JetBlue was established by David Neeleman in the later years of the 90s. It is an airline that offers various differentiated services at a low cost. Therefore, it follows the strategy of being the best cost provider aimed at giving its customers a high value for their money.
This report will seek to distinctly highlight how the company can be able to achieve its cost spot through the capacity to slot in nice-looking characteristics at abridged prices. Through the management strategic approaches undertaken, JetBlue has the capabilities and resources to expand its growth and profitability as will be evidenced by this report.
Analysis
JetBlue Airways serves 57 cities with approximately 650 daily flights throughout North and Central America plus 10 international flights. A low-cost airline requires high efficiency in its operations and it is very crucial to come up with very strategic measures so as to remain competitive.
The critical aspect lies in the fact that, as much as the organisation is aimed at maximising profits, it is also bound to meet its strategy of offering low-cost fares and also offer high quality services.
JetBlue has a mission of being a leading low-fare, low-cost passenger airline aimed at offering high quality customer service to underserved markets and customers looking for the best value in their flight. JetBlue owns the newest and advanced planes that are reliable, safe, fuel efficient, utilising advanced technologies and unique in multi-media entertainments.
Prior to 2007 during Neelemans tenure, JetBlue was prosperous and consistent in strategic moves producing the best in the airline industry. As a response to the 2007 ice storm, Neeleman instituted the Passenger Bill of rights while at the same time setting systems in place that could hold more reservations agents in future crisis times. The main strategic expectation of the move was in the intent of becoming Americas favourite airline.
Company Strategies of Management Growth at JetBlue
Strategic management is an aspect within any organisation that is very crucial for development and growth so as to realise considerable growth. According to Hunger and Wheelen (2), strategic management can be termed as set of managerial decisions and undertakings aimed at determining the long-run performance of the corporation in question.
The decisions and actions determining the effective long-run performance of a corporation are very critical in determining the eventual performance of the organisation. According to New York Times , an example of a problem faced by JetBlue is the winter of February 2007 which forced airlines to cancel flights or delay them leading to hundred of travellers stranded in airports across America.
JetBlue failed to cancel or delay flights until it was too late. This led to considerable losses amounting to 30 million dollars. This clearly shows the importance of prior anticipation of probable crisis and measures to undertake.
Key implementation strategies and the basic competitive-advantages are reinforcing the labour force productivity, outstanding quality examinations and innovations with prices that are fair and at the same time reasonably priced by many. Further, JetBlue strategises at providing low cost of the ticket system, as well as competent aircraft operation.
The main issues at hand for tackling are the rising fuel costs, lack of proper training to the employees, too main luxuries among the customers, baggage loss and complaints from customers. The rise of fuel cost has a direct or indirect effect on many other areas of operation. For example, rising fuel costs leads to increase in cost of tickets for clients as well as bag surcharges.
A notable plan by JetBlue to fuel growth would be adding a number of flights to existing routes, connecting new city pairs among the destinations that have already been served. Further, entering into new markets usually served by higher-cost, higher fare airlines would also mark a great move to ensuring sustainability and profitability in the airline industry.
On the same note, establishing viable partnerships and mergers would present a milestone achievement in the realisation of management growth. As a result of few aircraft in JetBlues fleet, an alliance would be a viable way for JetBlue to capitalise on the venture into the international market opportunities.
The culture of JetBlue whereby, the crew members have easy access to the, management crews should be well maintained by establishing a unit within the management that caters for strategic and upcoming crew issues.
With the global development and probable increase of commitments by the higher management teams, it would be very difficult for them to attend to every employees issues even via mails. Thus, to preserve the culture, a crew welfare department looking into issues from the crew members is imperative.
Credibility of the Strategic Measures
It is valuable to customers having their flights departure as planned.
(Hitt, Ireland and Hoskisson, 215).
JetBlue works towards providing superior services that meet all the needs of their customers in the air travel experience. Thus, to provide confidence among the customers, JetBlue ought to focus at ensuring that service delivery is of high quality.
The main issue of JetBlue specified in the aviation industry is competition. The aspect of cost leadership and differentiation are key strategies present for JetBlue to remain afloat amid the prevailing hardships.
Talking of establishing new flight destinations, JetBlue would determine the cities to include in the flight pattern by analysing the executive study information availed at the Department of Transportation. This will give an account of number of passengers, capacity and average fares over time charged in the regions.
The credibility of the strategy behind getting into alliances finds its basis in the fact that, with smaller aircrafts, it would be technically difficult for them to fly overseas. Therefore, by getting into alliances, its operations would be heightened and the strategic move of flying overseas realised.
Although fuel prices pose a point of concern, they affect the industry in the same way; thereby airlines have opportunities to mitigate the risks. The introduction of new flight routes would see JetBlue raise fares in these routes thereby supplementing on profit maximisation. Further, reduction of capacity and costs can be through selling of used fleets like the Airbus A320.
The strategic aspect of realising increased productivity can be through attraction of customers in sufficient volumes by featuring free internet sessions, comfortable seats with more legroom and unlimited catering services.
On the same note, the introduction of private massage parlours, manicure and hairstyle services for travellers, as well as children play areas like bouncing castles at the terminals would see high influx of customers attracted by the extra services they get as they await their scheduled flights.
Finally, for any organisation, being successful not only means being profitable and staying in business, but maintaining an organisational culture that is value based and of high commitment. The success of JetBlue ought to come from within, therefore, without a value based culture, it will suffer considerably.
This calls for strategic measures aimed at expanding the scope and coverage of service delivery while at them same time, maintaining every aspect within the company. This culminates into the fact that, the new strategic moves ought to maintain and improve the existing culture of JetBlue.
JetBlue used such information systems as the automotive key process (ticket sales and baggage handling), reservation system, system for managing planes, crews, and scheduling. The whole work of the company depended on informational technologies as it is impossible to avoid working in the airplane sphere where all processes are automatized (Laudon & Laudon, 2004).
JetBlue used the one type of plane from one vendor and was dependent only from Microsoft software. These circumstances helped JetBlues director to keep small staff and to spend 1.5% on informational technologies that was much lover than his competitors used (5%) (Laudon & Laudon, 2004).
