Handout Sheet 31

Seminar 4: Handout
Using the Strategy as Choice Perspective to Analyse JetBlue
Case Part 2

JetBlue is a classic example of an organistion that has made a clear

strategic choice on what its strategy is and what it is not - in Porter's
words it has made its 'Trade Off' choice. This choice and how it has
aligned the activities in its business operations have led to the airline
being a uniquely profitable business in an intensely competitive industry.
The case study takes the story of JetBlue
through into 2014 and a decision they are
making about introducing the new Mint
Service - a move that seems to strays away
from aspects of the strategy that has made
them successful.

As we discussed in previous seminars the

starting point for the case activity should
be identifying how to use the appropriate
theory in the analysis - so in this case
the Strategy as Choice perspective and
ideas of Michael Porter. As we did in the last seminar a key step is to
map the key activities of the airline onto the value chain model (NB: focus
on activities not resources or strategies). However it is worth reviewing
what you did to see if anything has changed in the 10 years between the
two parts of the case study. [Remember for a service company it is
customers that flow through the primary activities. So the equivalent of
inbound logistics is passengers arriving at the airport and boarding the
plane; operations it is the flight itself ...etc.]

The next step is to also review JetBlue’s value proposition and again
decide if this has changed since the period covered by the first part of the
case study. [Remember the firm’s value proposition describe the choices
the firm has made regarding which customers are targeted, what needs
served and what relative price position has been adopted]. We should also
revisit the big choices (Strategic Themes) through which Jet Blue is
looking to operationalize its value proposition (see the diagram in Porter's
"What is Strategy?" article of the equivalent themes that Southwest
Airlines)

1
Prepared for L3 Business Strategy Module Sept 2019 by Dr. David Webb
We can now move to the next step. Consider if the firm has made key
trade off choices that need a unique and tailored value chain to deliver.
Could Jet Blue’s proposition be delivered
by the value chain of any airline company
or does it need a potential imitator to
mirror the trade off choices Jet Blue has
made?

Armed with the individual activities you

mapped in the value chain and an
understanding of the strategic choice
JetBlue has made, you can now fill in the ‘Assessing First Order Fit’
template and assess if the firm shows first order of fit. Consider the
coherence of the activities you have mapped with the value proposition
and themes - are they fully aligned? If you think there is a good fit then you
can move on to look the second order of fit (remember the levels build on
each other).

Second order fit can be assessed using

Porter's activity system mapping (see the
"What is Strategy?" article). Start with the
strategic themes and draw lines between
those that add to the impact of another.
Now start to add in the activities from the
‘Assessing First Order Fit’ template and
again draw links to the themes and to
other activities where they support each
other. The map and the density of lines
will show the level of 2nd Order fit
("reinforcing") in the organisation.

For third order fit you need to return to the case study and look for
evidence that shows if JetBlue are looking to optimise the whole activity
system. Perhaps experimenting in ways to make the whole system better-
fit customer needs and the chosen strategy position – possibly making
some activities less effective to improve the fit of the system.

Now that you have a deep understanding of the company's strategy and
how its system of activities work together to support this strategy you
are able to explore the sustainability of JetBlue’s competitive advantage.
This also allows you to consider issues relating to the Mint introduction
and other changes Hayes will present to investors.
Additional questions you may wish to consider at his point are:

 What are the risks to JetBlue in taking in introducing Mint and

reducing legroom and how might they mitigate these risks
 How might Porter's warnings about the 'growth trap' and 'straddling'
i.e. the danger of diluting the company's strategic fit for the sake of
short-term growth opportunities apply in this case?
 What are the limitations of your analysis (e.g. did you have all the
information you needed)
 What are the issues with Porter's approach to thinking about
competitive advantage and what other theory(s) could you have used
instead and how might this give you a different result.

Finally sum up with your recommendation/answer to the question - in this

case what you believe JetBlue should do in regards Introducing Mint and
the other proposals.

Glossary
Activities（企业）活动: Discrete and repeating actions and sets of actions
taken within the firm e.g. developing products, customer servicing,
baggage handling, ticketing. Performance of activities generates costs and
value produced by the firm. An activity will make use of the assets,
people, capital and information of the firm. It is critical to zoom in on
activities at a more detailed level than broad generic functions such as
marketing or operations (e.g. “flexible small batch production” rather than
“manufacturing”).
Competition 竞争: In line with Porter’s view, competition is the contest
within an industry to capture the value created by that industry. This
includes the direct competition between rival firms, but also the dynamic
with suppliers and customers as they seek more value.
Differentiation 差异化: One of Porter’s generic strategies (the others being
cost leadership and focus). Differentiation means the proposition differs
from that of rivals in a way that more closely matches some customers’
needs for which they are willing to pay a higher price.
Fit 适度: The degree to which activities in the value chain align with the
value proposition and reinforce the impact of each other (i.e. Impact the
cost or value created by other activities).
Generic Strategy 基本竞争战略: Fundamental underlying strategy choice for
firms. Clear choice is needed whether to be (i) differentiated or a cost
leader and (ii) covering whole market or focused. In a highly competitive
market, firms trying do both are ‘stuck in the middle’ and will
underperform. Porter has subsequently refined this thinking around value
proposition and trade off choices but still emphasises the need to make a
meaningful choice on what you are going to do/who to serve and
(especially) what you are not going to do/who not to serve.
Operational Effectiveness 运营效益: Performing similar activities as well as
or better than rivals - Industry “best practice” or “state of the art”. Firms
need to be operationally efficient but this is not strategy and will not lead
to sustainable competitive advantage.
Trade Off Choice 权衡选择: A choice made about the value proposition and
activities that mean you are also choosing NOT to do something else.
Porter argues that without making trade off choices sustainable
competitive advantage is not achievable.

Value Chain 价值链: A template for identifying and mapping activities within
the firm that result in higher relative price or lower relative costs. This
framework is useful in ensuring you look holistically at the full range of the
firm’s activities and how they align with the value proposition. A tailored
value chain is a key component of achieving competitive advantage.
Value Proposition 价值主张: A value proposition defines the kind of value a
company will create for its customers. Competitive advantage stems from
choosing a unique value proposition delivered by a tailored value chain
(both containing trade offs). Porter breaks the value proposition in to 3
dimensions: Which customers? Which need(s)? And what relative price?
Porter stresses that firms must make clear choices what to do and what
not to do.
Value System 价值系统: Similar to the value chain but looking at activities
across the industry i.e. including suppliers and customers and the standard
value chain for rivals.