JET BLUE AIRWAYS

Strengths

o The first strength of JetBlue is its founding team’s background. Indeed, the
company was founded by a veteran in the low-fare airline industry, backed by a
group of private equity firms. The management of the company has also the
expertise of leading a publicly held company, following the IPO in 2002.
o The company has a successful business model and exhibits strong financial
results, as well as strong revenue growth despite the downturn in the industry
following the terrorist attacks of September 11, 2001. Thus, JetBlue is a perceived
as a solid and growing company by the investors.
o The low operation costs of JetBlue are one of the most important strengths of the
company. The company is utilizing aircraft efficiently generating more revenue
per plane. The company is also operating one type of aircraft, the Airbus A320,
thus lowering maintenance and training costs and spare parts needs.
o The workforce of JetBlue is non-unionized and does not benefit from strict work
regulations.
o The distribution costs of JetBlue are also low. Indeed, the company does not
provide any paper tickets.
o The company operates only new airplanes, thus minimizing maintenance costs
and offering a good “flying experience” to its customers. The company also
benefits from its reliable on-time performance, comfortable airplanes, and
friendly flying personnel to attract and secure its customer base.
o The company serves densely populated cities in underserved airports, with high
fares. This strategy helps the company capture market share in these segments.
o The company is financing its existing aircraft through secured debt and operating
leases, on favorable terms. Those financing possibilities are still available for the
company for additional aircraft purchase.

Weaknesses

 A considerable weakness of JetBlue is its small size. The company is operating 42 aircraft,
for 73 flights per day and annual revenues of $635 million.
 The company can probably not rely on its personnel loyalty, due to the non-
advantageous working conditions and regulation.
 The company is operating only one type of airplane, the Airbus A320. This represents a
weakness for the company as well. Indeed, the planes have the same age and might all
suffer at the same time from an eventual recurrent technical problem on this type of
aircraft, which should be catastrophic for the company.
 JetBlue does not have a line of credit, or short-term borrowing facility. Therefore, the
company depends on its operating cash flow to finance its short-term and working
capital obligations. The balance sheet of the company also needs to be strengthened.
  JetBlue also faces one of the airline’s principal risks which is the rising fuel price. The
company is spending a considerable amount of money in hedging for fuel prices
volatility. In addition, as the company is relatively consuming low volumes of fuel, it can
suffer from significantly higher prices in case of fuel shortage.
 JetBlue is a levered company. With a short-term debt of $26,580 thousand and a long-
term debt of $731,740 thousand as by June 2003, and equity of $480,594 thousand, the
company’s leverage ratio is 157.8%, whereas the industry average is around 129.46%
(Infinancials).

Opportunities
Internal

 The purchase of the new 100-seat Embraer E190 aircraft would allow JetBlue to enter
smaller markets while maintaining low operating costs, and increase flight frequency on
existing routes.
 The private placement of convertible debt proposed by JetBlue’s investment bankers
would provide sufficient capital at relatively low interest rates.
 JetBlue is a fast growing company, and should thus bear having less debt. The company
has thus the opportunity to raise additional equity.

External

 The low fares offered by JetBlue would allow it to attract new passengers who might
otherwise not fly.
 The mid-sized market that JetBlue intends to enter will represent a new opportunity for
growth to the company.
 By expanding its activities, the company will purchase larger volumes of jet fuel and
would thus have more leverage in procuring fuel than today. The company will thus
suffer relatively less from fuel shortages.

Challenges
Internal

 The company is intending to grow and become an airline company “like the others”.
JetBlue might thus lose its advantages from being low-cost, small and highly profitable.
 The company is clearly departing from its strategy, which has been the source of its
strengths up to 2003.
 JetBlue plans to purchase a new type of aircraft, the Embraer E190. This is again a
departure from the company’s initial strategy which is to operate only one type of
aircraft. JetBlue might thus incur higher maintenance and training costs, higher spare
parts and engines costs, and some negative impact on the maintenance scheduling.
  JetBlue plans to increase its aircraft fleet from 45 to 252. In addition, the company plans
to invest in other domains such as spare parts, new engines, additional hangars and a
flight training center. This represents a very big investment and thus a consequent threat
for the company. Such an investment will let the company more exposed to financial
distress and raises the question of the management ability to cope with such a rapid
expansion.
 The company board members are very concerned about dilution. There is a threat that
they will not support John Owen, the CFO, if he recommends to raise new equity capital.
 With the rapid expansion of the company, the jet fuel expenses, as well as the cost of
their hedging will grow rapidly. The company will be more exposed to both the fuel price
volatility and the growing cost of hedging it.
 As the company will get bigger, with higher manpower, those might want to be
unionized.