The problem which appeared was the bad weather. Most of the companies delayed or even canceled the flies, but the managerial staff of the JetBlue Company decided to provide the customers with the services as the canceling of the planes would mean the income looses. The results of such actions were worse. The airplanes stuck and people had to stay there for a long time. The staff, because of its low number, could not cope with all the problems, they had to work much over their time. The shortage of food and drinks made the problem more terrible. The absence of connection between staff complicated the problem decision (Laudon & Laudon, 2004).
JetBlue used different systems and functions in its work, such as sales and marketing (identifying customers, making customers aware of the services and selling these services), finance and accounting (creating financial statements and managing cash accounts) and human resources, which was poorly organized (hiring employees and evaluating employees job performance). The usage of the informational technologies helped the company to automate a lot of business processes. Customer Relationship Management Systems was also provided in the company, but they were poor developed and implemented as well as knowledge of management systems (Laudon & Laudon, 2004). When the problem appeared, the JetBlues government tried to provide some changes, especially in the collaboration and communication systems, but it was too late.
The solution to the problem was as follows, the new software was installed, the information was not only delivered but also collected and saved, the staff was trained to the appropriate level, the new bill of rights was created to enforce standards for customer treatment and airline behavior (Laudon & Laudon, 2004, p. 47). There are some solutions which the company did not try to provide: the discounts for customers who suffered from the flights delay, the company had to create different departments which could help in organizing the strategies of how to improve the work of the company and to renew the expenses which were during the crisis.
JetBlue is not prepared for the future (even taking into consideration the changes), as the automatization of systems is not on the high level. The Customer Relationship Management Systems do not function properly, which also lead to losing clients in future (Laudon & Laudon, 2004). Not all staff of the company is trained adequately as even in the era of information systems human resources play the greatest role and their assistance in the working process is very important (Kavanagh & Thite, 2008). Considering the directors strategy it is obvious that he tires to limit the expenses by economizing on important things that may lead to more expenses in future
Reference List
Laudon K.C. & Laudon J. P. (2004). Management Information Systems. Pearson.
Kavanagh, M. J. & Thite, M. (2008). Human Resource Information Systems: Basics, Applications, and Future Directions. Sage.
JetBlue was founded as a small entrepreneurial company. Authority was centralized with the CEO having making almost all decisions. Delegation of power was almost non-existent.
The CEO basically controlled all operations at the firm. Since its inception, the CEO cultivated the entrepreneurial spirit which saw the company grow tremendously but at the same time reflecting the original image of a small low-cost airline. At JetBlue, the CEO has cultivated a culture of being unique; standing out from the competitors. Being a low-cost airline, it itself does not offer the uniqueness since there are others in the category. What made it unique was the high quality of passenger services and comfort.
The company CEO always insisted on three things: low-cost, great product and capitalization. With this experience, talent and expertise, Neeleman saw the company’s profit grow tremendously and this success may have contributed to the growth of the uniqueness culture. It is not easy to operate in the low-cost range and yet offer high quality services. This made the company’s strategy difficult to imitate and hence it stood out.
Strategic Change
Goals of the new Project
There are two major goals in this project: first is Enacting growth in a cost effective manner while, at the same time, maintaining the entrepreneurial culture. Second is to maintain the image of a low-cost airline that is Jet Blue.
Ethical issues and Social responsibility
Jet Blue’s business is in an industry where ethicality is a key issue to be considered direct interaction with the customers, calls for good moral values and integrity. The airline is an entity in itself and should be given a personality. The personality of the airline is reflected in its employees.
In the case study, when the CEO apologized to the passengers who suffered the impact of flight delays, he did so on behalf of the company. This shows that the company values its customers and will not wish to inconvenience them. The move to compensate customers and give them a free full round trip in addition to the profuse apologies was another way to bring out the ethical nature of JetBlue. It is in best Interest to accept one’s mistake and rectify than to point a blaming finger on someone else.
JetBlue knew this too well and hence had the courtesy to agree that the flight ought to have been cancelled like in the other airlines; and instead of blaming it on the bad weather, JetBlue apologized and made it up for the stranded customers. This goes along way in building customer trust and in return earns their loyalty.
As a social being, JetBlue faces the responsibility of ensuring the wellbeing of those that it interacts with. The first thing that is notable at JetBlue is the low cost of their flights. It has ventured into the unexploited routes and offered fairly affordable flights that encourage even non-flyers to enjoy the luxury of flying. Secondly, the services offered are reasonably prestigious considering the cost.
Classy refreshments, comfortable seats and individual seatback TVs is far too much for a low-cost flight. Again by letting the passengers communicate their feelings concerning the 2/14 flight delay publicly shows that the customers’ feelings are catered for. Another responsibility facing JetBlue is being profitable. The owners should boast of a return on their investments.
Strategic Approach
The project at hand is aimed to substantially cut down cost while increasing profitability and enacting growth. A strategic approach that aims at minimizing production cost yet offer appealing services to the customers will best suit JetBlue.
Looking at Porters generic strategies, the low cost leadership Strategy offers the best strategic measures that can help JetBlue achieve its goals. For instance, the decision by the New CEO to drop the idea of adding more jets to their fleet is a way of avoiding additional cost and this is suggested by Porter, 1985 in this generic strategy.
He further argues that access to a large capital investment at entry creates a barrier that may not be crossed by any other company. Initially, JetBlue started off with huge investment capital but now that it is recovering from a blow, it is like a fresh entry altogether and the new COO is strategizing and implementing ways in which to accumulate capital for an effective comeback.
The strategic plan to cut down the number of current flights and introduce a new route is an assured way reduces cost incurrence. By reducing the number of flights, we introduce some free hours of labor and idle jetliners. These can be transferred to the new route meaning that there will be a new route at no extra cost.
Decentralization
With the founder CEO out of the scene, and having been faced with great challenges and losses, it is time JetBlue modified its operational strategy. The company needs to break up from the old culture of centralization, and diversify the decision making process. Lewin’s Model of change management, unfreezing, changing and then refreezing can be used to implement the required changes.
The starting point is to break up the system that has been since inception; that is the lines of authority and power. Construct them once again but this time in a different form. The conventional hierarchical model of organization can be used in this case.
The company is small and this works in favor of the model since even the topmost managers will have an idea of what is happening in the lower levels. This hierarchy provides a means of power delegation from the topmost position to the lowest in the ranking. The CEO who is ranked highest in this case will have the overall decision making authority but there are other levels of decision making that can be made in the lower level authority. In this organizational structure, every leadership position is assigned specific roles.
