read SCENARIO JetBlue Entrepreneur David Neeleman, at the age of 25, co-founded
ID: 421063 • Letter: R
Question
read SCENARIO
JetBlue
Entrepreneur David Neeleman, at the age of 25, co-founded Morris Air, a charter air service that in 1993 was purchased by Southwest Airlines (SWA). Morris Air was a low-fare airline that pioneered many cost-saving practices that later became standard in the industry, such as e-ticketing. After working as an airline executive for SWA, Neeleman founded another low-cost airline, JetBlue Airways, in 1998. At the same time, he also wanted to offer better service and more amenities.
JetBlue started by using just one type of airplane (the Airbus A320) and chose to fly point to point, directly connecting highly trafficked city pairs. In contrast, legacy airlines such as Delta, United, and American use a hub-and-spoke system; such systems connect many different locations via layovers at airport hubs. The point-to-point business model focuses on directly connecting fewer but more highly trafficked city pairs.
Some of JetBlue’s other features include high-end 100-seat Embraer regional jets with leather seats, free movie and television programming via DirecTV, XM Satellite Radio, along with friendly and attentive on-board service. Other amenities include its recently added Mint class, which offers personal check-in and early boarding, free bag checking and priority bag retrieval after flight, and complimentary gourmet food and alcoholic beverages in flight. It also features small private suites with a lie-flat bed up to 6 feet 8 inches long, a 15-ince high-resolution personal screen, and free in-flight high-speed Wi-Fi (“Fly-Fi”). JetBlue is also adding the newer Airbus 321 to its fleet, which scores significantly higher in customer satisfaction surveys than the older Airbus 320.
Also, because roughly one-third of customers prefer speaking to a live reservation agent, despite a highly functional website for reservations and other travel-related services, JetBlue decided to employ stay-at-home parents in the United States instead of following industry best practices by outsourcing its reservation system to India. The company suggests this “home sourcing” is more productive than outsourcing; it also says that customers’ appreciation of the reservation experience more than makes up for the wage differential between the United States and India. To sum it up, JetBlue’s “Customer Bill of Rights” declare its dedication to “bringing humanity back to air travel.”
QUESTION 19
JetBlue using planes with leather seats, free in-flight entertainment, and Mint class opens itself up for what risk?
The price differential between JetBlue and firms following another strategy becomes too large
Counterfeit goods replicate the features of the focal firm’s products
JetBlue doesn’t create enough value to allow it to charge significantly higher prices
Experience narrows customers’ perceptions of value for the focal firm’s products’ features
1 points
QUESTION 20
JetBlue choosing to employ U.S. citizens for reservations rather than outsourcing to call centers in India helps it avoid what risk of outsourcing?
Losing control over an activity that stimulates the development of new capabilities and competencies
Losing control over an activity in which it can create and capture value
Losing control over an activity that is valuable, rare, inimitable, and non-substitutable
Losing control over an activity that is important to the firm’s success even though it’s not an activity that is actually a source of competitive advantage
what is the answer and why? Why the other answers are wrong.
The price differential between JetBlue and firms following another strategy becomes too large
Counterfeit goods replicate the features of the focal firm’s products
JetBlue doesn’t create enough value to allow it to charge significantly higher prices
Experience narrows customers’ perceptions of value for the focal firm’s products’ features
Explanation / Answer
19. The answer is given below:
Experience narrows customers’ perceptions of value for the focal firm’s products’ features
Jet blue has been always giving good service with more amenities. It also focused on the point to point business model. It also provides other customer oriented services. With all these experience providing entertainment services concentrating on seats and mint class opens risks of customers assumption of value for a product narrow itself.
20. The answer is given below:
Losing control over an activity that is valuable, rare, inimitable, and non-substitutable
Jet blues idea of employing internal citizens rather than outsourcing is the best way where such activity carries value rare compared to other industry cannot be easily immitated by competitors and also cannot be substituted.
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