BSS063-6 Management-Practice-Airlines-Simulation University of Bedfordshire

Question 2:

What would you have done differently to be more successful during the simulation and why?

Answer 1:

The sector where we wanted to position our company Eagle Air was mid-range as it is the largest target market in terms of purchasing power and already have the need of travel by air. This is a critical decision as, we wanted to position Eagle Air that is affordable while the middle level customer segment who is already a frequent flyer in airlines. So market segmentation for mid range level customers is creating subsets amidst whole population of the airline travelers. Brassington and Pettitt (2006) argued that this segment has fixed needs and priorities that separates from luxury or budge segment. “BSS063-6 Management-Practice-Airlines-Simulation University of Bedfordshire”.

Luxury sector market segmentation does not meet our service standards, aircraft body types and pricing of ticket. While for the budget sector, we cannot justify the pricing of airline tickets and volume of passengers so we focused on mid range sector. The pressure on costing per mile in Eagle Air, which is 38 cents had to justify the passenger cabin service, and the rising cost of ATF in the world markets. Additional cost of renovation of cabin and revising menu would have to be done as per taste for both the leased and the owned aircrafts.

Read more Assignment Solved Blog

To begin the simulation once again, I believe that the marketing decision of advertisement could have been significantly lowered down through the use of social media and online promotions. This could have lowered ‘Eagle Air’ start up cost significantly, while it also would have helped to acquire new customers faster using social media networking and online promotions. This could have served the purpose of segmenting market through geographies and approaching the customers in those routes for ticket offers. “BSS063-6 Management-Practice-Airlines-Simulation University of Bedfordshire”.

The second issue is 5% increase in compensation, where the leeway of (1-7)% was there, so a phase wise rollout (in increasing wages) could have been done along with stock as bonus. The gradual increase in the compensation done per quarter wise would have helped in better management of financials and keep the track of profits per seat in route and justify the compensation hike.

The choice of aircrafts for the status of owning them and leasing them could have been leased only option which would have reduced the pressure on the first quarter financials. “BSS063-6 Management-Practice-Airlines-Simulation University of Bedfordshire”.

The two areas which justifies the use of funds are quality training budget and the aircraft cleaning that points towards the Eagle Air’s service quality elements and operations strategy. The issue of fuel purchased from open market is variable factor which could have been hedged for future. Regarding the aircraft choice and route scheduling, ‘Eagle Air’ after the first quarter could have segregated the route with revenue earned per seat in that route, so the high and low category to be created. Ali (2009) added that this would have enabled maximize miles flown, seat occupancy being optimized and increase the revenue per seat.

In overall, the simulation offered choices while it has allowed the first choices to continue over the quarters, while the operations can be improved significantly that would indicate profits in the subsequent quarters. “BSS063-6 Management-Practice-Airlines-Simulation University of Bedfordshire”.

Question 2

What were the KPI’s you used in running your airline? Did they change? Critically appraise the value of the information you had available to you in the results packs during the simulation. How did you use this to affect your decision making?

Answer 2:

KPIs (key performance indicators) for Eagle Air is the operating cost that is calculated by the total number of seats the aircraft has flown, cost per seat mile which when multiplied gives the final figure. The indicators of KPIs are indicator of costing strategy as it will be strategic for Eagle Air operations.
Though earlier the targeted estimate for the fare per mile per passenger to be 0.38 cents the indicator of not breaching the mark was essential to notice. The decision to position it, as a regular fare component therefore yielded the revenue per seat as the aircraft for a route covered the round trip total miles. This is the costing figure as if the revenue lowers below the threshold of 0.38cents then the viability of the route and the aircraft flying would not be there.
The dashboard metrics show the following indicators: Gross revenue, operating expense, net profit and the stock price (Foxall, 2008). The quarter to quarter basis figures show that there is 3.8% growth in gross revenues, with 1.2% operating growth, and 17.9% growth in net profit, and the stock has risen 3.3%. “BSS063-6 Management-Practice-Airlines-Simulation University of Bedfordshire”.

In the results section, when Eagle Air is compared with the other airline groups, we find that our income is healthy at $352,660 with current prevailing stock price of $43.15 that is best in the lot. The point of concern however, is in operations, where it indicates Eagle Air is not able to meet the service quality standard where it scored 94 with industry when most of them have achieved 99. For the period 12, the total cumulative income for Eagle Air is $2,095,304 that beats the others as many have run into losses. The strategy of keeping the fuel expenses low (50:50 open market & contract) purchase thus is a strategy to keep the fixed cost constant and purchase variable part from open market.

Read more Assignment Solved Blog

The above information therefore shows that the financially Eagle Air is doing fine, and has large amount of net profit generated $352,660 is healthy. The choices made in the beginning for routes, aircrafts and the scheduling done is appropriate, while thinking about the KPI, the issue of service quality should have been there as well. Customer’s rating Eagle Air indicates that the tactical strategy to mend the service quality gaps exists, failing which will affect future marketing efforts and seat occupancy issues. The issue of marketing expenses is huge as it can be curtailed with the strategy of social networking (Mulligan & Webster, 2007). Similarly, the fuel expenses forming 14.3% shows that along with flight operations and fleet maintenance it is one the highest expenses. Going forward, the need to lower these three figures should be the middle to long term strategy for Eagle Air. “BSS063-6 Management-Practice-Airlines-Simulation University of Bedfordshire”.