This is a particularly important as it enhances accountability and stimulates the urge to work harder to achieve the goals that are expected of the leadership position held. During this change-over, there may be a lot of confusion as employees learn to work in the new system and it may cause a drop I productivity. The new organizational form may be implemented in the current design. This may make things easier for the employees when it comes to adapting to the change.
Now that change is underway, it is hard to determine how the new system will be welcome but one thing is for sure, there has to be some amount of resistance to this change. This resistance is manageable with a little effort. This is where leadership qualities are evidently required. Communicating effectively the underlying change; its benefits and challenges and the reason why it needs to be implemented prior to implementation is particularly important (McShane & Glinow 2009).
This may not be a means of avoiding resistance but a way of managing the inevitable resistance. Making every member of the organization a part of the change process by holding healthy discussions, listening to their views and sharing in their fears makes each individual support the change positively with the feeling that he is making it happen and it is in his favor. Such communication issues require a strong leader.
Delegation of power and Duties
Now that there are different levels of authority and power, delegation of duties comes into play. The question of grouping these duties appropriately and assigning them to the relevant department is quite challenging in many cases. However, the implementation of the organizational form should put into consideration the professional background of each person before assigning them to the different department.
The most effective way is to create departments based on expertise and professional or educational foundations. Advertising, for example, should be allocated to the marketing department together with issues such as when to offer discounts on trips and the like. In other words related tasks should be grouped together. When it comes to authority, orders should flow from above, however, every level of authority has its decision making capabilities. Each person should be answerable to the one directly above him.
The organizational goals can only be met if the parties involved work collaboratively towards them. However, with the delegation of authority, delegation came of duties as well.
This means that every player in the process has got a role to play towards achieving the organizational goal, (Wonnacott and Wonnacott, 1986) There are needs to be a benchmark against which achievements can be measured. The benchmarks can be created by setting departmental goals.
These will form a basis on which success will be measured. As an example, setting target sales may be a goal in the marketing department. The target can be based upon sale projections from previous years or the appropriate trading period. If they are not met, the person in-charge will be answerable.
This accountability will translate to commitment towards realizing the set goals and objectives. Also, to determine if goals are being met, performance is measured (Sumanth, 1984). Measures of performance are based on feedback collected from customers as well as deliverables made to stake holders. Performance is measured by the following metric drivers. (House of Commons Committee of Public Accounts)
Effectiveness = Actual output/ Expected output x 100%
Efficiency = Resource actually used/ Resources planned to be used x 100%
Productivity = Outputs/ Inputs this can also be expressed as
Expected productivity = Expected output/ Resources expected to be consumed or
Actual productivity = Actual output/ Resources actually consumed.
Project monitoring is done by the CEO who should feed the Board of Directors with all relevant information and feed back from the employees under his command.
Quality Control
Quality control should be implemented in three levels; first is the incoming Quality Control, In-Process Quality Control and Outgoing quality assurance. In our case, we are dealing with a service industry and the input is mostly in terms of ideas. The ideas presented by different stake holders should be thoroughly scrutinized to determine whether they are worthy implementing.
Secondly, if an idea is to be implemented, continuous analysis should be carried out on the implementation process to find out if it is likely to yield the anticipated results. Finally, the services and other deliverables should be of the highest possible quality.
In the control of quality of any business process, we need to look at all dimensions of quality. The first Dimension is experience. It has got the ability to translate a vision into a reality. Without experience, all visionary plans are bound to fail. Experience also brings about learning in an organization. An organization whose quality management process is done by a person with experience will acquire its own experience during the process and with time eliminate consultancy services.
The second dimension is measurement. This is a characteristic of quality that enables the assessment of thee fact that something was done and the degree to which it was well done. The third dimension is relationship and system thinking. Relationships are seen in using such tools as graphs and charts where one variable is plotted against another to see how one affects the other.
System thinking translates a two dimensional quality system to a multidimensional, integrated, dynamic and leveraged system. There are two types of thinking, dynamic and static thinking. Dynamic thinking covers the interrelationship among all the dynamically interactive parts of the system. Static thinking captures a single point in time of a process. It shows the process’s logical flow.
Static thinking shows the relationship between one part of a system and the other parts. The point wise view of a process is more suitable in showing how the system is working at that particular point in time. The fourth dimension of quality is Interconnectivity and Paradigm logic.
A system has three basic parts, inputs, processes and outputs all of which are interconnected to produce results. This fourth dimension looks at the interconnectivity in systems. That is how the parts of a system are connected and thus understand the guiding rules and principles that make the system not only work but work in a certain way. His dimension explains the logic that drives a system.
The last dimension of Quality is value sharing. In relational economics theory, the value of sharing defines that if a party A gives party B something that is more valuable to party B than it is to party A then they are better off together as a result of the trade. When it comes to quality, value sharing is used to mean that you should give the customer more than what he is paying for, (Winder, 1993).
Risks and Benefits
This strategic change process may face opposition from the management who feel that their power positions are threatened. Also, as noted earlier, employees are most likely going to resist this change especially for fear of the unknown.
Communication is the key tool that can help in management of these crises, (Robbins, 2003). The Board of Directors and shareholders may be opposed to the change in fear of failure but if properly discussed and the benefits of the new system in comparison to the shortcomings of the old one clearly defined, they will support it.
If the project is successful, the shareholder’s will be the first beneficiaries as the get good returns on their investments; employees may have pay rises and the security that comes with working in a successful company. Due to the diverse views in decision making process, more productive decisions are likely to be made and also with diversity in culture, come employee satisfaction as everybody fits in.
Conclusion
In conclusion, the project may be summarized as an organizational change induced by change in management and the need to be more profitable. Changes are inevitable, what is most important is how the change is implemented and the benefits that come with the new system in comparison to the old system do benefits out do the risk.
JetBlue airway is one of the companies that are making use, and benefiting from the use of web 2.0 applications. There was a time this company set a 21-hour blogging when they were opening their new terminal 5 at JFK airport.
Their main theme was to keep continuous posts to inform the world about the happenings in the new terminal. This blog was to target both the customers and the employees from all over, to keep them updated.
That blog exists up to date as a way of connecting both the internal and the external customers, and at the same time to show this company has adopted the new technology (O`Reilly). By use of web 2.0, David Neelman, the CEO of JetBlue was able to come up with a personal blog for the advantage of the JetBlue airways.
