SM Final Exam Sample 2

Dear MBA students,
ESLSCA 52D
As agreed please find attached the Final Term Exam, you should:
1. Answer ALL questions, Part1 & Part2
2. Use your text book, extra text book, the internet, and other references.
3. DON'T discuss or share, by any means of communication, with any other class students (even for those who are
Otherwise will be counted as 'Plagiarism'
4. It is NOT ACCEPTED to just copy and paste from any source, your interpretation and write-up is a MUST to g
5. Reply with your file .xls, of your answer to ME ONLY, to [email protected] .
6. MUST include your first name and family name WITHIN the file name (ex.: DrAshrafElsafty-E-SM-52D-Fina
7. Use BLUE color for your text answers, or just fill in the shaded blocks.
8. Email directly to ME ONLY no later than agreed deadline day and time 12th December 2017, 10:00 pm, o
9. Please give every single question the needed high care, as grades are NOT equally distributed among que
As I mentioned before for the mid-term and during our classes, we are studying to learn, and we are now leveragi
So please focus on your time and answers to learn while filling the exam.
I hope I did met your expectations, and now you as a researcher, you will be responsible for what you have learne
what you already gained for the welfare of the country and your people.
Hope you gained the ultimate scientific benefit from the course and me as well.
May Allah bless you all.
Kind Regards,
Dr. Ashraf Elsafty
Adjunct Assistant Professor, Strategist
Strategic Management & Research Methods.
ESLSCA, MIU, Riti/MsM cairo outreach.
44D
Dr. Ashraf Elsafty
Strategic Management
ESLSCA 52D
Final Exam
Part ONE
Q
1 The first firm through a strategic window can occupy a propitious niche and discourage
competition (if the firm has the required internal strengths).
A. true
B. false
Niches do not change over time.

A. true
B. false
The TOWS Matrix illustrates how the external opportunities and threats facing a
particular corporation can be matched with that company's internal strengths and
weaknesses to result in four sets of possible strategic alternatives.
A. true
B. false
SO strategies attempt to take advantage of opportunities by overcoming weaknesses.

A. true
B. false
5
Business strategy focuses on improving the competitive position of a company's or
business unit's products or services within the specific industry or market segment that
the company or business unit serves.
A. true
B. false
Differentiation is the ability of a company or business unit to design, produce, and market
a comparable product more efficiently than its competitors.
A. true
B. false
A cost leader's lower costs allow it to continue to earn profits during times of heavy
competition.
A. true
B. false
One risk of a cost leadership strategy is that the technology may change.
A. true
B. false
One skill required of the cost leadership strategy is a strong marketing ability.
A. true
B. false
10
A licensing arrangement is an agreement in which the licensing firm grants rights to
another firm in another country or market to produce and/or sell a product.
A. true
B. false
11
A value chain partnership is a loose alliance with several distributors for the short-term.
A. true
B. false
12
Corporate parenting is the coordination of cash flow among units.

A. true
B. false
13
Vertical integration is going backward on an industry's value chain.

A. true
B. false
14
Concentric diversification is growth into unrelated businesses.

A. true
B. false
15
The concept that advocates management's attempt to find a strategic fit between external
opportunities and internal strengths while working around external threats and internal
weaknesses is called
A) environmental analysis.
B) position analysis
C) strategic evaluation
D) objective analysis
E) situational analysis
16
The particular capabilities and resources a firm possesses and the superior way in which
they are used is called
A) distinctive competencies.
B) differentiating capabilities.
C) situational proficiency.
D) core competencies.
E) distinctive characteristics.
17
In the development of a SFAS matrix, the first step is to
A) enter the ratings of how the company's management is responding to each of the
strategic factors.
B) calculate the weighted scores.
C) list the most important EFAS and IFAS items.
D) indicate short-term for the duration.
E) enter the weights for all of the internal factors.
18
Business strategy focuses on :
A) ensuring that the company maintains the existing market share that it has historically
enjoyed.
B) improving the competitive position of a corporation's products or services within the
industry or market segment served.
C) providing adequate shareholders' return on investment.
D) preventing the competition from gaining a competitive edge by undermining their
marketing plan.
E) recovering the competitive lead by using all available resources that the company can
provide.
19
Which of Porter's competitive strategies recommends that a company emphasize a
particular buyer group or geographic market and attempts to seek a cost advantage in its
targeted segment?
A) differentiation
B) cost leadership
C) differentiation focus
D) competitive advantage
E) cost focus
20
The kind of strategic alliance in which a company forms a strong and close long-term
relationship for mutual advantage with a key supplier or distributor is the
A) joint venture.
B) licensing agreement.
C) value-chain partnership.
D) mutual service consortia.
E) holding company.
21
While selecting your 'Growth Strategy', Merger is the same as Acquisition.
A) True
B) False
22
In the Boston Consulting Group's Growth-Share Matrix, the relative competitive position
of a product, division, or corporation is defined as
A) its market share.

