Student ID: 23004094

UMSDQ5-15-3

Word counts: 3100

BUSINESS STRATEGY
UMSDQ5-15-3
COMPONENT A

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Introduction
The essay is divided into two sections: the first analyzes JetBlue's CSR and shared value creation, while
the second evaluates cement manufacturing using Porter's and Barney's theories and examines JetBlue's
Mint class and CEMEX leading to strategic recommendations.

Section A
CRS/CSV
This essay will utilize the concepts of CSR (Corporate Social Responsibility) and the CSV (Creating Shared
Value) model, as developed by Porter and Kramer (2014), to assess whether Jetblue should continue
with specific initiatives.

CSR, originally defined by Bowen as aligning business actions with societal values has evolved from
simple altruism to a strategic approach focused on ethical conduct, environmental responsibility, and
sustainability. This modern interpretation of CSR emphasizes not just moral obligations but also a
performance-driven mindset, shifting from broad societal to specific organizational impacts (Sheehy,
2015). It includes ensuring current actions are sustainable for future generations and upholding a
"License to Operate" by adhering to legal and societal norms, thereby enhancing a brand's reputation
and public esteem. The shareholder view, as advocated by Milton Friedman, emphasizes prioritizing
shareholder wealth, and viewing social responsibilities as secondary. In contrast, the stakeholder
perspective holds that a company's duties extend to various societal elements like employees,
customers, and the community, not just shareholders. Integrating these views presents a challenge, as it
could lead to conflicts between maximizing shareholder value and broader social concerns, potentially
expanding business roles and diluting focus on profit maximization. CSV, as a strategic approach,
redefines the relationship between corporate performance and societal impact. It differs from
traditional CSR by viewing economic and social objectives as interconnected rather than separate. This
model focuses on enhancing both economic and social value, suggesting that companies can foster
innovation and productivity by addressing societal challenges. By integrating social goals into their core
strategy, businesses can create shared value, benefiting society and achieving economic success through
new opportunities and efficiencies. Porter and Kramer outline a framework for assessing the relevance
of social issues to business strategy, which includes three categories: generic social impacts that are
external to the firm and do not affect its competitive strategy; value chain impacts, which are how a
company's operations affect social issues; and the social dimensions of competitive context, referring to
the influence of social issues in the external environment on a company's competitive advantage. They
also differentiate between "responsive CSR," focusing on responsible corporate actions and mitigating
negative impacts, and "strategic CSR," which aligns more closely with a company's core strategy for
competitive advantage.

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 Figure 1: CSV

Strategic CSR

Initiative A, where JetBlue plans to buy Airbus NEO aircraft, promises to cut fuel use by 15% and noise by
50%, offering operational cost savings and addressing environmental and community concerns. This
move aligns with improving JetBlue's value chain socially and economically, presenting a scenario
beneficial for both shareholders, through cost efficiency, and the broader community, through reduced
environmental impact.

 Jetblue should continue it because it is satisfying both economic efficiencies and social
responsibilities.

Initiative C aligns with the "Social Dimension of the Competitive Context" as it directly influences
JetBlue's market edge by pioneering sustainable aviation technology. This forward-thinking strategy
addresses the broader environmental impact, aligning with societal trends and potential regulatory
shifts, thus embedding long-term competitiveness with social responsibility. By investing in green
technology, Jetblue has succeeded in creating shared value by differentiating itself as a leader in
sustainable aviation, where social progress is closely tied to economic benefit.

 Jetblue should continue these activities to maintain its competitive advantage as they have the
potential to strengthen competitiveness while also addressing critical environmental concerns.

Responsive CSR

Initiative B categorized under "Generic Social Issues" in the CSV framework, doesn’t significantly impact
its core business operations or market position. This initiative, while not enhancing financial
performance, contributes positively to community welfare and corporate goodwill, showcasing strong
social value from a stakeholder perspective but neutral or negative economic value from a shareholder
standpoint.

 From a shareholder perspective, Jetblue might consider discontinuing this initiative because it
doesn't yield economic benefits for the organization. However, on the contrary, when viewed
from a stakeholder standpoint, continuing this initiative will help Jetblue increase its social
values.

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Initiative D of solar panels at LAX, serves wider social and environmental interests rather than directly
boosting its operational efficiency or market position. This reflects JetBlue's commitment to
environmental sustainability and corporate citizenship, aligning with "Generic Social Impact" in CSV, as it
contributes broadly to societal welfare, separate from the airline's immediate business operations or
economic goals.

 Jetblue could consider temporarily suspending these activities from a shareholder view, as they
do not bring any economic value to the airline. However, from a stakeholder perspective,
maintaining these initiatives will help Jetblue earn favor with those who have environmental
conservation and fuel efficiency aspirations.