After taking a flight in JetBlue, David collected data from the customers that he used to post in this blog. Through this, JetBlue was able to interact with its customers directly, and was a very successful exercise that attracted many customers to this airline and acted as a lesson to other companies.
Consumer participation, social engagement, and motivation are crucial aspects in JetBlue. Through Flickr, JetBlue shares its events such as thanksgiving parties online to keep their customers engaged in their every move.
The web 2.0 has helped JetBlue to share its experiences with customers, to make them participate through comments and feel as part of the company. This is a great way of motivating the customers to maintain the company loyalty (O`Reilly). Through online sharing, the customers and the employees of the company feel honored and appreciated.
Through the exclusive eBay stores, JetBlue has interacted with its treasured customers through the most comfortable way without interrupting their activities. JetBlue believes in making the best use of technology to reach new customers and to retain the old ones through participation and socializing with them.
Through the applications of web 2.0, JetBlue has managed to maintain the customers’ loyalty even during the tough times. When customers realize the company is concerned about the services they receive, their level of motivation and loyalty to that company increases.
The customers determine the continuity of any business. The company cannot grow if it does not retain new customers as well as attracting more. Through their quality services, JetBlue manages to attract more and more customers as well as retaining the old ones (Doctorow 89).
Through different web 2.0 applications, customers have the freedom to make both positive and negative comments concerning the company services. The company also tries to market itself through these applications to attract more customers. JetBlue as well, conducts some events and parties to increase its fame through advertising its services.
Through these events, parties, advertisements on various media channels, and by use of web 2.0, JetBlue gathers many people to be part of their customers.
The consumer participation in any company brings some assurance to the company of customer retention. When customers participate and become involved in the happenings of the JetBlue services, the company gets a chance to know where to improve their services according to the desires of the customers (Howe).
JetBlue does outsourcing crowd through creation of open blogs for customers and other people to specify their likes, and for the company to get the desired people to work with. Through this, JetBlue manages to perfect its services to serve customers satisfactorily. When the company serves customers satisfactorily, a chance of attracting more customers is created, and the company becomes assured of growth.
When the customers grow the revenue of the company also grows making the company to benefit financially. The stronger the customers base of the company the better for the company. If the company can serve customers without them returning to the business, that is a sign of business downfall.
JetBlue airway is a successful company, whereby in some areas in United States, it has the greatest number of flights, and the largest load capacity. The charges of this airway are higher compared to other airlines, although it still attracts more customers due to its quality services.
To maintain its quality services, JetBlue ensures a regular turnover of its planes (Doctorow 87). The company has a policy of purchasing several new planes at the same time as a way of replacing the existing ones. The company believes in efficiency and comfort of new planes that are below fifteen years on air.
To maintain its policy, the company out of its high profits keeps on purchasing new planes for their customers. The company has benefitted from this policy through the effectiveness of the flights due to increased productivity.
On the other hand, purchasing of these planes at the same time, leads to a period when all of them will deserve repair and maintenance of the engine at the same time of the year. This becomes like a weakness as it causes some flight inconveniences. It is also expensive and time consuming for the company to do the maintenance of several planes at the same time.
It would be advisable if the company can purchase the planes one at a time, to create some intervals for maintenance. Through this, the company would be in a position to serve its customers effectively throughout the year.
Works Cited
Doctorow, Cory. The Branding of Billy Bailey. San Francisco: Running Press, 2003.
Howe, Jeff. The Rise of Crowdsourcing. 2006. Web.
O`Reilly, Tim. What is Web 2.0. New York: O`Reilly Media, 2005. Web.
JetBlue was established by David Neeleman in the later years of the 90’s. It is an airline that offers various differentiated services at a low cost. Therefore, it follows the strategy of being the best cost provider aimed at giving its customers a high value for their money.
This report will seek to distinctly highlight how the company can be able to achieve its cost spot through the capacity to slot in nice-looking characteristics at abridged prices. Through the management strategic approaches undertaken, JetBlue has the capabilities and resources to expand its growth and profitability as will be evidenced by this report.
Analysis
JetBlue Airways serves 57 cities with approximately 650 daily flights throughout North and Central America plus 10 international flights. A low-cost airline requires high efficiency in its operations and it is very crucial to come up with very strategic measures so as to remain competitive.
The critical aspect lies in the fact that, as much as the organisation is aimed at maximising profits, it is also bound to meet its strategy of offering low-cost fares and also offer high quality services.
JetBlue has a mission of being a leading low-fare, low-cost passenger airline aimed at offering high quality customer service to underserved markets and customers looking for the best value in their flight. JetBlue owns the newest and advanced planes that are reliable, safe, fuel efficient, utilising advanced technologies and unique in multi-media entertainments.
Prior to 2007 during Neeleman’s tenure, JetBlue was prosperous and consistent in strategic moves producing the best in the airline industry. As a response to the 2007 ice storm, Neeleman instituted the Passenger Bill of rights while at the same time setting systems in place that could hold more reservations agents in future crisis times. The main strategic expectation of the move was in the intent of becoming America’s favourite airline.
Company Strategies of Management Growth at JetBlue
Strategic management is an aspect within any organisation that is very crucial for development and growth so as to realise considerable growth. According to Hunger and Wheelen (2), strategic management can be termed as set of managerial decisions and undertakings aimed at determining the long-run performance of the corporation in question.
The decisions and actions determining the effective long-run performance of a corporation are very critical in determining the eventual performance of the organisation. According to New York Times , an example of a problem faced by JetBlue is the winter of February 2007 which forced airlines to cancel flights or delay them leading to hundred of travellers stranded in airports across America.
JetBlue failed to cancel or delay flights until it was too late. This led to considerable losses amounting to 30 million dollars. This clearly shows the importance of prior anticipation of probable crisis and measures to undertake.
Key implementation strategies and the basic competitive-advantages are reinforcing the labour force productivity, outstanding quality examinations and innovations with prices that are fair and at the same time reasonably priced by many. Further, JetBlue strategises at providing low cost of the ticket system, as well as competent aircraft operation.
The main issues at hand for tackling are the rising fuel costs, lack of proper training to the employees, too main luxuries among the customers, baggage loss and complaints from customers. The rise of fuel cost has a direct or indirect effect on many other areas of operation. For example, rising fuel costs leads to increase in cost of tickets for clients as well as bag surcharges.
A notable plan by JetBlue to fuel growth would be adding a number of flights to existing routes, connecting new city pairs among the destinations that have already been served. Further, entering into new markets usually served by higher-cost, higher fare airlines would also mark a great move to ensuring sustainability and profitability in the airline industry.