B) its gross sales divided by its market share.
C) its market share multiplied by that of its nearest competitor.
D) its market share divided by that of the smallest other competitor.
E) its market share divided by that of the largest other competitor.
23
According to the BCG Growth-Share Matrix, the key to success is
A) effective management.
B) competitive positioning.
C) innovative initiative.
D) industry leadership.
E) market share.
24
Which of the following is NOT one of the limitations of the BCG Growth Share Matrix?
A) It is too simplistic.
B) The link between market share and profitability is questionable.
C) Growth rate is only one aspect of industry attractiveness.
D) There are too many aspects of overall competitive position included.
E) Small competitors with fast-growing market share are ignored.
25
According to the BCG Growth Share Matrix, cash cows are market leaders typically at the
peak of their product life cycle and are usually able to generate enough cash to maintain
their high share of the market.
A. true
B. false
26
According to the GE Business Screen, the competitive strength of a product is based only
on its market share.
A. true
B. false
Thanks
Dr Ashraf Elsafty
#VALUE!
Answer ONLY using A or B or C or D or E

DON'T DELETE OR HIDE ANY OF THE ROWS or COLUMNS
Just
answer
here, on
grey cells
only
B
A
A
B
A
C
C
B
B
B
LY using A or B or C or D or E
OR HIDE ANY OF THE ROWS or COLUMNS
IT IS A MUST to .. Add needed justification for your selection
A firm's management must continually look for a strategic

window where a unique market opportunity is availabe for a
particular time.
Niches can also changes, sometimes faster than a firm can adapt
to that change.
These possbile four sets of strategic alternatives are:

1. SO Strategies: use strengths to take advantage of opportunities.
2. ST Strategies: considering strengths as a way to avoid threats.
3. WO Strategies: take advantage of opportunities by overcoming
weaknesses.
4. WT Strategies are defensive and act to minimize weaknesses
and avoid threats.
WO strategies attempt to take advantage of opportunities by

overcoming weaknesses.
Research shows that business unit effects have double the impact
on overall company performance that do either corporate or
industry effects.
Cost Leadership is the ability of a company or business unit to

design, produce, and market a comparable product more
efficiently than its competitors.
Because of its lower costs, the cost leader is able to charge a lower
price for its products than its competitors and still make a
satisfactory profit. Having a lower-cost position also gives a
company or business unit a defense against rivals.
As technology may change leading to lesser costs for competitors

to do the same product and threatening this company that follows
the Cost Leadership strategy.
One skill required of the Differentiation strategy is a strong

marketing ability. Differentiation is aimed at the broad mass
market and involves the creation of a product or service that is
perceived throughout its industry as unique.
Licensing arrangement is one of the Cooperative Strategies where

the licensee pays compensation to the licensing firm in return for
technical expertise.
A Value-chain partnership is a strong and close alliance in which
one company or unit forms a long-term arrangement with a key
supplier or distributor for mutual advantage.
Corporate parenting is in which management coordinates

activities and transfers resources and cultivates capabilities
among product lines and business units.
Vertical growth results in vertical integration which can be

divided into either backward integration of forward integration.
Backward integration is the "going backward on an industry's
value chain".
Concentric diversification is growth into related businesses.
Situation analysis is the beginning for strategy formulation which

is referred to as strategic planning or long-range planning which
is concerned with developing a corporation's mission, objectives,
strategies, and policies.
Distinctive competencies are the core competencies that are

superior to those of the competition.
It is the first step to list the most important items of EFAS
(Opportunities and Threats) and IFAS (Strengths and
Weaknesses) from which we will select those of the higher
weighted scores to be be furtherly considered and deeply
investigated.
Research shows that business unit effects have double the impact
on overall company performance that do either corporate or
industry effects.
Cost Focus is a low-cost competitive strategy that focus on a

particular buyer group or geographic market and attempts to
serve only this niche, to the exclusion of others.
Value-Chain Partnership is done to improve quality as choosing

fewer suppliers to ensure consistency of purchases. Companies
have decided to work more closely with fewer suppliers and to
involve them more in product design decisions.
Although both Mergers and Acquisitions are so close to each
other but there is a difference. Merger is regarded as a
transaction involving two or more corporations in which both
companies exchange stock in order to create one new corporation
while Acquisition is a 100% purchase of another company.
It is relative the largest competitor (Market Leader).
Firms with the highest market share tend to have a cost

leadership position based on economies of scale, among many
other things. If a company is able to use the experiences curve to
tis advantage, it should be able to manufacture and sell new
products at a price low enough to garner early market share
leadership.
BCG Growth-Share Matrix depends mainly on the market share

which is only one aspect of overall competitive position.
According to the BCG Growth Share Matrix, Stars are market

leaders typically at the peak of their product life cycle and are
usually able to generate enough cash to maintain their high share
of the market.
According to the GE Business Screen, the competitive strength of a
product is based on long-term industry attractiveness and
business strength competitive position.
Must add reference(s) used
Strategic Management and