External

 The fuel price is also an external factor due to its non-predictable volatility.
 JetBlue plans to be the launch customer for the new Embraer E190 aircraft. Although this
allowed probably the company to have a price discount, it is also a threat. JetBlue might
be exposed to technical and/or non-technical problems that have been not detected by
the manufacturer or other users of the jet.
 The reason for the company to go public was to wean off its dependence on the venture
capital and private equity industries. Issuing private debt securities represent a threat for
JetBlue as this might lock back the company to such private investors. In addition, those
investors and the private investors in general might not be interested by the eventual
convertible debenture issued by the company.
 JetBlue is a small client of Morgan Stanley, the investment bank in charge of proposing
financing alternatives for the company. Morgan Stanley might thus charge heavily
JetBlue, and/or try to bias the company’s choice for its benefit.
 The competition from other low-cost and regular airline companies which might try to
counter JetBlue’s expansion.
 The revenues of the company and its growth aspirations are subject to the economic
conditions. An economic downturn or additional terrorist attacks might impact
negatively JetBlue’s ability to finance its debt obligations.
 The company will also have to secure additional airport gates which will represent a
threat for the company in case it cannot negotiate advantageous conditions as with
underserved airports.
CALIFORNIA PIZZA KITCHEN

Strengths

1. Innovative & non-traditional pizzas. For ex – The original BBQ chicken

pizza was introduced by CPK

2. Competitive prices. It doesn’t have to offer discounts to increase sales

even during recession

3. Recent tie up with Kraft foods to distribute a line of frozen pizzas

4. Variety of ways in which its distributed & marketed. Strong distribution

networks including franchisee concepts designed for airports , universities ,
stadiums , supermarkets & even catering

5. Healthy balance sheet, high margin revenue. Reduction in long term

debt

6. High brand resonance, high in consumer & community engagement

activities. It has official partnerships with different NGOs

7. High in quality. It has partnered with gluten free food service certification
program

8. Close to 15,000 employees in over 15 countries

Weaknesses

1. Lack of geographical diversification. Most of the company operated

stores are located within California

2. Bad acquisitions in past

Opportunities

1. Increase number of franchises for good margins & returns

2. Increase number of outlets in other geographies

3. Market more varieties of premium frozen pizzas

4. Can leverage its tie up with Kraft & promote other products too

5. More formats of restaurants ex – quick service restaurants in college &

other potential markets , catering

Challenges

1. Profits greatly depend on Krafts relations with CPK

2. Increase in number of competitors with similar value proposition

3. Increase in food regulation standards

4. Seasonality. To drive restaurant sales one has to continuously innovate

& offer new exciting products.
 ● VALUE LINE PUBLISHING
Home Depot SWOT Analysis

Strengths

1. Home Depot operates in more than 2000+ locations

2. The companies financial strength can be seen from its NYSE and S&P 500 index
3. Home Depot is one of the largest home improvement retailers in the United States
4. More than 400,000 people are employed with the organization
5. Strong financial position and growing opportunities for the company
6. Home Depot has a high brand recall as it is a leading market player
7. The company has been involved with several sponsorships in sports, political and
entertainment events
8. The online brand of Home Depot has also been able to engage users in the USA
9. Out the US, it has stores in Canada, UK, China 

Weaknesses

1. Home Depot is primarily dependent on US market and has limited global presence
2. Intense competition means limited market share growth

Opportunities

1. Diversifying product portfolio and catering to more customer needs

2. The Home Depot exclusively carries several major brands
3. Global expansion to other countries can help boost business for the company
4. Acquisition of smaller companies can help Home Depot increase sales

Threats

1. Competition within industry can affect Home Depot's business

2. Bargain power of buyer is higher and brand switching can cost loyal customers
3. Government policies and taxation can affect business margins

Lowe's Companies SWOT Analysis

Strengths

1. Lowe's Companies serves more than 14 million customers a week

2. Globally it is one of the largest home improvement retail brand along with The Home
Depot
3. The company has its presence on NYSE & S&P 500 Component
4. Lowe's Companies has been recognized in the Fortune 500 companies
5. Strong brand reputation and financially stable
6. One of the top 50 trademark applicants according to the United States Patent and
Trademark Office

Weaknesses

1. Lowe's Companies is decentralized

2. Geographical expansion is not at very large extent and limited global presence

Opportunities

1. Global expansion to tap newer markets can boost Lowe's business

2. Increasing product and service offerings
3.Free parcel shipping to increase customer experience

Threats

1. Cut throat competition with respect to margins

2. Touch and feel of product is not available prior to purchase in case of shipment
3. People opting for ecommerce portals for home deliveries & services can degrow
business