On the same note, establishing viable partnerships and mergers would present a milestone achievement in the realisation of management growth. As a result of few aircraft in JetBlue’s fleet, an alliance would be a viable way for JetBlue to capitalise on the venture into the international market opportunities.
The culture of JetBlue whereby, the crew members have easy access to the, management crews should be well maintained by establishing a unit within the management that caters for strategic and upcoming crew issues.
With the global development and probable increase of commitments by the higher management teams, it would be very difficult for them to attend to every employee’s issues even via mails. Thus, to preserve the culture, a crew welfare department looking into issues from the crew members is imperative.
Credibility of the Strategic Measures
“It is valuable to customers having their flights departure as planned.”
(Hitt, Ireland and Hoskisson, 215).
JetBlue works towards providing superior services that meet all the needs of their customers in the air travel experience. Thus, to provide confidence among the customers, JetBlue ought to focus at ensuring that service delivery is of high quality.
The main issue of JetBlue specified in the aviation industry is competition. The aspect of cost leadership and differentiation are key strategies present for JetBlue to remain afloat amid the prevailing hardships.
Talking of establishing new flight destinations, JetBlue would determine the cities to include in the flight pattern by analysing the executive study information availed at the Department of Transportation. This will give an account of number of passengers, capacity and average fares over time charged in the regions.
The credibility of the strategy behind getting into alliances finds its basis in the fact that, with smaller aircrafts, it would be technically difficult for them to fly overseas. Therefore, by getting into alliances, its operations would be heightened and the strategic move of flying overseas realised.
Although fuel prices pose a point of concern, they affect the industry in the same way; thereby airlines have opportunities to mitigate the risks. The introduction of new flight routes would see JetBlue raise fares in these routes thereby supplementing on profit maximisation. Further, reduction of capacity and costs can be through selling of used fleets like the Airbus A320.
The strategic aspect of realising increased productivity can be through attraction of customers in sufficient volumes by featuring free internet sessions, comfortable seats with more legroom and unlimited catering services.
On the same note, the introduction of private massage parlours, manicure and hairstyle services for travellers, as well as children play areas like bouncing castles at the terminals would see high influx of customers attracted by the extra services they get as they await their scheduled flights.
Finally, for any organisation, being successful not only means being profitable and staying in business, but maintaining an organisational culture that is value based and of high commitment. The success of JetBlue ought to come from within, therefore, without a value based culture, it will suffer considerably.
This calls for strategic measures aimed at expanding the scope and coverage of service delivery while at them same time, maintaining every aspect within the company. This culminates into the fact that, the new strategic moves ought to maintain and improve the existing culture of JetBlue.
This essay focuses on human resource management at JetBlue Airline as a startup company. It explores employment opportunity laws that may affect the company, recruitment method, selection process, appraisal, compensation, and discretionary (voluntary) benefits at JetBlue.
Three national equal employment opportunity laws that impact JetBlue’s hiring practices
Ann Rhoades must observe national equal employment opportunity laws in its hiring processes in order to protect the company against legal issues and attract best employees. First, Equal Pay Act prohibits discrimination on employees’ compensation. Moreover, the Act prohibits unequal pay that arises from sex discrimination. JetBlue must recognize that equal pay relates to all types of employee compensation, including bonuses, allowances, incentives, benefits, and overtime among others.
Second, the Equal Employment Opportunity Commission (EEOC) ensures that employers adhere to Civil Rights Act and Fair Employment Act in hiring processes. On this note, JetBlue would not discriminate potential employees on any other grounds other than individual qualifications. Prohibited discrimination covers cases based on color, race, sex, religious practices, sexual orientation, national origin, marital status, arrest record, memberships and affiliations, and unfair testing among others. Finally, the company must also consider the Fair Labor Standards Act (FLSA). The FLSA aims to protect employees’ rights on a minimum wage and maximum working hours. The Act strived to introduce fair pay for fair work for all men and women in employment. In addition, it also protects workers against working in poor conditions by ensuring general well-being, welfare, providing minimum conditions for living, health, and eliminating the use of substandard labor (Equal Employment Laws, n.d).
In addition, the company should also comply with other national laws like Rehabilitation Act, Immigration Reform and Control Act, and American with Disabilities Act. Compliance with these laws would ensure that the company maintains the law and conducts transparent hiring processes with integrity. Hence, JetBlue would be able to protect itself and potential employees.
Recruitment efforts
Internal recruitment method that JetBlue uses
Ann Rhoades can utilize internal recruitment method to get new staff for the growing JetBlue operations. Filling these positions internally at JetBlue would motivate employees to stay and grow with the company because of its rapid expansion (Mathis and Jackson, 2011). This would reduce employee attrition, attract, and retain the best talent in the airline industry. While several methods of internal recruitment exist, the HR department uses job posting.
Job posting and bidding entail the provision of current job openings in the company and employees respond to specific openings. The method allows employees to know current jobs available within the organization. The process also involves formal bidding for jobs as required in the labor agreement. The ultimate goal of job posting and bidding is to provide opportunities for current employees to grow with JetBlue.
External recruitment method that JetBlue uses
JetBlue also uses external recruitment strategies to attract the best talents. In other words, the company turns to outside sources for potential employees. Although there are several external methods, which are available to JetBlue human resource manager, the company uses poaching from other firms. This allows it to recruit the best candidates in the industry.
JetBlue has successfully used employee poaching from other airline companies. In fact, senior management team consists of employees from other airline firms.
Effects of these methods on JetBlue’s recruitment efforts
Both internal and external recruitment strategies present significant advantages to the company. For instance, the company externally recruited the best senior executives in the industry. In addition, the company sources employees from different geographical locations to reflect market dynamics. It hires the best employees externally to fill vacant positions. As a result, the company has been able to develop a team for growth.
Internal recruitment has ensured that the company retains the best talent and helps employees to grow their careers internally. This enhances employee motivation and performance standards. Overall, the company has used both external and internal recruitment methods to build the best HR department and people-centric organization based on previous experiences.
Personnel selection
Personnel selection interview process for mechanics and pilots at JetBlue
The company relies on structured and targeted selection process for all mechanics and pilots. JetBlue looks for mechanics and pilots who have knowledge in computer usages and software. In addition, these potential mechanics and pilots must reflect the potential to fit in the intended JetBlue culture. The company incorporates five values in hiring and selection processes of all pilots and mechanics. Moreover, these are the core principles, which all mechanics and pilots must observe at the course of their duties. These five core values include caring, integrity, safety, fun, and passion.