Business Policy. 14th Edition.
Strategy Formulation: Situation
analysis and Business Strategy.
Finding a propituous Niche. Page
201

Finding a propituous Niche. Page
202

Generating Alternative Strategies
by using a TOWS Matrix. Page
182. The electonic copy.

Generating Alternative Strategies
by using a TOWS Matrix. Page
182. The electonic copy.
Business Strategies. Page 203

Porter's Competitive Strategies.
Page 203

Page 204

Risks in competitve strategies.
Page 188. The electonic copy.

Page 204

Licensing Arrangements. Page
213
Value-Chain Partnerships. Page
213

Strategy Formulation: Corporate
Strategy. Corporate Strategy. Page
220

Strategy. Concentration. Page 223

Strategy. Diversification
Strategies. Page 229.

Situational Analysis: SWOT
Approach. Page 198.

Internal scanning: Organizational
Analysis. Page 163.
Generating a SFAS Matrix. Page
199.

Business Strategies. Page 203.

Cost Focus. Page 204.

Value-Chain Partnerhips. Page
213
Strategy. Growth Strategies. Page
222.

Strategy. BCG Growth-Share
Matrix. Page 235.

Matrix. Page 237.
Lecture Presentation Slides. Page

7-232

Matrix. Page 235.
Strategy. GE Business Screen.
Page 223. The electonic copy.
1
2
3
4
5
Dr. Ashraf Elsafty
Strategic Management
ESLSCA 52D
Final Exam
Part TWO
Case analysis guidelines:
#VALUE!
You are requested to conduct a full strategic audit, NOT only as Appendix 1.A & 12.B and e
I’ll consider carefully with grades your analysis to cover mainly major topics and tools/models:
a. Assessing corporate strategic postures like; Mission, Vision, Strategies, Goals, Policies.
b. Assessing the type of Corporate Governance, Social Responsibility, and corporate ethics.
c. Commenting on Industry Analysis (if any or needed).
d. Using powerfully the strategic management analytical tools/models, and the applicat
corporate, business, and functional levels, like –but not limited to-; Uncertainty matri
(Center of gravity), SFAS, SWOT Analysis, TOWS Matrix, Porter model(s), Critical strate
matrix, GE matrix, … etc.
e. Formulation of major of strategies; corporate, business, and functional level.
f. Strong argument and objective conclusions/recommendation with generic known strategies or
your analysis outcomes.
Make use of –but not limited to- your case analysis in-class presentation and discussions.
Please select ONLY one of the cases below. Final Exam cases at your text book; Wheelen, T
management and business policy: Toward global sustainability, Pearson, 13th Ed.:
Case 17 Chrysler in Trouble

