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Table of Contents
SECTION A..................................................................................................................3
SECTION B...................................................................................................................6
1. CEMEX...............................................................................................................6
2. JetBlue.................................................................................................................9
REFERENCE..............................................................................................................14
SECTION A

Corporate Social Responsibility (CSR) is a business management concept, in which

companies take their social responsibility into practice, take parts of their profits to
fund or donate to social activities or organizations, and also their shareholders.
Through CSR, companies can balance environmental, social and economic
imperatives and simultaneously meeting the hopes of shareholders (UNIDO, n.d.)

Organizations do not combine their activities with social activities, instead, they
remain interdependent with each other. Porter and Kramer came up with a framework
in 2006 to elaborate this more clearly. They categorised social issues into 3 types of
impacts, which companies might address to create the share value with their
shareholders and stakeholders.

(Porter and Krame, 2006)

Generic Social Impacts are issues that play a vital role in society, however, they do
not bring long-term competitiveness or benefits to company and its value chain
activities. They are not significantly affected by company’s operations as well.
Value Chain Impacts have great effects on company’s daily activities, and vice
versa. These issues are divided into two types: Positive impact and Negative impact.

Social Dimensions of Competitive Context are situations in the external

environment but they have a strong influence on company’s competitiveness, and the
company should directly involve itself in those issues.

In this case of JetBlue, each impact will be analysed using Porter and Kramer’s CSV
(Creating Share Value) model to see whether the company should continue its funding
or divert the funds to other social initiatives.

A. JetBlue donating $250,000 to Nature Conservancy can be categorized as

Generic Social Impact, since JetBlue contributes significantly to this social
issue but it brings little advantage to the company’s value chain activities. The
donation supports the programme of the organisation, which makes a huge
impact on maintaining the Lightening Creek Range – one of the most crucial
prairies in the US. This also helped JetBlue to build image as eco-friendly
business.

B. This collaboration with the Organization of Black Aerospace Professionals and

ACE Academy gives benefits and opportunities for students to learn from
JetBlue pilots. This issue may affect the future competitiveness of the firm,
since the students joining this program are potential to be hired as pilots or
other aviation professional positions later in the future, so the firm needs to get
involved directly. It also deals with a social issue of training young generations
so they are qualified for aviation professionals. This issue is therefore
categorised into Social Dimension of Competitive Context.

C. The earthquakes in Turkey brought a lot of damage to its people, therefore a lot
of organizations from countries all over the world have raised fund and donated
to Turkey. JetBlue is not an exception, and the company has raised $100,000 to
for firefighters in this country, making a great contribution to Turkey’s society.
 The contribution significantly supports Turkey’s serious environmental and life
conditions, hence being categorised as Generic Social Impact.

D. Environmental issue has always needed the attention from individuals as well
as organizations all over the world. JetBlue is aware of that, and is now
carrying out research with professionals in other countries to create more
sustainable biofuels. By using this better newly developed energy, carbon
dioxide emissions will be reduced, and in the long run, the engines of JetBlue
aeroplanes will also be benefited, since the biofuels contain much less toxicity
than normal fuels. Since this activity contributes greatly to air pollution
reduction (generic social issue), as well as provides a better source of energy
for JetBlue’s aeroplanes, which belong to value chain activities, it is
categorised as Positive Value Chain Impact in Porter and Kramer’s CSV
framework.

E. NextGen Navigation equipment helps to decrease emissions like carbon

dioxide, which helps create a more sustainable operation for businesses. By
utilising this equipment, JetBlue has been able to eliminate flight
overcrowding, a major issue for many airlines businesses. Moreover, by
investing into NextGen, long flights are operated more efficiently, which saves
a lot of CO2 emission from being released into the air. This activity reduces
harm from the value chain, as well as dealing with environmental issue, so the
issue is categorised as Negative Value Chain Impact in CSV framework.

From the above analysis, the issues can be categorised into a CSV impacts table as
below:

Generic Social Impact Value Chain Social Social Dimension of

Impact Competitive Context
Reserving the Lightening Utilizing NextGen Giving students
Creek Range Navigation equipment (-) opportunities to learn
 Supporting firefighters in Creating sustainable directly from JetBlue
Turkey biofuels (+) pilots/other aviation
professionals

CSR, as the name speaks for itself, is about businesses being aware of the
responsibility and take it into action. However, if companies just focus on performing
what they have to do without creating any value, sustainability is not created, hence
the importance of putting CSR initiatives into CSV context. According to Kramer
(2011), CSR is about duty while CSV is about generating value. The Social
Dimension of Competitive Context should be invested in the most, while Value Chain
Social Impacts can be of low or high priority based on how they benefit the company.
If they are positive value chain impacts then the company should continue to invest in
them, but if they are negative then company should mitigate harms out of value chain
activities, and fix the problems immediately. For the Generic Social Impact, they are
all very meaningful funding activities, and they can help JetBlue build a reputation
and image of an eco-friendly organization that works to contribute to the environment,
as well as influencing others to do the same. There is no doubt that JetBlue should
continue investing in creating sustainable biofuels and funding collaborations to give
students opportunities to learn from the company, since they are of positive Value
Chain Impacts and Social Dimension of Competitive Context. For the negative Value
Chain Impact (CO2 emission), JetBlue should fix the problems by continue applying
Nextgen Navigation equipment. In conclusion, JetBlue should keep funding these
activities since they bring a lot of intangible benefits to the company.

