External and Internal Environmental Analysis Essay
External and Internal Environmental Analysis
External and internal environmental analysis is a critical component for an organization seeking to achieve its goals. The follow information within this paper presents a complete external environmental and an internal competitive environmental scan for JetBlue Airways. The information provided identifies and analyzes the most important external environmental factor in the remote, industry, and external operating environments. When addressing external environment it speaks to a set of forces and conditions outside the organization that can influence its performance. The most common forces include political, economic, social, technological, environmental, and legal (or PESTEL).
The paper will further identify and analyze the key internal strengths and weaknesses of JetBlue Airways. When addressing the internal environment it speaks to the key factors and forces within the organization affecting its operation. The internal strength and weaknesses will cover an assessment of the JetBlue Airway’s resources, their competitive position and possibilities within. Lastly the following will analyze the structure of JetBlue and how this affects organizational performance.
External Environmental Factors
For JetBlue external environmental factors cover political, economic, social, technological, environmental, and legal. The most important external environmental factors in the remote, industry, and external operating environment of JetBlue can be expanded through opportunities and threats. Opportunities encompass expansion, such as increasing routes and destinations within the U.S. Global expansion falls within expansion as well, while JetBlue has many successful partnerships with international airlines there is further potential abroad. Threats include fuel costs, advanced technology, and government relations. Fuel costs and advanced technology are almost synonymous.
The increasing price of fuel in turn increases operational costs. Advanced technology is a key factor in this space as well given new planes for example, have the technology to utilize less fuel in flight. Governmental regulations and legalities are another key threat for JetBlue. Airline regulations can increase expenses and potentially create inefficiency in operations in order to meet regulation requirements. Additionally, restrictions related to international trade, tax policy, and competition can thwart expansion efforts.
Internal Strengths and Weaknesses
JetBlue is a pro at utilizing its resources and structure. As such, JetBlue has proven to be efficient in its internal environment. Out of the physical and human aspects of the internal environment JetBlue focuses on human as the key factor. JetBlue views its employees and their skills as the key to a successful structure by emphasizing elements of loyalty, satisfaction, service quality, productivity, capability, and output quality. JetBlue reflects a culture of employees that understand how to retain customers and can perform under various situations with an equally varied consumer base. In addition to human capital, JetBlue uses physical assets to set them apart from the rest.
The airline fleet of JetBlue is very precisely selected. From its new Airbus A321 to its Airbus 320, JetBlue prides itself on comfort and luxury. Other perks offered by JetBlue include lower priced airfare compared to that of its competitors and in-flight entertainment options that succeed its competition. Internal weaknesses include a smaller base of destinations compared to its competitors, which could be viewed as a product of their smaller planes and perhaps weaker brand recognition given its newness in the airline market. The weakness can be strengthened with expanding their location/market base.
Major players in the U.S. airline industry include Delta Air Lines, United Continental, American Airlines, Southwest Airlines, and JetBlue Airways. In 2013 many consolidations reduced the number of top players, such as U.S. Airways with American West, Northwest with Delta, United with Continental, AirTrans with Southwest, and American with U.S. Airways. Those carries, including JetBlue and Alaska, account for more than 90% of the U.S. market share (Cederholm, 2013). With the number of competitors in times of low or moderate industry growth, the competition increases as each one tries to woo the consumer base. JetBlue is still the new kid so it is hard to say if its resources are inimitable. JetBlue’s low cost operations are interrelated to other activities in the organization like human resource management and technology development. If JetBlue were to reinforce competencies, with its efficient low-cost operations, it can find a sustainable competitive advantage making it a non-imitable organization.
JetBlue’s competitive advantage is built off of differentiation and cost leadership. Differentiation comes with a strong brand image. JetBlue provides this image through its customer service and various in-flight features such as increased legroom and entertainment options per seat. JetBlue achieves cost leadership through efficient operations. JetBlue’s new planes minimize fuel costs and increases revenue per flight. Not offering in flight meals allows for quick turnarounds and overall reduced costs. The differentiation strategy and its features do risk ease of imitation or differentiate ones brand past the point of consumer support.
If JetBlue continues to employ a combination of these strategies it will have an increased approach in outperforming its rivals. Superior performance will come through combined low-cost services with a differentiated offering as JetBlue does. As JetBlue moves onward, the extent to which it can maintain the integration of low-cost and differentiation will determine whether its competitive advantage is sustainable.
The structure of JetBlue is likely very simple compared to its counterparts. The highest of quality in customer service, one style of plane, a focus on environment, all this reflects its culture. With the human aspect being their highest priority they put a lot of thought into how they hire, train, set expectations, and monitor their employee base. JetBlue trains employees, provides compensation (likely more giving than the competitors), and equally provides empowerment among its employee base. JetBlue Airways seeks to hire and train great people (human focus), develop purpose, vision, and values. JetBlue operates on a strong organizational culture, where one listens to its customers and employees, cultivates leadership, and provided incentive.
The airline industry is exposed to upturns and downturns with economy trends. With that a growing economy creates a greater demand for air travel, whereas a decrease in the economy means reduced demand and intensified competition. JetBlue has managed to maintain a quality brand as a newer airline, in the face of some significant challenges, such as the tragedy of 9/11. JetBlue Airways new planes, competitively low fares, non-unionized labor, thus far an effective business model, and strong emphasis on the human element, it remains to provide a foothold in them market as a solid competitor regardless of its external threats and internal weaknesses.
Cederholm, T. (2013, September 3). Overview: External factors that influence the airline industry. Retrieved May 31, 2015, from http://marketrealist.com/2014/09/must-know-external-factors-influencing-airline-industry/ JetBlue | Airline Tickets, Flights, and Airfare. (n.d.). Retrieved May 25, 2015, from http://www.jetblue.com
University/College: University of Chicago
Type of paper: Thesis/Dissertation Chapter
Date: 24 September 2016
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