Case 19 Harley-Davidson Inc. 2008
Case 20 JetBlue Airways
Use this same excel sheet(s), DON’T use PowerPoint or pdf’s. Keep your file in a minimized fi
need for graphics, keep it simple text, table, matrix, and limited drawings (as needed only).
Note : Plagiarism or Copy/Paste from your colleagues or other sources are totally prohib
rejection of your exam, and a grade of F. Your case analysis must conform to the univer
ethics; this means any material cut and pasted from the internet, books, or articles must be
Wish you all best of success.
Thanks
Dr Ashraf Elsafty
Corporate Strategic Postur
Mission
Vision
Values
Strategies
Goals
Policies
Corporate Strategic Postures
An American Low Cost Carrier (LCC) Airline which serves currently domestically and regionally in future.
JetBlue offers a combined low fares with several value-added services that improved customer service without adding to
Safety, caring, integrity, fun, and passion.
JetBlue operates “red-eye” flights.
JetBlue has a strategy to serve the unserved (the unreached). Example: JetBlue’s management identified the routes on wh
In April 2002, JetBlue launched an IPO of 5.87 million shares, raising $158 million.
In April 2002, JetBlue started expanding operations on the West Coast, using LosAngeles as a second hub.
In late 2002, JetBlue acquired 100 percent ownership of LiveTV, the company that maintained its in-flight satellite TV cha
JetBlue has a customer loyalty program, TrueBlue, since mid-2002, collecting nearly 40,000 members by the end of the
JetBlue has the strategy to increase its fleet:
1. In 2003, JetBlue placed an order for 100 Embraer-19019 regional jets for a price of$3 billion, with options for another
plans.
2. In 2003, 16 A-320 aircraft added to the fleet with an order for 65 more, and options on another 50.
3. In 2004, JetBlue announced that it planned to take delivery of one new Airbus A320 every three weeks and to hire five
In 2003, JetBlue received permission to build a new terminal at JFK, giving it 26 more gates.
JetBlue offers fares that were typically 30 to 40 percent lower than other airlines.
JetBlue’s cost per available seat mile is 7 cents, which is 25 percent less than the average of the major carriers.
An average completion factor of 99.5%.
JetBlue’s passenger complaint numbers and baggage handling errors were among the lowest in the industry.
On-time performance record of 80%.
Average turnaround time was 35 minutes
During 2004, JetBlue performed well on many operating metrics:
1. 99.4 percent completion factor.
2. the highest on-time performance of 81.6 percent in the industry.
3. the fewest baggage mishandlings of 2.99 per 1,000 customers boarded.
4. Its CASM also remained lower than the industry average at 6.10 cents.
By the end of 2004, JetBlue flew to 30 destinations, including one international destination—the Dominican Republic—la
JetBlue Never cancel flights.
Safety First.
Try always to maintain fares constant even in the times of hardships.
1
3
Social Responsibility & Corporate Ethics
JetBlue has shown a good "Social Responsibility" in time of Crisis that was shown as per below items:
Following the fiasco in Feb 2007, JetBlue published apology letters in the New York Times and USA Today, among other p
g the fiasco in Feb 2007, Neeleman also apologized during his appearances on the Late Show with David Letterman on th
YouTube. “We should have acted quicker,” said Neeleman. “We should have called the Port Authority quicker. These were
that experience.”
In late February 2007, Neeleman unveiled a “Customer Bill of Rights,” which laid out the airline’s policy on compensating
and cancellations
Customer Bill of Rights

INFORMATION
JetBlue will notify customers of the following:
Delays prior to scheduled departure
Cancellations and their cause
Diversions and their cause
CANCELLATIONS
All customers whose flight is canceled by JetBlue will, at the customer’s option, receive a full refund or reaccommodation
at no additional charge or fare. If JetBlue cancels a flight within 12 hours of scheduled departure and the cancellation is d
Irregularity, JetBlue will also provide the customer with a Voucher valid for future travel on Jet-Blue in the amount paid b
roundtrip (or the oneway trip, doubled).
DEPARTURE DELAYS
Customers whose flight is delayed prior to scheduled departure for 1–1:59 hours due to a Controllable Irregularity are en
good for future travel on JetBlue.
good for future travel on JetBlue.
for future travel on JetBlue in the amount paid by the customer for the oneway trip.
Customers whose flight is delayed prior to scheduled departure for 6 or more hours due to a Controllable Irregularity are
good for future travel on JetBlue in the amount paid by the customer for the roundtrip (or the oneway trip, doubled).
OVERBOOKINGS
(As defined in JetBlue’s Contract of Carriage)
Customers who are involuntarily denied boarding shall receive $1,000.
ONBOARD GROUND DELAYS
For customers who experience an onboard Ground Delay for more than 5 hours, JetBlue will take necessary action so tha
deplane. JetBlue will also provide customers experiencing an onboard Ground Delay with food and drink, access to restro
medical treatment.
Arrivals:
Customers who experience an onboard Ground Delay on Arrival for 30–59 minutes after scheduled arrival time are entitl
for future travel on JetBlue.
Customers who experience an onboard Ground Delay on Arrival for 1–1:59 hours after scheduled arrival time are entitle
for future travel on JetBlue.
Customers who experience an onboard Ground Delay on Arrival for 2–2:59 hours after scheduled arrival time are entitle
future travel on JetBlue in the amount paid by the customer for the oneway trip, or $100, whichever is greater.
Customers who experience an onboard Ground Delay on Arrival for 3 or more hours after scheduled arrival time are enti
for future travel on JetBlue in the amount paid by the customer for the roundtrip (or the oneway trip, doubled).
Departures:
Customers who experience an onboard Ground Delay on Departure for 3–3:59 hours are entitled to a $100 Voucher good
JetBlue.
Customers who experience an onboard Ground Delay on Departure for 4 or more hours are entitled to a Voucher good fo
in the amount paid by the customer for the roundtrip (or the oneway trip, doubled).
Corporate Governace
David Barger Former Chief Operating Officer (COO)

