Academic journal article Journal of the International Academy for Case Studies

Jet Blue: A New challenger.(Instructor's Note)

Academic journal article Journal of the International Academy for Case Studies

Jet Blue: A New challenger.(Instructor's Note)

Article excerpt

CASE DESCRIPTION

The primary subject matter of this business policy case concerns the competitive strategy and background of a new, very successful airline--JetBlue Airways (JetBlue). The time frame of the case is from the firm's inception to the end of fiscal year 2002. The case has a difficulty level of four - five, appropriate for senior level undergraduates or first year MBA students. The case is designed to be taught in one seventy minute class and will require approximately two to three hours of outside preparation by the students.

CASE SYNOPSIS

JetBlue is a new, very successful low cost airline. In their first full year of operations (2001) they achieved a $32 million net profit on revenues of approximately $320 million. This is particularly notable in that the entire industry lost approximately $10 billion during the same year. JetBlue flies point to point routes--much like Southwest Airlines and offers distinctive service features--reserved seating, leather seats, seat back TVs (24 channels) and very customer oriented personnel.

JetBlue, at least superficially, appears to be an example of a Low Cost Leader. In their initial foray into the New York to Florida market they offered ticket prices about half of the existing competitor's ticket prices and a serious focus on customer convenience--including such things as no mandatory Saturday night stay to get the lowest ticket price. All tickets are sold online or through a unique Salt Lake City reservation system. They were the first airline to introduce electronic ticketing and their use of Information Technology is extensive. Jet Blue's founder--David Neeleman--is a young (43 year old) career entrepreneur with dyslexia. He is a practicing Mormon with nine children and prior to founding JetBlue had experience with two other airline startups.

INSTRUCTORS' NOTES

Learning Objectives

This case is designed to reinforce learning of the following strategic management (business policy) analysis and decision tools:

Porter's Five Force Analysis of Industry Competition

Financial ratio analysis

SWOT analysis

Generic strategies (Porter)

It is assumed that all of the above topics will have been covered with textbook readings or classroom discussion prior to asking the students to analyze the case. If these topics have not been covered in detail, they provide a real opportunity for the "black board panel" approach recommended by Harvard University.

TEACHING THE CASE

The starting point for this case is the classroom discussion of Porter's Five Force Model, SWOT analysis and Generic Strategies. Any good business policy text should cover all three of those concepts in some detail because they are so common to the strategy literature. Financial ratio analysis, is of course, a topic from the prerequisite management accounting or, perhaps, first course in finance. Surprisingly, non accounting or finance majors frequently need to go back and review, so it probably makes sense to talk about the common ratios and their interpretation as a classroom review item.

When assigning this case, we have found it helpful to require students--particularly undergraduates--to jot down their answers to the case questions and to bring those responses to class. All too often, it seems, some undergraduates "breeze" through the case and are woefully unprepared for a rigorous class room discussion.

When discussing the case in class, we feel that the "black board panel" approach to case organization works well. The panels for this case would likely be:

A SWOT ANALYSIS

The Five Force Model of Industry Competition

Strengths and Weaknesses of a Low Cost Leadership strategy and examples of differentiation on the part of JetBlue.

DISCUSSION QESTIONS

1. Go to the JetBlue web site (http://www.jetblue.com/) and the American Airlines web site (http://aa. …

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