grows larger, while reviewing operations to prevent a similar debacle from recurring? Summary of Facts The founder of JetBlue is David Neeleman. He has helped establish a number of regional air carriers that were eventually purchased by larger airlines. He served a brief stint at Southwest airlines where it was noted that his fast paced style did not fit in with the slower more cautious corporate culture. In 1998, David Neeleman with a team of investors and airline industry executives founded a company called New Air Corporation. The firm later changed its name to JetBlue in July of 1999. The new airline’s goal was to provide high quality service and amenities at a low cost...
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...1. WestJet upgraded first while JetBlue observed. JetBlue created a backup failover system and hired a temporary call center for help. The impact was that WestJet experienced (as a result of not being patient and not waiting) significant disruptions as JetBlue’s transition and implementation went smoothly. WestJet had to compensate passengers as a result of the erratic transition. 2. The precautions were taken by JetBlue in this case. They observed WestJet’s implementation and learned from their actions. Unlike WestJet, JetBlue also hired temporary call center workers to handle basic calls. Other actions taken by JetBlue include reduce and consolidating flights, as well as waiting for a slow travel period before implementing the upgrade. These precautions helped by allowing JetBlue’s experienced operators to handle the more complex calls during the upgrade (WestJet customers experienced long waits and travel reservation difficulties). Because of this, JetBlue only had to use its failover system twice and did not have to offer its passengers compensation to its customers, like WestJet did. 3. Upgrade advantages would include having many new features immediately available with faster future implementations and lower cost platforms as well as more support for mobile platforms. However, there would be some disadvantages that would come with upgrading also. Significant upfront expenses, and significant disruptions if not done in the proper manner are just some...
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...1. How could JetBlue have better communicated with its internal stakeholders across the country on Valentine’s Day and during the days that followed to enhance its image with customers? Stakeholders have their own perception before they begin their interaction with the organization. Usually, the perception is based on what they have read, been told, and what they have been exposed to. JetBlue needed to have ensured the quality of each and every interaction. Updating their web site accordingly, placing automated phone calls telling people that their flights have been canceled and that they were being given a free flight voucher. They needed to make sure that they emphasized how sorry they were and that it is due to the weather, but they were doing everything possible to alleviate the situation. 2. Should the corporate communications team at JetBlue have arrange for CEO David Neeleman to appear on the national television news and talk show circuit following the crisis? What might be the potential benefits and risks to the company’s reputation? The corporate communications team should have arranged for David Deeleman to appear on the talk shows and news shows. He could be potentially pitted against the customers that were unhappy about it, and he may interact with people who are motivated by emotion. It is how he handles the situation. He should have gone on those shows and apologized, spoke about the weather conditions, emphasized it. Also owned up the JetBlue’s mistakes...
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...Assignment #1 Case #3 Jet Blue Airways Daisy L Kenney Professor Kimberly Anthony BUS599 Strategic Management July 10, 2011 Case #3 Jet Blue Airways 1. Discuss the trends in the U.S. airline industry and how these trends might impact a company’s strategy. The trend in US airline industry is to use price discrimination and differential pricing to increase the revenue of the airlines. For this there are computerized programs that help increase the revenues of the airlines. Further, the current trend among airlines is to reduce operating costs. The current trend in airlines industry is to lease aircraft and avoid entering into long term contracts so that the financing remains modes. Finally, the current trend of alliance among airlines especially that of code sharing or selling the tickets of another airlines. Overall, the airline industry is very competitive, turbulent and volatile. 2. Discuss Jet Blue’s strategic intent. The strategic intent of Jet Blue Airways is to improve its profitability, revenue optimization, Improved capacity management, cost reduction, and delivering high quality service. Since its IPO, Jet Blue Airways posted its first loss in 2005. There is a difficulty in the strategic intent of Jet Blue Airways. It...
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...Jet Blue Airways: Analysis of a Company The airline industry serves not only as a means of transportation to millions of people on a daily basis, but also a huge customer service industry. Customers analyze every aspect of air travel from the food services offered and convenience of completing business transactions, to the airline’s safety results and ratio of on-time departures. Many customers become brand loyal, where others will do business simply based on price. It is also vital to note that, like any company, brand perception plays a large role in the success or failure of a company within the airline industry. Because of the number of individuals impacted when a flight goes awry, it only takes one incident to completely destroy an airline company’s credibility for safety, which can also lead to reduced sales and ultimately profit. Airlines must also now adapt to the world of technology as many consumers are looking for airlines that provide high tech amenities, such as paperless boarding passes and the ability to use cell phones while in flight. To keep their customer’s content, airlines must use their Research and Development teams to meet these expectations or they will lose those customers to competition. At the creation of Jet Blue, its Chief Executive Officer, David Neelman, wanted to “combine the low fares of a discount airline carrier with the comforts of a small cozy den in people’s homes” (Thompson, Strickland, Gamble, 2009). He wanted leather seats...
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