Current CEO and President
Executives Founder and former CEO
David Neeleman
Current the non-executive Chairman of the Board
Russell Chew Current Chief Operating Officer (COO)
Industry Analysis - Porter's Approach
Basic Competitive Force Factors affecting the force
1 Threats of new Entrants Economies of scale
Product differentiation
Capital requirements
Switching costs
Access to distribution channels
Government policy
2 Rivalry among Existing firms Number of competitors
Rate of industry growth

Product or service characteristics
Amount of fixed costs
Capacity
Height of exit barriers
Diversity of rivals
3 Threats of Substitute Products or Services

A buyer purchases a large proportion of the seller’s
4 The Bargaining Power of Buyers product or service
A buyer has the potential to integrate backward by
producing the product itself
Alternative suppliers are plentiful because the
product is standard or undifferentiated
Changing suppliers costs very little
The purchased product represents a high
percentage of a buyer’s costs, thus providing an
incentive to shop around for a lower price.
A buyer is very sensitive to costs and service
differences
The purchased product is unimportant to the final
quality or price of a buyer’s products or services
and thus can be easily substituted
The supplier industry is dominated by a few
5 The Bargaining Power of Suppliers companies, but it sells to many.
Its product or service is unique and/or it has built
up switching costs
Substitutes are not readily available
Suppliers are able to integrate forward and
compete directly with their present customers
A purchasing industry buys only a small portion of
the supplier group’s goods and services and is thus
unimportant to the supplier.
6 The Relative Power of Other Stakeholders

orter's Approach
Strength of Reasoning
the Force
FSAs (Full Service Airlines) will compete very well and take
High away market share from the LCCs because of its advantage
for theisn't
There economies of scale. between the LCCs in their
a lot difference
Medium services.
Low
1. Growing number of LCCs in the aviation industry.
2. The attempts of the FSAs (Full Service Airlines) to take
away market share from the LCCs.
High 3. Legacy carriers (FSAs) also launched low-cost subsidiaries
of their own, in an effort to compete with the growing
number of LCCs.
Low
1. There is encouragement from the US Government for the
aviation industry.
High 2. Companies in bankruptcy significantly on purpose
slashing their own fares taking advantage of the protection
of the bankruptcy laws.
1. There are many rivals like Southwest, AirTran, United, US

Air, Independnce Air, Delta, American, Ted, Song, Spirit,
Virgin America, Frontier and Continental.
High 2. The attempts of the FSAs (Full Service Airlines) to take
away market share from the LCCs.
3. Legacy carriers (FSAs) also launched low-cost subsidiaries
of their own, in an effort to compete with the growing
number of LCCs.
High There is a growing number of LCCs in the aviation industry.
Medium More or less most LCCs offers the same services.
High fixed cost (Fuel "considered as fixed in this case" was
the second major expense in an airline’s operations after
High labor in the United States). The jet would fly with only one
passenger or with full capacity.
The airline has to have maximum capacity. That is why
High Airlines can use their own ject plus other leased one to fill
capacity.
Low
The attempts of the FSAs (Full Service Airlines) to take away
Medium market share from the LCCs had led to a fall in the average
fares.
There is no substitutes of being travel by air. For example:
Low train or car or bus in not comparable.
Low
Low
There isn't a lot difference between the LCCs in their
Medium services.
High
With LCCs, passenger will always search for the lower prices,
High even irrespecitve of the service provided.
With LCCs, passenger will always search for the lower prices,
High even irrespecitve of the service provided.
There isn't a lot difference between the LCCs in their

Medium services.
High
Jet's Suppliers are few companies, with few models of jets.
High
High
It is less likely that Jet's suppliers to initiate their own
Medium airlines.
Low
These airlines were able to undercut competition by offering

High very low fares, taking advantage of the protection of the
bankruptcy laws.
Industry Matrix for LCCs
Weight JetBlue Rating
Key Success Factors Weighted Score
(0-1) (1-5)
1 Offering low fares 0.4 4 1.6
2 Offering several routes 0.1 3 0.3
3 Having high capacity of jets 0.1 4 0.4
4 Amenities Offered 0.1 5 0.5
5 Connection of flights 0.1 1 0.1
6 Responding quickly to Crisis 0.2 1 0.2