Initiative E falls under "Value Chain Social Issues" as it's an operational change intended to mitigate
environmental harm from JetBlue's activities. The initiative might be seen as economically
disadvantageous due to potential upfront costs or complexities in implementation, leading to a negative
economic value. There might be concerns about the cost-effectiveness of the recycling process versus
the benefits gained. Positively, it showcases a strong commitment to environmental stewardship,
aligning with societal values for sustainability and responsible waste management.".

 Jetblue may consider halting this initiative because it incurs excessive costs and does not
guarantee profitability from a shareholder perspective. On the other hand, from a stakeholder
perspective, Jetblue will receive social value for their recycling efforts.

In conclusion, JetBlue can proceed with all of the initiatives since they provide advantages to the
organization in various respects through CSV model. However, Porter and Kramer's approach still has its
limitations, notably the assumption that social and economic goals always intersect beneficially. In
reality, businesses can exploit social value investments to conceal their true intentions of merely
enhancing their reputation to profit from the positive image they create in the media, thus falling into
the trap of greenwashing. The model might also simplify the complexities businesses face in ethical
decision-making, not fully grasping the difficulty in navigating moral gray areas. Additionally, it's critiqued
for a somewhat limited view of a company’s societal role, not entirely capturing the diverse ways a
business can influence society.

Section B
1. CEMEX case study
Applying the Resource-Based View (RBV) in practice is challenging due to its complex nature and lack of
clear implementation guidelines. Resources, defined by various scholars, range from accessible assets
useful in market opportunities to fundamental elements of production. Barney (1991) highlights the
importance of a resource bundle for competitive advantage, emphasizing the synergy of tangible and
intangible assets. This concept underscores that competitive positioning stems from effectively
leveraging these resources, a strategy that can help companies like CEMEX identify their competitive
stance, ranging from disadvantage to significant advantage (Kitsios et al., 2014).

The PMI process can be seen as an intangible asset of CEMEX, as it forms a multinational team consisting
of high-performing middle managers and experts, as well as members selected from acquired
businesses, helping to harmonize cultural beliefs with those of CEMEX. Meanwhile, CEMEX's tangible
resources can include the national chain when accessing independent companies or cement products

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created from manufacturing facilities. A business will succeed if it possesses superior resources and
excels in effectively incorporating them compared to its competitors, due to the RBV concept. According
to Barney (1995), to maintain a lasting competitive advantage, a company must possess rare
resources. Based on RBV, it is connected to the expansion and effective utilization of a company's
fundamentals not only by resources but also by competencies. Furthermore, to become a core
competency, it must pass the VRIO model, which serves as a tool to uncover an organization's
strengths and weaknesses while also examining how each resource can be leveraged to enhance the
company's competitive position. These criteria encompass Valuable, Rare, non Inimitable, and
Organizational factors, and the article will emphasize Barney's perspective by not only affirming that rare
resources contribute to a company's sustainable advantages but also highlighting that competencies
must meet all the VRIO criteria to be effective (Barney, 1995).

Competencies Valuable Rare Inimitable Organized Strategic

Implication
Construrama √ √ √ √ Sustainable
competitive
advantage
CEMEXnet √ √ √ √ Sustainable
competitive
advantage
CEMEX Culture √ √ x √ Temporary
competitive
advantage
Cement/Concrete √ √ x √ Temporary
Delivery/Logistics competitive
advantage
Cement √ x x √ Competitive
Manufacturing parity

Figure 2: VRIO

CEMEX's competence in cement manufacturing, serving a broad customer base and its leadership in
concrete production post RMC acquisition in the UK, has established it as a global market leader. This
positions CEMEX strongly in meeting construction industry demands and maintaining a consistent
revenue stream. However, the widespread availability and long-term use of cement and its components
mean that this advantage often leads to only competitive parity, as competitors like Elementia and
Holcim's Apasso have similar capabilities, limiting CEMEX's uniqueness in the market. CEMEX's
Cement/Concrete Delivery and Logistics offer a temporary advantage due to their lack of inimitability.
While advancements in logistics and IT have improved supply chain management and customer service,
these strategies can be replicated by competitors, even on a smaller scale. CEMEX's efforts in creating a
large-scale multinational infrastructure for material transportation provide local market benefits but
remain imitable, limiting the long-term uniqueness of this advantage. CEMEX Culture offers only a
temporary competitive advantage as it is not inimitable. The "One CEMEX" initiative fosters a strong
corporate culture focused on innovation and data, enhancing management efficiency and performance.
Although this approach sets CEMEX apart in the market, it's still replicable by competitors who can adapt

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similar strategies to prioritize customer demands, product innovation, and distributor relations, which
other companies may emulate to gain market share.