The company selected the best attributes it wanted to all its employees to possess. These attributes guided the entire selection of pilots and mechanics. The company translated these values in interviews and applied them to select the best pilots and mechanics. Potential recruits would provide their responses on how they would benefit the company once hired. JetBlue HR department has made selection and hiring of employees the most important part of organizational development because they want selected employees to align with the company’s culture and reflect the desired five core values.
JetBlue’s goals in utilizing this personnel interview process for mechanics and pilots
The company wanted to select the right people and leverage on its human resources in order to create value for customers. The company’s recruitment process involved testing candidates on core values. For instance, a mechanic had to identify when integrity was a problem in his previous place of employment. Employees who identified such core values correctly met the company’s goals of hiring the right personnel. On the other hand, JetBlue did not hire a potential pilot who was arrogant.
The recruits had to meet knowledge level in computer usages and cultural fit that JetBlue wanted. The company also wanted to ensure that it found the right pilots and mechanics who would fit within JetBlue culture. Cost of training such pilots was high, and the company had to get it right the first time. As a result, high rates of attrition could prove costly.
The company conducted an interview process in front of many executives. This ensured that all executives agreed on the candidate’s qualifications, experiences, and their goals and aspirations through a consensus before hiring decision. This process ensured that the company found the perfect fit for its strategy. JetBlue was looking for employees with great attitude. Overall, JetBlue’s selection process ensures that the company has the right employees, who would drive its growth strategy as a startup.
Three factors that influence a performance appraisal system
Performance appraisal is the strategy that organizations use to evaluate performances of employees and provide feedback about performance expectations (Mathis and Jackson, 2011). Performance appraisal provides developmental information for JetBlue on how it can improve future training, skill gaps, employee relations, and other areas related to performance. However, some factors have the ability to influence performance appraisal.
First, JetBlue is a relatively new company. As a result, it may lack a formal documented process of performance appraisal. Effective performance appraisal requires a formal documented process, which provides standardized method of assessing employees’ performances. A documented performance appraisal leads to consistency. This allows an organization to review and compare performances against targets in order identify areas of strengths and areas that require improvement. The ease of conducting performance appraisal affects its outcome and effectiveness.
General biases may also affect performance appraisal outcomes. Managers have abilities to skew any assessment. For instance, some supervisors may deviate from the norms of evaluation and provide extreme scores. Others would rate employees based on personal influences or provide highly fair scores. This could be due to leniency, an attempt to avoid confrontation with employees or simply out of a desire to please employees.
The supervisor may also base the process on recent performances, which leads to recency bias in the process. In addition, there are also opportunity biases, which may result in high or poor ratings. These are mainly factors beyond employees’ control. For instance, an economic downturn or poor products may affect sales performance of a salesperson.
Finally, teamwork may also affect performance appraisal. Employees who are not team players may score poorly on overall rating. On the other hand, employees who assist their colleagues could score high and get rewards for their team efforts and contributions. Teamwork may also be responsible for good rating among employees who have not demonstrated exceptional performances. JetBlue is a people-centric organization. Hence, teamwork is a critical part of performance appraisal.
360-degree feedback evaluation
Three advantages of using 360-degree feedback evaluation as a performance appraisal method
Ann Rhoades wanted to create a people-centric organization that focused on cost-effective services, fun, healthy working environment, and a productive workforce. The executive team wanted to maintain an organization that reflected customer value and in which employees would hold their autonomy. On this note, 360-degree was the best method for JetBlue evaluation and feedback tool (Williams, 2001). One critical advantage is that the 360-degree tool would provide feedback and opportunities for continuous improvement and process advancement. This is important for JetBlue as a startup that strives to change the airline industry.
A 360-degree evaluation can assess subjective aspects of employee functions, which may include teamwork, leadership abilities, and character. One must recognize that JetBlue executive team consists of a virtual team. Hence, teamwork and feedback are critical components of management that a 360-degree strategy would address effectively. The executive team would understand behaviors and competencies of all employees through a 360-degree tool.
A 360-degree evaluation provides outcomes, which the company would use to set its expansion plan, performance objectives, and training requirements.
A rationale for JetBlue utilizing 360-degree feedback evaluation as a performance appraisal method
A 360-degree feedback evaluation tool would help JetBlue to identify strengths and weaknesses inherent in performance and formulate methods of improving them. Effective assessment through 360-degree as a development tool can yield positive outcomes for the company. In a people-centric organization like JetBlue with a virtual executive team, employees have opportunities to provide their anonymous feedback about colleagues. Feedback is critical in providing insights for employees. Such insights can help employees to improve their performances, behaviors, and develop required skills for job success.
A 360-degree evaluation tool would also provide feedback on employee performance. However, it is not simple to structure the 360-degree tool to measure performance because the tool focuses on behaviors and skills than other aspects of management, such as job requirements and performance objectives. While managers and supervisors can appropriately address issues of employee performance during annual reviews, a 360-degree feedback tool can incorporate them as a part of management process.
However, there must be a clear communication on how employees would utilize 360-degree feedback. A clear communication would facilitate feedback among agents who are based at homes. A 360-degree feedback tool can facilitate communication in a flexible firm like JetBlue in which employees have customized HR practices and can choose their preferred benefits.
The company also favored a 360-degree feedback evaluation because it wanted to eliminate metric-oriented strategies of evaluation. As a result, it would be able to improve on customer services by using flexible approaches. Frequent visits facilitated feedback and communication in the organization.
Four employee-related factors that are essential in determining financial compensation
A number of factors are critical in determining financial compensation for employees in the airline industry. However, a focus on employee-related factors could help an organization to concentrate on important financial compensation factors. First, job performance remains a critical factor in determining employees’ compensation in all industries. Through compensating best performers in an organization, the company will retain the best talent and experience an increase in performance as other employees strive to receive good pay based on their performances. Higher performance pay could be in terms of performance merit pay, a percentage of the base pay, bonus, gift cards, and performance certificates. Some organizations prefer spot cash compensation strategy.
A second method that organizations use to determine employee financial compensation is based on qualification and skills. Skill based financial compensation offers best pay for highly qualified employees. This ensures that the company attracts the best talent and leverages on its employees to create competitive advantage (Beardwell, Holden and Claydon, 2004).
