Jet Blue Airways External Enviornment

Slide 1

External Environment (Opportunities and Threats) A. Natural Physical Environment: Sustainability Issues

B. Societal Environment

C. Task Environment

D. Summary of the External Factors

EFAS Table

External Environment (Opportunities and Threats)A. Natural Environment1) Potential of more severe snowstorms like the one that hit in February 2007.

2) Severe snowstorms and other severe weather conditions exist globally.

External Environment (Opportunities and Threats)B. Societal Environment

EconomicTechnological Political-Legal Sociocultural

Societal Environment1. Economic Factors:a. Unstable economic conditions, the country is in a recession cycle but there are signs that show the economy is trending into the recovery stage which will increase consumer spending. (O)b. Increasing fuel costs will increase operating expense. (T)c. Bankruptcy protection allowing competitors to slash prices. (T) d. Increased number of LCCs flooding the market lowering fare prices. (T)

e. Increase in taxes by government. (T)

Societal Environment2. Technological Factors:a. Ability for employees to work from home using voice-over-Internet protocol cuts down on operating costs. (O)b. Paperless cockpits, automation processes, automatic check-in and electronic baggage tagging minimize labor costs. (O)c. Installation of bullet proof, deadlock cockpit doors. (O) d. Ownership of LiveTV. (O)e. Increasing Internet functionality decreasing need for business travel. (T)

Societal Environment3. Political-Legal

a. Government bailout programs allowing growth. (O)b. Potential for conflicts in the Middle East which result in fuel increases. (T)c. Global warming laws restricting the use of fuels and oil. (T)d. Terrorist threats on American soil like September 11, terrorists attack. (T)

e. Threats of union labor strikes(T)

Societal Environment4. Sociocultural a. Baby boomers retiring eliminating business travel and reducing their income therefore reducing leisure travel. (T) b. Economic recovery leads to business growth increasing travel demand. (O) c. Consumers demand on entertainment and media. (O)

C. Task EnvironmentThreat of new entrantsBargaining power of buyersThreat of substitute products or servicesBargaining power of suppliersRivalry among competing firmsRelative power of unions, governments, special interest groups, etc.

Bargaining power of Buyer - HighStandard product and servicesSeveral options available to customers with what airline they choose to fly.No switching cost customer need a reason to stayCustomer can research easily using the internetCustomer incentives such as True blue which allow customers to earn rewards, book flight in an easier/faster manner, and stay on top of the upcoming event/salesCustomer loyalty : flying round trip across the US two times will earn you a free reward

Threat from substitute High Threat is high : numerous other airlinesSwitching costs among other airlines are lowSwitching costs among other transportation option are high for everything but short distance (Train, boat, car etc)High existing barriers bankruptcy laws allow loss maker to continue operating

Bargaining power of suppliers HighOnly two suppliers Airbus & BoeingLittle/No chance to bargain with suppliersFuel suppliers have a considerable amount of power because they control how much money is spent on the fuel used to fly the planes. The volume of fuel supplied to the airlines is extremely important because JetBlue has prescheduled flights that require a certain amount of fuel.

Threat of new entrance - LowDeregulation made it possible for new entranceVery high cost or capital required for entry Low profit marginDifficult to differentiate product & servicesBrand image and loyalty is importantNew airlines must be seen as safe and reliableHundreds of gone defunct trying to compete against the large airlines

Competitive rivalry HighNumerous competitors like Delta, United and American In times of low or moderate industry growth, the competition gets fiercer as each one tries to nab customers from the other in order to keep their capacity utilizations at acceptable levelsThe industry is extremely sensitive to economic cycles

Relative power of unions, governments, special interest groups High

One of the first airlines to increase safety of aircraft after Sep. 11th.

First carrier to install bulletproof, dead bolted flight deck doors before FAA mandated use.

Relative power of unions, governments, special interest groups High

One of the first airlines to increase safety of aircraft after Sep. 11th.

First carrier to install bulletproof, dead bolted flight deck doors before FAA mandated use.

CPM MATRIX

JetBlueSouthwestAmerican airwaysCritical success factorsWeightRatingWsRatingWsRatingWsHuman resource0.1540.640.6020.30Price competitiveness0.1520.3030.4530.45advertising0.2040.840.8020.40International expansions0.1010.1030.3030.30Client/customer satisfaction0.1530.4540.6030.45Market capitalization0.1040.440.4030.30Financial position0.0530.1540.2030.15Technology/entertainment services0.1030.3030.3020.20Totals3.103.652.55

OpportunitiesWeightRatingWSThe demand of air travel increased0.1030.30Untapped international market0.1240.48Higher fares of other airlines0.1030.30Usage of airlines has been effected badly since 9/110.1030.30Use of latest technology for tracking the lost luggage of customers0.0540.20Increasing use of internet can help to reach and facilitate more customers 0.0840.32ThreatsWeightRatingWSThreats of union labor strikes0.0830.24Inflation and rising prices of fuel0.0740.28Security issues causing customers dissatisfaction.0.1030.30Competitors giving same services at very low prices.0.1030.30Increase in taxes by government.0.1020.20Total weighted score1.003.22EFAS TABLE