CEMEX's competitive advantage is significantly enhanced by Construrama and CEMEXnet, meeting all
VRIO criteria. Construrama's expansive network, including over 1100 outlets and strong brand awareness
in Mexico, along with a diverse range of models, underscores its value and rarity. CEMEX has bolstered
Construrama's distinctiveness with unique financial options and robust support in staff training and
inventory control, driving sustainable growth and reinforcing its market position. Lastly, CEMEX has
demonstrated its capacity to fulfill organizational requirements—all of which have aided in
Construrama's profitable and sustainable expansion. Aiming to overcome the shortcomings and
instability of the Mexican phone system, CEMEXnet is an investment in CEMEX's satellite communication
system. This investment has paid off as seen by enhanced manufacturing procedures and precise data
management, demonstrating its value. CEMEX has made large investments in technology and logistics to
improve operational efficiency, which surpasses the rare criteria. Achieving success in these activities
demands significant financial investments in infrastructure and a highly qualified labor force, making it
difficult for rivals to mimic. The organization's supply chain and logistical strategy have been altered by
the integration of technology. Finally, the firm has been able to meet the organization's requirements by
optimizing manufacturing standards, streamlining procedures, and enhancing order fulfillment efficiency
through the integration of CEMEXnet with a variety of customized technological tools for output and
choice-making processes.

In conclusion, it can be observed that Barney's (1995) assertion holds true, with the requirement that
these competencies must meet all four criteria in the VRIO framework in the CEMEX case. However,
organizations may experience resource inefficiency and impracticality if they just depend on the RBV
(Resource-Based View) idea. As such, CEMEX should prioritize resource identification, allocation, and
leveraging while adopting the notion of dynamic capabilities. To gain a competitive edge, companies
must concentrate on building their entire capacity and critical capabilities (Kandampully et al., 1999).
Especially, knowledge resources are vital to an organization's ability to stay competitive and easily adjust
to the volatile and rapidly evolving nature of the market (Lin et al., 2008).

2. Jetblue case study

Pan et al. (2018) emphasize that a business's strategy is influenced by the macro environment, which
affects the industry it operates in. Barney (1991) advocates an "inside-out" approach focusing on a
company's unique abilities, while Porter (1996) suggests an "outside-in" perspective, aligning internal
processes with market position for competitive advantage. The concept of "fit" is essential in
differentiating a company's offerings and developing a unique value proposition. Porter identifies three
key elements of a successful strategy: a distinct value proposition, strategic trade-offs, and consistency in
activities.

A business needs a unique value proposition to stand out and sustain competitive advantage, involving
adaptation to customer needs, strategic decisions, and establishing Porter's three levels of fit—creating a
system hard for competitors to imitate. Our analysis will examine JetBlue's value proposition and the first
two levels of fit with Mint, assessing its sustainable competitive edge. We'll also consider Mint's role in
the third level of fit and its impact on JetBlue's competitive position according to Porter's framework.

Unique value proposition:

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Under Barger's leadership, JetBlue achieved modest growth and made internal adjustments. Focusing on
target customers, competitive pricing, and meeting consumer demand, JetBlue initially targeted both
leisure and business travelers, offering slightly premium yet affordable fares. Later, it expanded its
services with more destinations, including international routes, introduced a customer bill of rights,
offered free Wi-Fi, and established a codeshare agreement with Lufthansa to enhance customer
satisfaction. To sum up, Jetblue targets budget-conscious travelers with a high-value service and
enhanced comfort at an affordable price.

1st Order Fit:

Figure 3: Value chain before Mint Acquiring landing slots at smaller airports

This section focuses on how JetBlue differentiates itself in its value chain, emphasizing both support and
primary activities. In support activities, JetBlue uses cost-effective offices and integrates staff planning
with executive decisions. Its human resources strategy stands out, prioritizing cultural fit and attitude
over experience, aligning training with company values. Technologically, JetBlue modernizes cockpits
and revamps overhead lockers, prioritizing ticketing system efficiency. Primary activities include a unique
approach to customer seating, no meal service, a single class system,... JetBlue also distinguishes itself
by upholding consumer rights and promoting equality in service. In conclusion, Jetblue has created a
value chain that aligns with and fulfills the requirements of its intended customer base and brings
consistency to the value proposition.

 JetBlue's value chain, particularly in operations, has evolved due to Mint's introduction. This
change involved discontinuing certain routes and adding 16 lie-flat seats and 4 private suites in

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 their aircraft. Additionally, they now operate two types of aircraft - Embraer and Airbus. These
changes might impact JetBlue's competitive edge, as customers face reduced route choices,
altered perceptions of equality, and potentially higher costs for added services..