Total 1 3.1
Industry Matrix for LCCs
Reasoning
This is the most aggressive Key Success factor in the Aviation industry especially the LLCs
Atlanta was Delta’s hub, and when JetBlue entered the market, Delta responded by instantly
adding capacity and lowering prices on this route
Airlines, beside what they own, lease other jets to always keep their capacity high.
Amenities such as leather seats, free personal entertainment system at every seat and free
served beverages
FSAs' Subsidiaries LCCs had an advantage over the other LCCs, in that they allowed
passengers toconnect to the flights of their parent airlines, which had far bigger route
networks than any of the LCCs.
Slow response to crisis in aviation industry is fatal and can cost the firms big fortures.
SWOT Analysis
S1
S2
S3
S4
S5
S6
S7
S8
S9
S10
S11
S12
S13
S14
S15
S16
S17
S18
S19
S20
S21
S22
S23
S24
S25
S26
S27
O1
O2
O3
O4
SWOT Analysis
Strengths
Jetblue is one of the most successful airlines in the United States (especially in its first operating years until
2005)
Too fast growth in the short term.
JetBlue was positioned as a colorful and fun airline.
Jetblue combined low fares with several value-added services that improved customer service without adding
to operating costs.
Leather furnishings.
JetBlue provided assigned seating and allowed passengers to choose their seat on the plane whenever possible.
JetBlue served light snacks such as chips, cookies, and crackers, and coffee and canned drinks, which cost a
fraction of a regular meal.
JetBlue provided free personal satellite television to all the passengers.
JetBlue did not use old planes, but operated a fleet of new Airbus A-3206 aircraft which are easier to maintain
and are more fuel-efficeint.
JetBlue Operates a uniform fleet of planes was also economical, as it reduced costs significantly in the areas of
pilot training, maintenance, and spare parts.
All the aircraft were configured in a single class, with a uniform level of service. This also allowed JetBlue to put
in the maximum number of seats possible in its planes.
On-time performance record of 80%.
Average turnaround time was 35 minutes
JetBlue operated several “red-eye” flights
JetBlue also flew to secondary cities that were neglected by major carriers.
JetBlue flew only point-to-point flights, avoiding the hub-and-spoke model used by major
carriers.
JetBlue used electronic ticketing extensively.
JetBlue allowed its call-center operators and customer service executives to work from
home.
Automation and the effective harnessing of technology
JetBlue was the first airline to introduce paperless cockpits, where the pilots were equipped with laptops to
access flight manuals and make the requisite calculations before takeoff.
Automatic check-in and electronic baggage tagging
JetBlue’s cost per available seat mile was 7 cents, which was 25 percent less than the average of the major
carriers.
An average completion factor of 99.5%.
JetBlue’s passenger complaint numbers and baggage handling errors were among the lowest in the industry.
JetBlue was the first national carrier to install bulletproof, deadbolted cockpit doors on its aircraft. The airline
also installed screens in the cockpit so that pilots could see what was happening in the passenger cabins.
In 2004, it was recognized as a “major airline” by the DOT (Department of Transporation)
Opportunities
In 2001, JetBlue planned to launch an IPO to fund its expansion plans.
JetBlue continued with its expansion plans using its share of the $15 billion bailout 12 the U.S. government
granted the aviation industry, and a fresh infusion of funds from its original investors.
In 2003, JetBlue received permission to build a new terminal at JFK, giving it 26 more
gates.
Opportunities for regional expansion by purchasing the Embraer-19019 regional jets.
T Analysis
Weaknesses
W1 Slow Reactions to adverse weather.
W2 Unsustainable growth in the long term.
W3 Jetblue is working in New York, the biggest aviation market in the United States where most
LCCs avoid it operating from JFK, New York is very expensive.
W4 Not giving a sufficient traing on coming new type jets. (As what happened with the Emprear
jets)
All the aircraft were configured in a single class, with a uniform level of service. Sometimes
W5 this compromise the revenue and it better to differentiate and do a leveling within pricing of
tickets.
Threats
T1 Adverse Weather (Snowstorms)
T2 Financial repercussions
T3 Customer service image can be shaken easily with an only one small mistake.
T4 Business environment can change quickly.
T5 Terrorists Attaches.
Rise of Fuel Prices and thus increasing of operating costs. (Fuel is the second major expense
T6 in an airline’s operations)
Working as LCC is intself a threat has to be strategically well managed by the top
T7 management.
High fixed cost (Fuel "considered as fixed in this case" was the second major expense in an
T8 airline’s operations after labor in the United States). The jet would fly with only one
passenger or with full capacity.
T9 It is hard to conicide fares with costs in times of crises.
T10 There is a growing number of LCCs in the aviation industry.
The attempts of the FSAs (Full Service Airlines) to take away market share from the LCCs had
T11 led to a fall in the average fares.
The average price for a passenger to fly a mile fell by more than 10 percent between 2000 and
T12 2006
By 2005, fuel constituted nearly 30 percent of JetBlue’s operating expenses, compared to 14.4
T13 percent in 2002. It even exceeded 33 percent in 2006.
T14 Airlines offering very low fares.
Companies in bankruptcy significantly on purpose slashing their own fares taking advantage
T15 of the protection of the bankruptcy laws.
Legacy carriers (FSAs) also launched low-cost subsidiaries of their own, in an effort to
T16 compete with the growing number of LCCs.
FSAs' Subsidiaries LCCs had an advantage over the other LCCs, in that they allowed
T17 passengers toconnect to the flights of their parent airlines, which had far bigger route
networks than any of the LCCs.
T18 Loyal Customer bases.
T19 LCCs Alliance to combine their marketing and mileage programs
Strategci Facto
IFAS Weight Rating Weighted Score
Strengths
Jetblue combined low fares with several value-added

