They don’t have efficient control system that can oversee from designing and planning to manufacturing along with suppliers. For example, Dreamliner was aimed to reduce the financial risks involved in a $10 billion-plus project for designing and developing a new aircraft and reduce the new product development cycle time. But with the trouble getting enough permanent titanium fasteners, Boeing has to highly dependent on a few suppliers. This will inevitably increase cost. With bad communication, various manufacturers can’t design a proper software program for test the nose
They also included a share of the costs associated with running the hubs at two airports, such as ticket agents, building charges, baggage handlers, gate charges, etc. Suppose that the revenue collected on the typical United flight from San Francisco to Washington does not cover these costs. Does this fact imply that United should discontinue these flights? Explain. Based on the book when there are competitive markets such as airlines, a company certainly needs to look at costs and revenue very closely.
Based on the summary table provided in the text book – the first thing that jumps out is how disproportionate the labor volume/number of employees is to the number of aircraft that the company has. The company has to make some tough decisions in streamlining the labor force to reduce the cost of labor and make itself more competitive with its peers in an industry where competition is stiff at the least. In addition to this the idea that they will be using more regional jets e.g. Mesa Air in medium markets may help alleviate operating costs that are also currently very high. US Airways may also want to look into the option of merging/working with one of the more successful low cost carriers as a strategic partnership 2.
In addition, airplanes re-orders were being rescheduled. Rising fuel prices consolidation - Cost pressure – resulted as there was a decline in the industry as a whole. Increasing competitive intensity – Airbus, Boeings competitor, offered the same airplanes at cheaper costs. 2. What is the e-Enabled Advantage?
If the servers are attacked by hackers customer information may be stolen including product designs and financial data. If Aircraft Solutions customers lose the confidence they have for Aircraft Solutions then they will not do repeat business with Aircraft Solutions an even worse possibility is that customers may start publicly expressing their displeasure in the service they received from Aircraft Solutions. These customers may also have rights to obtain satisfaction for any losses through the legal
High cost of entry into industry Potential Competitors: Low - Rivalry among existing firms is intense, which affect the profits to be low. It¡¦s unattractive to the potential competitors. - High initial investments and fixed costs such as lease a fleet of safe and reliable aircraft, negotiate reasonable gate access and landing fees as well as high labor and fuel costs. - There are the price competitions in the airline industry, which some major airlines offer the low-price fares that is very difficult for new entrants to gain enough profit to cover the investment and fix cost in this industry. Rivalry among Existing Firms: High - Currently, there are many major airlines such as Delta, United and American that exist in the same market as Jet Blue.
Recent debates and news concerning air travel has created a deep-seated fear of this mode of transport, and more and more people are being made aware of the consequences of having firm airport security. Busy and popular airports and international airlines try to come up with the best measures to make sure that air travel is safe and reliable as well as quick and convenient, but people still have solid reservations and opinions about this modern day concern. There was a time when security checks at airports were merely a formality. Metal detecting equipment and body searches were minimal and people didn’t need to worry about their right to privacy, and more specifically, being asked to take their clothes of during their travels. Airports were not security-free but at the same time they did not feel like entrances to maximum security prisons.
Highly competitive industry 2. Unsuccessful implantation of growth strategy 3. The hiring of competent staff who maintain the culture of JetBlue JetBlue’s strategy of maintain customer excellence and providing needed low cost service is a definite way to stay up above the competition, customers want a low cost airline that gives them what they need in terms of pricing as well as destination. JetBlue, will be in a position of failure if a growth strategy is not in place to increase capital and foresee methods in which to cover debt and make a profit “ Achieving our growth strategy is critical in order for our business to achieve economies of scale and to sustain or increase our profitability” (JetBlue,2004) Gating is an important issue that must be looked at, due to the fact it could limit their sales “We will also need to obtain additional gates at some of our existing destinations. Any condition that would deny, limit or delay our access to airports we seek to serve in the future will constrain our ability to grow” (JetBlue, 2004).
If I were apart of the JetBlue team I would have build systems that were prepared for disasters like this. Having a system that could accommodate high call volumes is very important for any business. It was because JetBlue didn’t use technology to their advantage in the first place that these problems occurred. If they would have set up application for tracking luggage before the company started, they wouldn’t have taken 3 day to short out bags. Being prepared for the worst is always an advantage for any company.
And the costs of complying and some additional costs such as audit fees can be very high, especially for small firms. Furthermore, if the IPO fails JetBlue will lose money. This makes the IPO process time consuming and expensive. Finally, the future benefits of being listed are not guaranteed. After weighting the costs and benefits of going public, in my opinion, private placement would be a better idea for JetBlue to raise funds particularly following the terrorist attacks of September 2001, because private placement is less expensive, less time consuming and do not need for registration, and at the same time, JetBlue can also raise funds quickly through private placement.