SECTION B

1. CEMEX
According to the resource-based view (RBV), a company's ability to maintain a
competitive edge depends on its access to valuable, rare, inimitable, and non-
replaceable resources (Barney, 1991). The capacity of businesses to produce or
acquire these resources has an impact on their effectiveness and competitiveness
against rivals.

Since core competencies are the tools and talents that make up a company's
competitive advantages, they are the foundation for competitiveness. Srivastava in
2005 revealed that core competencies are the foundation for all competitive
advantages. Core competency is a pretty new concept that was established in 1990 by
Prahalad and Hamel. They claimed that in order for a company activity to become a
core competency, it must meet three qualities: valuable, rare, and inimitable.

Applying the theory into the case of CEMEX, a VRIO test is necessary to identify
whether the company’s activities meet the requirements to become core competencies.

Activities/Core Valuabl Rare Inimitable Organization Competitive

competencies e gains value Advantage
Construrama V V V V Sustainable
competitive
advantage
CEMEX V V X V Temporary
culture competitive
advantage
Cement V V X V Temporary
delivery competitive
advantage
CEMEXNET V V V V Sustainable
competitive
advantage
Cement V X X V Competitive
manufacture parity
Post-merger V V X V Temporary
Integration Competitive
(PMI) process Advantage
Shift (internal V V X V Temporary
 social Competitive
network) Advantage

The majority of CEMEX shops used to be tiny, ineffective, and little known. Due to
the enormous volume of bagged cement CEMEX sold, the company needed to
concentrate on controlling its dealers. Construrama, a network for independent
merchants, was therefore developed by CEMEX. Because Construrama was able to
establish a sizable market share, provide CEMEX national and regional commercial
opportunities, and also supply a wide variety of goods, it was able to deliver
Sustainable Competitive Advantage. Thanks to Construrama, brand recognition rate
was more than 90% throughout Mexico, making it valuable, uncommon, and very
challenging to copy. The launch of CEMEXNET is another action that generated
sustainable competitive advantage. Since the Mexican phone system was so unstable
and insufficient, CEMEX made the decision to invest in its own satellite
communications system. Since all activities were transparent thanks to CEMEXNET,
the firm was able to respond quickly to changes in demand and unforeseen problems.
Since CEMEX was the only corporation capable of creating its own communication
system, the activity was utterly unique and non-substitutable.

The CEMEX culture and cement delivery are two permanent competitive advantages.
One CEMEX, or CEMEX culture, was a more progressive and data-driven culture that
placed a higher priority on satisfying customer demands and strengthening ties with
distributors and users. Not many businesses can create a culture like this, but others,
especially new entrants, have little trouble copying it. The delivery of cement is in the
same predicament. Smaller builders would purchase CEMEX cement in bags from
construction materials wholesalers and retail establishments. CEMEX cement was
distributed in bulk to ready mix firms. Although the concept of selling cement in bags
was initially quite original, competitors in the business were able to imitate it since it
was a simple move to copy.

Core competencies allow company to better understand how to allocate its resources.
By identifying core competencies, CEMEX was able to use its resources better to
create competitive advantages. As evaluated in the VRIO test above, it can be seen
that core competencies of CEMEX provided the company with Sustainable and
Temporary Competitive Advantages. As a result, competitive advantages can be the
products of company’s core competencies.

2. JetBlue

a. JetBlue’s value proposition

- Customer segments: Economy class traveller
- Customer needs: More comfort while on-board with premium services, for
instance unlimited snacks, greater leg space, leather seats, etc.
- Relative price: The airline has the lowest cost per available seat mile in the US.

b. First order fit

 (Service Industry Value Chain Analysis | EdrawMax Online, n.d.)

To analyse JetBlue’s value provided for customers, Porter’s Value chain analysis
(1985) will be used.