S4 services that improved customer service without adding 0.2 4 0.8
to operating costs.
JetBlue did not use old planes, but operated a fleet of new
S9 Airbus A-3206 aircraft which are easier to maintain and 0.05 2 0.1
are more fuel-efficeint.
S14 JetBlue operated several “red-eye” flights 0.1 5 0.5
S17 JetBlue used electronic ticketing extensively. 0.1 5 0.5
S21 Automatic check-in and electronic baggage tagging 0.05 4 0.2
Weaknesses
W1 Slow Reactions to adverse weather. 0.2 1 0.2
W2 Unsustainable growth in the long term. 0.1 5 0.5
Jetblue is working in New York, the biggest aviation

W3 market in the United States where most LCCs avoid it 0.05 3 0.15
operating from JFK, New York is very expensive.
W4 Not giving a sufficient traing on coming new type jets. (As 0.05 4 0.2
what happened with the Emprear jets)
All the aircraft were configured in a single class, with a
W5 uniform level of service. Sometimes this compromise the 0.1 5 0.5
revenue and it better to differentiate and do a leveling
within pricing of tickets.
Total Score 1 3.65
EFAS Weight Rating Weighted Score

Opportunities
In 2001, JetBlue planned to launch an IPO to fund its 0.05 3 0.15
O1 expansion plans.
JetBlue continued with its expansion plans using its share
of the $15 billion bailout 12 the U.S. government granted 0.05 4 0.2
the aviation industry, and a fresh infusion of funds from
O2 its original investors.
In 2003, JetBlue received permission to build a new
terminal at JFK, giving it 26 more 0.1 4 0.4
O3 gates.
Opportunities for regional expansion by purchasing the 0.01 2 0.02
O4 Embraer-19019 regional jets.
Threats
T5 Terrorists Attaches. 0.2 4 0.8
Rise of Fuel Prices and thus increasing of operating costs.
T6 (Fuel is the second major expense in an airline’s 0.25 5 1.25
operations)
High fixed cost (Fuel "considered as fixed in this case"
was the second major expense in an airline’s operations
T8 0.14 5 0.7
after labor in the United States). The jet would fly with
only one passenger or with full capacity.
T10 There is a growing number of LCCs in the aviation 0.1 5 0.5

industry.
The attempts of the FSAs (Full Service Airlines) to take
T11 away market share from the LCCs had led to a fall in the 0.1 5 0.5
average fares.
Total Score 1 4.52
Strategci Factors Analysis Summary Martix [SFAS Matrix]
Comments
Strategic Factors Weight Rating
Jetblue combined low fares with several

value-added services that improved
S4 0.14 4
customer service without adding to
operating costs.
S14 JetBlue operated several “red-eye” flights 0.03 5
S17 JetBlue used electronic ticketing extensively. 0.07 5
W2 Unsustainable growth in the long term. 0.07 5
All the aircraft were configured in a single

class, with a uniform level of service.
W5 Sometimes this compromise the revenue and 0.08 5
it better to differentiate and do a leveling
within pricing of tickets.
T5 Terrorists Attaches. 0.15 4

Rise of Fuel Prices and thus increasing of
T6 operating costs. (Fuel is the second major 0.2 5
expense in an airline’s operations)
High fixed cost (Fuel "considered as fixed in
this case" was the second major expense in
T8 an airline’s operations after labor in the 0.1 5
United States). The jet would fly with only
one passenger or with full capacity.
There is a growing number of LCCs in the
T10 0.08 5
aviation industry.
The attempts of the FSAs (Full Service
T11 Airlines) to take away market share from the 0.08 5
LCCs had led to a fall in the average fares.
1
Total Score
Comments
Duration
Weighted Score Comments
Short term Intermediate Long term
0.56 very Important
0.15
0.35
0.35
0.4
0.6 Very Important
0.5 Very Important
0.4
0.4
4.71
THE 9 ELEMENTS
1 Organization Corporate
2 Management Functions Planning