Trade-off:

Before applying Mint, aiming to minimize costs and focus on delivering value to customers, Jetblue had
to make trade-off choices, such as sacrificing superior customer service to offer customers a unique
deal that emphasizes "humanity in the air." This strategy provides a significant advantage over its low-
cost competitors as it incorporates much of the value identified in the previously discussed value
creation study. To maintain this commitment, this policy essentially means not providing business-class
seats or amenities (Porter, 1996). Another trade-off choice is Jetblue's decision to remove 6 rows of seats
to increase legroom for passengers. This move helps Jetblue create differentiation from low-cost
competitors as they can maintain competitive ticket prices while providing a more comfortable
experience for customers.

 Mint's introduction challenges JetBlue's value proposition - a key competitive advantage. Porter
(1996) emphasized the importance of trade-offs in business decisions impacting value
propositions. With Mint, JetBlue compromised its egalitarian approach by introducing a two-
class seating system, marking a significant trade-off from its previous commitment to equality.
Additionally, CEO Hayes' decision to add more seats in A320s, while maintaining legroom above
industry standards at an extra cost, potentially affecting customer loyalty and trust. Moreover,
JetBlue faced operational trade-offs, including route reductions and delayed new aircraft
deliveries, leading to a loss in route diversity. These changes reflect JetBlue's strategic shifts in
response to competitive pressures and market demands. Introducing Mint class in JetBlue poses
significant risks, potentially undermining its ethos and affordable travel image.

2nd Order Fit:

The study will use activity mapping to explore how JetBlue's internal operations interact to reinforce
each other, providing a competitive edge over competitors. This interconnected network of activities at
JetBlue, evident in the map, is hard for rivals to replicate. Key themes in JetBlue showed in thr map
below, all contributing to its unique value proposition.

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 Figure 4: Activity Mapping

JetBlue's core themes are supported by various interconnected initiatives. Despite limited services, the
airline enhances the experience with Wi-Fi, allocated seating, and ample legroom,... These
improvements in service quality (theme 1) are closely linked with and support their operational
efficiency (theme 2). Further, customer confidence is boosted by initiatives like a customer bill of rights.
Themes 3, 4, and 5 are interwoven, with their low-fare strategy being reinforced by using a single aircraft
type (A320s) and adopting no-baggage, point-to-point flying patterns, enhancing operational efficiency
and cost-effectiveness.

With the launch of Mint, Jetblue's CEO and top executives have been actively involved in overseeing both
external and internal operations to implement this innovative concept. At the request of shareholders,
Hayes’s efforts are convincing investors and retaining customers that the idea of a luxurious Mint aligns
with the company's values. This also serves as compelling proof of the Mint concept's 3rd order fit
efforts. Furthermore, it can be observed that there are several positive aspects that Mint has brought,
such as the fact that 16 Mint seats can offset the cost of the removed seats, while also helping the airline
increase annual revenue by $450 million and boost average revenue per flight by 10%.

JetBlue's Mint introduction, while potentially profitable, conflicts with its unique value proposition of
affordability and equality. The airline is caught between maintaining its low-cost model and
differentiating itself from competitors like Southwest Airlines. This strategy shift, including the removal of

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47 economy seats for Mint Class, deviates from JetBlue's commitment to "bringing humanity back to air
travel" and its egalitarian culture, risking its competitive advantage. The two-tiered service of Mint Class
may be seen by customers as a departure from the expected equality, possibly leading to alienation.
Such a perceived betrayal can lead to unpredictable outcomes, including potential consumer boycotts in
a market with numerous alternatives and high customer expectations (Mattila, 2004).

Therefore, in conclusion, as this article suggests, the application of Mint could lead Jetblue to lose its
current sustainable competitive advantage, according to Porter's perspective. However, considering the
financial gains Mint brings to Jetblue, Porter's theory still has certain limitations. Businesses can opt for
temporary competitive advantages to achieve short-term success instead of long-term ones. The
company should strategically align Mint with its market position, utilizing dynamic capabilities as
suggested by Teece and Pisano (1994). This approach involves evolving and adapting skills to changing
environments. Continuous R&D and reconfiguration are recommended to support and improve the Mint
class. Additionally, establishing a customer feedback system is vital to refine Mint’s service in line with
benchmarks, ensuring it aligns with JetBlue's evolving strategies and market demands.

Conclusion
Crafting effective business strategies is challenging, requiring leaders to understand and leverage their
company's capabilities and resources for a competitive edge. Additionally, investing in strategic CSR can
benefit both the firm and the community, enhancing the company's long-term reputation and image.

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