Third, competency based compensation relates closely with skill based financial compensation. Employees develop their competency levels with time as they acquire new skills from their job functions.
Fourth, seniority and experience are also factors that organizations use to determine financial compensation for employees. For instance, some organizations would consider the number of years that an employee has put in the company to determine their pay and promotion. Experiences among employees also determine financial compensation. However, JetBlue did not believe in associating pay with employee seniority.
In addition to the above employee-related factors that determine financial compensation, organizations also have distinct categories of compensations for trainees or fresh graduates, who may only bring fresh ideas, but not experience or competency to the company.
Discretionary (voluntary) employee benefits
Three discretionary employee benefits
The company is not under any obligation to provide discretionary benefits to employees, and it has the power to provide or not to provide such benefits to employees. Organizations may customize their discretionary benefits to meet their organization and industry unique attributes. However, the paper only covers few cases, which may be applicable in the case of JetBlue.
First, there is the 401K contribution plan. This is a popular contribution scheme among many organizations and employees. However, today, employees have absolute control over their retirement plans. Hence, the company no longer controls or has such responsibilities. Second, companies also provide stock option plan for employees as a way of retaining, attracting, compensating, and rallying employees to support organizational goals. However, JetBlue does not have this option just yet. Third, there is also profit sharing option as a discretionary benefit. Companies use profit sharing in the same manner as stock option plans. Some organizations may relate profit sharing to individual performances. This implies that only employees who meet a given performance standard may qualify for such benefits. Fourth, some organizations also offer high compensations than the industry averages.
Some forms of discretionary benefits also include childcare, financial services, emergency funds, scholarship, education benefits, and training benefits. These are benefits, which enhance employees’ lives, but they remain optional.
There is also high pay above the industry standards. However, this does not account for overtime because the law requires all employers to compensate for overtime. Employees may also receive benefits based on the nature of their occupations. For instance, employees who work in extremely risky environments may receive compensation. All these are discretionary benefits to improve employees working conditions.
How JetBlue, if at all, has incorporated the three discretionary employee benefits
JetBlue also provides discretionary benefits to its employees. For instance, the company has profit sharing options. This is a strategy of attracting, retaining, and motivating employees to improve performance. The company has also incorporated 401K plan for its staff.
The company offers medical benefits to all employees, including some part-timers in the outlying airports. It also provides double pay for all employees who work during holidays. JetBlue also covers costs of training its employees after hiring. Overall, the company has included many benefits in its compensation structure in order to attract, retain, and motivate employees. This reduces high employee attrition rate, which is common in the airline industry.
Conclusion
The essay has explored equal employment laws and their impacts on hiring. It also covers employment selection processes, especially for core roles like mechanics and pilots. It shows that structured selection and recruitment process can result in the best team for driving the growth of a startup. Organizations should also conduct performance appraisal and use effective feedback mechanisms in order to improve their processes. JetBlue uses HR strategies, which ensure that it attracts, recruits, and retains the best talents in the airline industry.
Human resource management at JetBlue shows that practices and employee management have changed over the last few decades. For instance, JetBlue has introduced several discretionary benefits to attract, hire, and retain best talents. This strategy reduces staff attrition in the company. It has also introduced flexible practices or customized HR practices to allow employees to have a wide range of choices in benefits.
The success of HR management in JetBlue shows that best practices and procedures in the HR department can result in rapid organizational growth. Hence, HR department becomes an integral part of strategic objective in the organization, particularly with regard to performance management and improvement.
References
Beardwell, I., Holden, L., and Claydon, T. (2004). Human Resource Management: A Contemporary Approach, (4th ed.). London: Pearson Education Limited.
Equal Employment Laws. (n.d). 2013. Web.
Mathis, L. R. and Jackson, H. J. (2011). Human Resource Management (13th ed.). Mason, OH: South-Western Cengage Learning.
Williams, A. (2001). Maximizing the Value of 360-degree Feedback. International Journal of Manpower, 22(7), 664 – 674.
The analysis shows that the company’s selling, general, and administrative (SG&A) expenses had a mixed trend during 2012-16. It is noted from Figure 1 given below that SG&A expenses increased from 2013 to 2015. However, they declined by 1.89% in 2016.
Figure 1. SG&A Expenses.
The net profit margin of the company increased in the five years from 2.57% in 2012 to 11.44% in 2016. It shows that the growth in the company’s sales was well supported by its cost management strategy and low fuel price. However, an increase in the fuel price can affect its profit margin. Furthermore, the proportion of operating expenses to sales also declined in that period. It shows that the company was able to control its expenses, which had a positive impact on its pretax income (Dess, McNamara, Eisner, & Lee, 2019).
Table 1. Net Profit Margin and Operating Expenses to Revenue.
2012
2013
2014
2015
2016
Net Profit Margin
128 / 4,982 = 2.57%
168 / 5,441 = 3.09%
401 / 5,817 = 6.89%
677 / 6,416 = 10.55%
759 / 6,632 = 11.44%
Operating Expenses to Revenue
204 / 4,982 = 4.09%
223 / 5,441 = 4.10%
231 / 5,817 = 3.97%
264 / 6,416 = 4.11%
259 / 6,632 = 3.91%
There are other ratios such as gross profit margin, non-operating income to EBIT, unusual expenses to EBIT, and interest cover that are also useful for evaluating the financial performance of the company.
Successful Period
The particular year in which the company reported net income growth of 138.69% was 2014 and its EPS (Basic) growth was 128.85%. In that year, the company had a significant non-operating income of $234 million which boosted its pre-tax income by 123.30%. The key area of success was that the company managed its SG&A expenses well in 2014 as they grew by only 3.59% as compared to 9.31% in 2013 (Dess et al., 2019).
Trend Analysis
The case analysis indicates that the operating margin of JetBlue was 19.65% in 2016, which was higher than its three major competitors. It shows that the company’s strategy to cut its costs and improve and modernize its fleet was effective to generate a higher profit margin. The financial analysis indicates that the company achieved sales growth every year, and it benefited mainly by low fuel prices. Moreover, it managed its operating expenses well to generate high profit margin during 2012-16. Another significant trend observed was that the interest expense reduced consistently over the five years (Dess et al., 2019).