Supportive Activities

Firm infrastructure - Location: The base airport is JFK Airport,

Human Resources Management
New York
- Aircraft: Airbus A320s
- Recruiting, which focus on “motivational
fit”
- Training focused on cultural immersion.
- No pay increase by seniority and accepting
staff turnover
- Lower salary but higher job security
- Operating with fewer flight crew
 - 1 to 5-year duration for flight attendant role
- Union affiliation
Technology Development - In house development of ticketing system
- Updating digital cockpit
- Updating overhead lockers
- Rewarding efficiency
Procurement - Acquiring landing slots at smaller airports
- Buying two types of plane
- Reduction and closure of route, a slowing
in delivery of new aircraft
- Leather seats, great leg-room,
- Low-cost ground suppliers

Primary Activities

Inbound Logistics - Machine check in

Operations
Outbound Logistics
Marketing and Sales
- Bag drop only counter
- Queuing to speed boarding
- No allocated seats
- One class only
- Fun/games
- No meals, unlimited snacks
instead
- Free Wifi
- Automatic bags handling
- All staff join in cleaning the plane
- No luggage transfer
- Onward connections unavailable
- Ticket sales are online only
- Billboard advertisements
 - Word-of-mouth marketing =>
save cost in marketing
Service - “TrueBlue Flight gratitude”
- Sense of egalitarianism
- “Red-eye” flights

There would be less delays since JFK airport has stronger infrastructure and a larger
capacity than other New York airports. Since it was far away and mostly used for
foreign flights, JetBlue's choice to make this airport its home base surprised many of
its industry rivals. 80% of JetBlue's flights could operate during non-peak hours,
according to CEO David Neeleman, therefore turnarounds time was shorter and delays
were cut down. The company established "red-eye" flights, which flew overnight and
arrived in the morning, to target underserved areas. JetBlue was able to utilize its
planes at the highest rate in the market thanks to its selections of routes and airports,
which improved customer satisfaction.

c. Trade off choices

Trade-offs are the actions a brand decides not to do because they would conflict with
its vision and key values. According to Michael Porter, without trade-offs, there
would be no option and no need for strategy. JetBlue’s key value is to bring
“humanity on air”, and the company chose to operate a low-cost airline, making it a
trade-off option for first class/premium service. This trade-off choice brought values
to JetBlue, making it much more competitive than other rivals in the industry. This
also means that premium service like private lounge, larger seats and spaces were not
provided, so that the company can maintain the value it had offered, as well as
offering an egalitarian airline. Another trade-off choice JetBlue made is to charge a
fee for first baggage, that way the firm can influence the sense of loyalty and pride
that customers have for JetBlue.
 d. Second order fit

Customer No baggage
bill of rights transfer Single aircraft
Flying
type A320s
point to
“True blue” and brand
point
reward system new aircrafts

Extra
legroom Bring humanity High aircraft
back to air utilization
travel
Very low
Unlimited ticket prices
Free wifi
snacks
on flights

Limited but Productive

Leather differentiated workforce
seats service Web-based &
automatic
ticketing
Quick
Seat-back
turnarounds
TV screens
Allocate
seating Non- Reservation
unionized agents
workforce operate
from home

JetBlue’s objectives are “Bringing humanity back to air travel”, “High aircraft
utilization”, “Limited but differentiated service”, “Productive Workforce” and “very
low ticket prices”. These goals are supported by specific actions and methods. The
activity map shows how activities and themes reinforce each other. For instance, the
themes of “bringing humanity back on air” and “limited but differentiated service” are
tailored with value chain activities like free wifi on flights, extra leg room, unlimited
snacks. It can be seen that low prices on tickets and high aircraft usage also strengthen
each other, where a single type of aircraft (A320s) was used, with no baggage transfer
and no transit helped reduce the cost for passengers. These activities are proof that
JetBlue’s value chain activities are well tailored.

e. Third order fit

The introduction of Mint Concept is to target the premium air travel segment.
Although the revenue per flight of JetBlue was higher than that of other low cost
carriers like Virgin America, not having a premium class caused the total revenue per
flight to be more than 10% lower. This led to a “significant unit revenue
disadvantage’. Since the initial core value of JetBlue was to avoid distributing seats
class, a lot of crew members as well as customers saw Mint concept as a betrayal to
JetBlue’s egalitarian service. There was obviously a threat to JetBlue’s reputation.
Nevertheless, CEO Robin Hayes still chose to operate Mint, because the company’s
operation capacity was developed so greatly that revenue needed to be increased.
Introducing premium service would not be enough to deal with the problems, so
Hayes and his team decided to keep an eye on what they could expect to boost
revenue and make changes, while still being able to reduce costs. Those changes
included introduction of first bag fee, charges for more leg room. Despite being a
threat to the egalitarian approach that JetBlue used to maintain, Mint concept was a
success, as it boosted annual revenues by $450m, while reducing capital cost by
around $1bn.
The new Mint Concept still satisfied customers in terms of great flight experience,
however, with initial value proposition targeted the economy segment and no class
distribution, it did not maintain JetBlue’s ‘egalitarian’ approach. In spite all that,
operating Mint helped the company gained more revenue to match current capacity.
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