External Environment

(Opportunities and Threats)

A. Natural Physical
Environment:
Sustainability Issues

. B. Societal Environment
. C. Task Environment
. D. Summary of the
External Factors
.

EFAS Table

External Environment
(Opportunities and Threats)
A. Natural Environment

1) Potential of more severe snowstorms like the

one that hit in February 2007.
2) Severe snowstorms and other severe weather
conditions exist globally.

External Environment
(Opportunities and Threats)

B. Societal Environment

1.
2.
3.
4.

Economic
Technological
Political-Legal
Sociocultural

Societal Environment
1. Economic Factors:

a. Unstable economic conditions, the country is in a recession

cycle but there are signs that show the economy is trending
into the recovery stage which will increase consumer
spending. (O)

b. Increasing fuel costs will increase operating expense. (T)

c. Bankruptcy protection allowing competitors to slash prices.

(T)

d. Increased number of LCCs flooding the market lowering

fare prices. (T)
e. Increase in taxes by government. (T)

Societal Environment
2. Technological Factors:

a. Ability for employees to work from home using voice-overInternet protocol cuts down on operating costs. (O)

b. Paperless cockpits, automation processes, automatic

check-in and electronic baggage tagging minimize labor
costs. (O)

c. Installation of bullet proof, deadlock cockpit doors. (O)

d. Ownership of LiveTV. (O)

e. Increasing Internet functionality decreasing need for

business travel. (T)

Societal Environment
3. Political-Legal
a. Government bailout programs allowing growth. (O)

b. Potential for conflicts in the Middle East which result in

fuel increases. (T)

c. Global warming laws restricting the use of fuels and oil. (T)

d. Terrorist threats on American soil like September 11,

terrorists attack. (T)
e. Threats of union labor strikes(T)

Societal Environment
4. Sociocultural

a. Baby boomers retiring eliminating business

travel and reducing their income therefore
reducing leisure travel. (T)

b. Economic recovery leads to business growth

increasing travel demand. (O)
c. Consumers demand on entertainment and
media. (O)

C. Task Environment
Threat of new entrants
Bargaining power of buyers
Threat of substitute products or
services
Bargaining power of suppliers
Rivalry among competing firms
Relative power of unions, governments,
special interest groups, etc.

 Bargaining power of Buyer - High

Standard product and services
Several options available to customers
with what airline they choose to fly.
No switching cost customer need a
reason to stay
Customer can research easily using the
internet
Customer incentives such as True blue
which allow customers to earn rewards,
book flight in an easier/faster manner,
and stay on top of the upcoming
event/sales

 Threat from substitute High

Threat is high : numerous other airlines
Switching costs among other airlines are
low
Switching costs among other
transportation option are high for
everything but short distance (Train, boat,
car etc)
High existing barriers bankruptcy laws
allow loss maker to continue operating

 Bargaining power of suppliers

High
Only two suppliers Airbus & Boeing
Little/No chance to bargain with
suppliers
Fuel suppliers have a considerable
amount of power because they control
how much money is spent on the fuel
used to fly the planes.
The volume of fuel supplied to the
airlines is extremely important
because JetBlue has prescheduled

Threat of new entrance - Low

Deregulation made it possible for new
entrance
Very high cost or capital required for entry
Low profit margin
Difficult to differentiate product & services
Brand image and loyalty is important
New airlines must be seen as safe and
reliable
Hundreds of gone defunct trying to
compete against the large airlines

Competitive rivalry High

Numerous competitors like Delta,
United and American
In times of low or moderate industry
growth, the competition gets fiercer
as each one tries to nab customers
from the other in order to keep their
capacity utilizations at acceptable
levels
The industry is extremely sensitive to
economic cycles

Relative power of unions,

governments, special interest
groups High
One of the first airlines to increase
safety of aircraft after Sep. 11th.
First carrier to install bulletproof, dead
bolted flight deck doors before FAA
mandated use.

Relative power of unions,

governments, special interest
groups High
One of the first airlines to increase
safety of aircraft after Sep. 11th.
First carrier to install bulletproof, dead
bolted flight deck doors before FAA
mandated use.

CPM MATRIX

JetBlue

Southw
est

Ws

America
n
airways
Rating

Critical success
factors
Human resource
Price competitiveness
advertising
International
expansions
Client/customer
satisfaction
Market capitalization
Financial position
Technology/entertainm
ent services
Totals

Weight

Rating

Ws

Rating

0.15
0.15
0.20
0.10

4
2
4
1

0.6
0.30
0.8
0.10

4
3
4
3

0.60
0.45
0.80
0.30

2
3
2
3

0.30
0.45
0.40
0.30

0.15

0.45 4

0.60

0.45

0.10
0.05
0.10

4
3
3

0.4 4
0.15 4
0.30 3

0.40
0.20
0.30

3
3
2

0.30
0.15
0.20

3.1
0

3.65

2.55

Ws

EFAS TABLE
Opportunities

The demand of air travel increased

Untapped international market
Higher fares of other airlines
Usage of airlines has been effected
badly since 9/11
Use of latest technology for tracking the
lost luggage of customers
Increasing use of internet can help to
reach and facilitate more customers

Weight

Rating

WS
0.3
0
0.4
8
0.3
0
0.3
0

0.10

0.12

0.10

0.10

0.05

0.20

0.08

0.32

Threats

Threats of union labor strikes

Inflation and rising prices of fuel
Security issues causing customers
dissatisfaction.
Competitors giving same services at

Weight

Rating

WS

0.08

0.07

0.10

0.2
4
0.2
8
0.3
0
0.3