Organizing
Leading
Controling
3 Orgainzation Level
Executives
Seniors
Middle and Frontline Managers
Workers
4 Business Functions
R&D
Information Technology
Finance and Accounting
HR
Marketing and Sales
5 Geographical Based in John F. Kennedy International Airport (JFK) in

New York, which was to serve as its base.
In April 2002, JetBlue started expanding operations on
theWest Coast, using LosAngeles as a second hub.
6 Industry Airline
Low Cost Carrier (LCC)
7 External Environment Political Factors
Economic Factors
Social Factors
Technological Factors
Legal Factors
Environmental Factors
8 Internal Environment
Customers
Suppliers
Employee
Stakeholders
9 Time Founded by Nelmeen in Feb 1999

David Barger
David Neeleman
Russell Chew
First Capital: 160 Million
September 11, 2001, terrorist attacks had hit the

industry hard and any of
the major airlines had either gone into
bankruptcy protection, or were on the verge of
doing so.
JetBlue had a positive work culture.

All the employees from the CEO down to the
lowest ranking ones were called “crewmembers.”
A family-like atmosphere at the airline.
Positive attitude employees.
JetBlue rewarded employees frequently with
bonuses and profit sharing programs.
Initiative was encouraged, and all employees
were free to suggest ideas to cut costs and
improve operations.
Former Chief Operating Officer (COO)
Current CEO and President
Founder and former CEO
Current the non-executive Chairman of the Board
Current Chief Operating Officer (COO)
1
2
3
4
5
6
7
8
10
11
12
Recommendation
JetBlue has to sell aged fleet once required to decrease maintaince cost.
JetBlue has to decrease labor numbers and hence decrease labor cost.
JetBlue has to keep adding new in-flightcservices.
JetBlue has to discard the policy of not canceling flights.
It would reduce the number of long-haul flights and shift its focus back to short-to-medium routes.
JetBlue also said that it would offer fewer tickets at very low fares and more tickets at mid-level fares on all its
routes to improve the mix of fares in its revenues.
The average fare was expected to rise to at least partly reflect the increased fuel prices.
JetBlue also committed itself to conducting a careful scrutiny of its yield management practices to ensure it did not
sacrifice revenues to increase the load factor
It also implemented several initiatives to conserve fuel and
improve fuel efficiency, especially by using single-engine taxi techniques, utilizing ground
power units, and identifying ways to remove excess weight from the aircraft
JetBlue also began to go slow on hiring people for non-operational positions.
Better flight scheduling practices were also implemented to control costs.
JetBlue started charging for some premium services.

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Dear MBA students,

Niches do not change over time.

SO strategies attempt to take advantage of opportunities by overcoming weaknesses.

Corporate parenting is the coordination of cash flow among units.

Vertical integration is going backward on an industry's value chain.

Concentric diversification is growth into unrelated businesses.

In the development of a SFAS matrix, the first step is to

While selecting your 'Growth Strategy', Merger is the same as Acquisition.

A) its market share.

According to the BCG Growth-Share Matrix, the key to success is

Answer ONLY using A or B or C or D or E

IT IS A MUST to .. Add needed justification for your selection

A firm's management must continually look for a strategic

These possbile four sets of strategic alternatives are:

WO strategies attempt to take advantage of opportunities by

Cost Leadership is the ability of a company or business unit to

As technology may change leading to lesser costs for competitors

One skill required of the Differentiation strategy is a strong

Licensing arrangement is one of the Cooperative Strategies where

Corporate parenting is in which management coordinates

Vertical growth results in vertical integration which can be

Concentric diversification is growth into related businesses.

Situation analysis is the beginning for strategy formulation which

Distinctive competencies are the core competencies that are

Cost Focus is a low-cost competitive strategy that focus on a

Value-Chain Partnership is done to improve quality as choosing

It is relative the largest competitor (Market Leader).

Firms with the highest market share tend to have a cost

BCG Growth-Share Matrix depends mainly on the market share

According to the BCG Growth Share Matrix, Stars are market

Strategic Management and

Strategic Management and

Strategic Management and

Strategic Management and

Strategic Management and

Strategic Management and

Strategic Management and

Strategic Management and

Strategic Management and

Strategic Management and

Strategic Management and

Strategic Management and

Strategic Management and

Strategic Management and

Strategic Management and

Strategic Management and

Strategic Management and

Strategic Management and

Strategic Management and

Lecture Presentation Slides. Page

Strategic Management and

Case 17 Chrysler in Trouble

Wish you all best of success.

Customer Bill of Rights

David Barger Former Chief Operating Officer (COO)

Basic Competitive Force Factors affecting the force

1 Threats of new Entrants Economies of scale

Access to distribution channels

2 Rivalry among Existing firms Number of competitors