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How to Increase the Profitability of the Company and Keeping the Company Working?

Autor:   •  January 11, 2016  •  Case Study  •  513 Words (3 Pages)  •  603 Views

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APPLIED MANAGEMENT JETBLUE’S CASE

FACULTAD DE CIENCIAS SOCIALES Y HUMANÍSTICAS

ESPOL

TEACHER:

María Cecilia moreno

ELABORADO POR:

JOSÉ ARÉVALO

             11/01/2016

  • Key Issue

How to increase the profitability of the company and keeping the company working?

  • SWOT

Strengths

Weaknesses

  • Customers loyalty
  • Lower fares than the industry
  • Offers many destinations to their clients
  • High revenues
  • Develop their own aircraft by their own university.
  • High operating expenses
  • High interest expenses
  • Low or none profitability to their shareholders.
  • The eighth biggest airline with a low market share of 4.2%
  • Lack of system and headquarters capacity to respond to situations like the storm.

Opportunities

Threats

  • Get airplanes with higher fuel efficiency
  • Making strategic alliances with other airlines
  • Demand growth
  • Open up new destinations
  • Offering their clients refunds and attendance in case something shows up
  • Rising jet fuel prices
  • The emergence of new competitors
  • Increase in wages policies
  • Change in government policies about participation of foreign companies on local companies’ equity.
  • Hostile takeovers.

  • Strategic Alternatives

  • Making strategic alliances with other airlines in order to split the costs and get profits.

Pros

Cons

  • Considerable decrease in our expenses.
  • New routes would be opened up easily.
  • They might get the know-how of our service.
  • JetBlue would lose its independence.

  • Open up new destination by itself where the fuel is cheaper and closing those routes that generate high operating cost and not big revenues.

Pros

Cons

  • Considerable decrease in our expenses in fuel and wages.
  • New routes would let us charge fuel at a lower cost.
  • We might lose clients from the destinations we close.
  • It might take a longer time to open up the routes than in an alliance.

  •  JetBlue might keep the destinations they have and charge more in their prices and reducing staff that they consider is not useful to reach their goals.

Pros

Cons

  • Considerable decrease in our expenses.
  • Because of our clients loyalty and a slightly increase on the prices, revenues will increase.
  • They have one of the most efficient staff in the industry, so they would give their service to the competition.
  • They should redesign the responsibilities of the leftovers jobs and it might take time to redesign it properly.

  • Recommendation

My recommendation for this case and try to fix the situation is to make the strategic alliances with other Airlines about the same size of us because we need to start generating profits for our shareholders inmediately. These alliances will help us to adquire inmediately new destinations without having develop an extensive logistic to decide with routes should be open and how much them will cost us and, obviously, it would take a long time. Unfortunately, we dont have the enough Budget to develop our own routes without having to share the revnues and taking the risk that the other Company might get the know-how of our service. Besides, firing many of our employees would decrease the level of attendance to our customers with is one of our outstanding points in our Company and we would let them free to go to other companies and help them to minimize the differentiation we have developed.

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