Based on Porter’s Five Forces Model, it could be stated that JetBlue operated in a highly competitive market where the rivalry between companies was intense based on price, limited gate space, and mergers between airliners.
The company relied on low-cost A320 Airbus models to compete in the northern region of the US market. However, it means that the supplier had a high degree of power. Another strategy of the company was to offer better cabin experience with leather seats to its customers. It emphasized the importance of high-quality service to its customers at a low cost due to fearsome price wars and zero switching costs which made it very challenging for the company to compete with other airliners including American Airlines, Southwest, and United Airlines (Dess et al., 2019).
Reference
Dess, G., McNamara, G., Eisner, A., & Lee, S. (2019). Strategic Management (9th ed.). New York, NY: McGraw Hill.
Jet Blue was founded by David Neelman. Its foundation was laid based on the following motto ” bring humanity back to air travel”. He wanted to develop an airline that could provide a home-like ambiance to its customers at low fares. Leather seats, 24-hour live transmission on TVs, gourmet snacks, and a cozy den-like environment was provided to the customers. Neelman pioneered the induction of electronic reservation ticketing in the airline industry.
JetBlue’s first major venture was the John F Kennedy airport to take care of flights between New York and Buffalo. The rates offered were 70% less than competitor rates. This attracted the middle-tier income groups of the region. Soon Jet Blue expanded its domestic flight coverage beyond New York to Manhattan and other areas.
The expansion was very rapid and was central to JetBlue’s core strategy. From 2000 to 2007, JetBlue increased its domestic flight coverage from 12 to 53. The number of aircraft owned did not rise proportionally. Between 2005 to 2007, the company could add only 40 aircraft while the number of departures grew exponentially from 10000 to 196,594.
JFK airport became overcrowded and disturbances created due to weather could not be effectively handled. The worst blow came on 14th February 2007. The inaction and turbulence caused because of JetBlue’s inefficient operational service, the entire image of the company went down the drain. Its delay rate was 114% and it was ranked as the third most delayed airline in America. The company was incurring heavy losses. the company was not involved in too many diverse activities but the growth was very fast. (RovenPar J, 2008)
Competitor assessment
The operating costs of JetBlue were lower compared to competitors like Boeing. It offered low fares, served only snacks and other benefits at cheaper rates. The air crafts were new so the maintenance costs were relatively lost too. American Airlines and South West Airlines were incurring higher maintenance costs on the other hand. They were fined due to operational glitches in the aircraft. (Donnelly S, 2001)
JetBlue suffered due to technical glitches in its aircraft handling. When the oil prices rose and the government introduced new policies most of the other airlines went bankrupt while big wigs like US Airways opted for mergers with other companies. The focus of all airlines became energy conservation and they started coming up with various tactics to do the same. (Weil. N, 2007)
New airlines like Virgin America and Newair & Tours also came up. These airlines posed a direct threat to Jet Blue because their prime focus was also providing experience at low-fares. Their strategies were more realistically planned compared to JetBlue’s strategy. They aimed at increasing the number of flights by the increase in the number of aircraft. JetBlue failed to forecast this lag correctly.
Future strategy
Jet Blue needs to focus on various strategies to survive in the long run. It should find ways to cut down on costs, reevaluate how the company is using its assets, raise its airfares and grow in only certain target markets, offer strategic partnerships, and improve the quality of its services. It should not indulge in too many acquisitions. For now, it needs to sustain its current growth to ensure a higher rate of return in the long run. Some of the aforementioned strategies have already been implemented while some others need to be addressed immediately.
Works Cited
Donnelly.S, Blue Skies. Prorequest database. 2001.
Weil.N, What Jet Blue’s CIO learned about Customer Satisfaction. ABI Proform. 2007.
RovenPar. J, Jet Blue Airways. Manhattan College. 2008.
JetBlue used such information systems as the automotive key process (ticket sales and baggage handling), reservation system, system for managing planes, crews, and scheduling. The whole work of the company depended on informational technologies as it is impossible to avoid working in the airplane sphere where all processes are automatized (Laudon & Laudon, 2004).
JetBlue used the one type of plane from one vendor and was dependent only from Microsoft software. These circumstances helped JetBlue’s director to keep small staff and to spend 1.5% on informational technologies that was much lover than his competitors used (5%) (Laudon & Laudon, 2004).
The problem which appeared was the bad weather. Most of the companies delayed or even canceled the flies, but the managerial staff of the JetBlue Company decided to provide the customers with the services as the canceling of the planes would mean the income looses. The results of such actions were worse. The airplanes stuck and people had to stay there for a long time. The staff, because of its low number, could not cope with all the problems, they had to work much over their time. The shortage of food and drinks made the problem more terrible. The absence of connection between staff complicated the problem decision (Laudon & Laudon, 2004).
JetBlue used different systems and functions in its work, such as sales and marketing (identifying customers, making customers aware of the services and selling these services), finance and accounting (creating financial statements and managing cash accounts) and human resources, which was poorly organized (hiring employees and evaluating employees’ job performance). The usage of the informational technologies helped the company to automate a lot of business processes. Customer Relationship Management Systems was also provided in the company, but they were poor developed and implemented as well as knowledge of management systems (Laudon & Laudon, 2004). When the problem appeared, the JetBlue’s government tried to provide some changes, especially in the collaboration and communication systems, but it was too late.
The solution to the problem was as follows, the new software was installed, the information was not only delivered but also collected and saved, the staff was trained to the appropriate level, the new bill of rights was created to “enforce standards for customer treatment and airline behavior” (Laudon & Laudon, 2004, p. 47). There are some solutions which the company did not try to provide: the discounts for customers who suffered from the flights delay, the company had to create different departments which could help in organizing the strategies of how to improve the work of the company and to renew the expenses which were during the crisis.
JetBlue is not prepared for the future (even taking into consideration the changes), as the automatization of systems is not on the high level. The Customer Relationship Management Systems do not function properly, which also lead to losing clients in future (Laudon & Laudon, 2004). Not all staff of the company is trained adequately as even in the era of information systems human resources play the greatest role and their assistance in the working process is very important (Kavanagh & Thite, 2008). Considering the director’s strategy it is obvious that he tires to limit the expenses by economizing on important things that may lead to more expenses in future
Reference List
Laudon K.C. & Laudon J. P. (2004). Management Information Systems. Pearson.
Kavanagh, M. J. & Thite, M. (2008). Human Resource Information Systems: Basics, Applications, and Future Directions. Sage.
