1) What is JetBlue strategy for success in the marketplace? Doe the company rely primarily on a customer intimacy, operational excellence, or product leadership customer value proposition? What evidence supports your conclusion? # 1 Based on the company’s 10-K/A filing with the SEC, JetBlue’s strategy for success is product leadership with customer value proposition. As a matter of fact, this is JetBlue’s core strategy, “provides high-quality customer service at low fares primarily on point-to-point routes” (JetBlue, 2005).
This is also proven by the company’s focus on offering alternative choices to customers by serving “underserved and large metropolitan areas that have had high average fares” (JetBlue, 2005). As a result of these strategies, the company has one of the highest load factors (percentage of aircraft seating capacity actually utilized in a given period) in the United States. 2) What business risks does JetBlue face that may threaten its ability to satisfy stockholder expectations? What are some examples of control activities that the company could use to reduce these risks? 2 One of the most critical business risks that JetBlue faces that may threaten its ability to satisfy stockholder expectations if higher jet fuel prices which contributes to a majority of its operating expenses. The company can control or mitigate the impact of this risk by hedging or entering into contracts locking in on a specific future price for jet fuel. Another risk is foreign exchange risk. A portion of the company’s revenues are denominated in currencies other than the US dollar. This risk can be minimized by entering into foreign currency hedging contracts. ) How can the concept of unit level activities be applied to an airline? More specifically, what are 2 examples of unit level activities for JetBlue? What steps has JetBlue take to manage these unit level activities more efficiently. # 3 Certainly, the concept unit level activities can be applied to an airline. Examples of unit level activities are operating the airplane on the air which affects the cost of jet fuel and providing ancillary services to passengers which affect the crew’s salary.
JetBlue, to manage its jet fuel costs, has embarked on fare promos such as cheaper fares for passengers with no check in baggage – heavier load means higher jet fuel costs. On the other hand, it manages its labor cost by shortening the turnaround times of its airplanes. 4) How can the concept of batch level activities be applied to an airline? More specifically, what are 2 examples of batch level activities for JetBlue? What steps has JetBlue take to manage these batch level activities more efficiently. 4 The concept of batch level activities can easily be applied to an airline such as JetBlue. Two examples of batch level activities are the maintenance of the company’s fleet and training flight crew. JetBlue to manage its fleet maintenance and training activities just upgraded its fleet such that it does not have to maintain different types of aircraft which makes maintenance and crew training complicated. With a uniform type of aircraft, JetBlue’s crew needs only to be trained to fly a single aircraft. ) What is one example of a customer level activity and an organization sustaining activity for JetBlue? # 5 An example of a customer level activity for JetBlue is the maintenance of the company’s customer loyalty program – True Blue Flight Gratitude while an example of an organization sustaining activity for the airlines is its activities to comply with Federal Aviation Administration’s and other relevant government agencies’ rules and regulations. 6) Give an example of a transaction driver and a duration driver that could be used to assign fuel costs to a particular flight departure.
Which of the two activity measures would be more accurate and why? # 6 Given jet fuel costs, we can use the number of departures as the transaction driver for JetBlue while we can use the number of miles flown for an aircraft as the duration driver. I believe that the number of miles flows or the duration driver is the more accurate activity measure between the two drivers. This is so because the number of miles flown actually distinguishes that the number of miles flown by an aircraft directly affects its fuel consumption.
Moreover, the relationship of the number of miles flown and fuel consumption is much more direct than that of the number of departure and fuel costs. Reference References JetBlue (2005). 10-K/A. Retrieved August 31, 2009. Available at http://www. sec. gov JetBlue Airways Corporation as of December 31, 2004 and 2003, and for each of the three years in the period ended December 31, 2004, and have issued our report thereon dated February 7, 2005 (included elsewhere in this Annual Report