Question 3

Giving due consideration to theory, evaluate how a merger or acquisition might have changed your outcomes and the way you operated during the simulation? What additional implications would there have been for your company?

Answer 3:

The M&A theory talks about mutually exclusive gain of market share, financials and sharing of customers which would benefit both the firms. For Eagle Air with the kind of profit generated thus holds an opportunity to unleash the competitive strategy through M&A. The comparative results show that Eagle Air and Signature Airlines are the only ones able to accrue net income in green while the remaining airlines runs into red. The strategic alliance in terms of synergetic relationship with Signature Airlines would have subsequently changed the ball game altogether. In the synergetic M&A theory, there is a premise of something more big of the final merged entity will contribute to create more value for both the entities. “BSS063-6 Management-Practice-Airlines-Simulation University of Bedfordshire”.

Read more Assignment Solved Blog

Going forward with this M&A definition, then there can be sharing of passengers data for cross selling, offer more routes to each other’s customers, share the common ground operations, cabin maintenance, to enjoy economies of scale in cabin food supply, widening of the market penetration and be competitive (Brigham, 2010). None of the other airlines can respond to the requirements as their financials are below average, so these M&A entity can eliminate with their approach to lower the cost of operations to exploit newer routes, and bid for newer markets like long haul flights.

In the simulation game, if a M&A had occurred in midway, then the obvious strategies of the sharing of the financials would have happened, while KPIs would have differed, there would have been a change process which would not have been visible in dashboard. Aligning operations for a synergetic M&A, would require all functions especially financials to be agreed upon and accepted by both the parties (Davis, 2010). This would substantially push up the efficiencies of scale in internal operations, as resources will be share internally which would lower the cost of training, negotiate on the fuel contracts more aggressively. The challenges is that Eagle Air needed to learn more in terms of service quality, more working capital from Signature Airlines, that will enable to meet up to the customer satisfaction index and draw up a strategy to lease more new generation aircrafts.

Read more Assignment Solved Blog

Some of the future implications for the synergetic M&A for Eagle Airlines and Signature Airlines is that it will reduce the risk of both competing against each other. Again, it also increases their propensity to eye for the other airlines operating in different routes to be acquired as both of them have substantial net income from their operations. The possible outcomes is more profit, better assured repeat business, higher seat miles utilization and ability to gain more on the existing individual passenger traffic market share for a given route. The importance of the KPI going forward will help to control the risks that are lurking. “BSS063-6 Management-Practice-Airlines-Simulation University of Bedfordshire”.

Question 4

Appraise how successful your company was in your industry. Was your relative success or failure due primarily to your analysis and diagnosis or the choices and decisions you made? Which models and theory did you consider when participating in the game and how did this help you?

Answer 4

Eagle Air tops the chart in the industry, which reflects in the investor confidence and the stock price hovering around $43.15 is a testimony of that. There are other competitors whose stock price, market price ranges from $ (11.29 to 32.12) barring the other competitor at $40.14. This shows the market sentiments while financially Eagle Air is showing signs of robust income for all the quarters. The success principles for this venture was to meet up the necessary operations and legal obligations that reflects in the income statement, paying up the lease rentals, insurance, compensation, and save the rest for future. The initial marketing expenses is justified as it helped to create brand awareness about the Eagle Air existence. The maintenance and administrative expenses are high and Eagle Air not achieving the quality score in providing service shows that in operations it still needs to work on towards bettering own scores. On the contrary, the routes and the choice of aircraft types helped to enable to fly miles that are short distance, while longer routes could have been done by the Canadian CRJ100, Embraer ERJ135. Maintenance fee chosen at level 3 is $3500 per quarter but barring the cleanliness and aircraft UV check and safety, the passenger has not been able to contribute to the overall quality satisfaction index.

The theories that are relevant for this simulation game is first to understand the type of segment we wanted to operate and the target market segment. For this we used market segmentation theory, where the psychological needs of a mid range was targeted which was done on the premise that they get what they pay for (Bowie and Buttle, 2007). The next theory was pricing which was translated into costing per mile, so at 0.38cents the challenge was to reach break even early. The next theories were typically used in strategies, where tactical, medium, short and long term were discussed in different context of the stages of the simulation game. The most important was competitive strategy which led to the proposal of M&A with the Signature Airlines for a synergetic relationship. This eliminated competition while enabled to create a bigger capabilities from the merged entities that was a threat for the remaining loss making airlines in that sector. “BSS063-6 Management-Practice-Airlines-Simulation University of Bedfordshire”.

The simulation game was interesting and an eye opener for me as a student as it make me realize the overall linkages between the key functions and how choices made affected the outcomes. As a team, my contribution was towards more of the route selection, aircrafts while group discussion increased many views which we could not implement and justify. As I now reflect back, the game enabled me to link the theories of the book in an action based role play. It helped me to get the feedback of the strategies deployed and the consequences in the outcomes. The game challenged my knowledge inside me, and put them to test which was unexpected when I visualized the outcomes against the choices made earlier.

Read more Assignment Solved Blog

References: BSS063-6 Management-Practice-Airlines-Simulation University of Bedfordshire

Ali, S. S., (2009). Models in Consumer Buying Behavior. 7th Edition. Fourth Estate: Manchester
Bowie, D. and Buttle, F. (2007) Hospitality Marketing: An Introduction. 5th ed. Oxford: Elsevier.
Brassington, F.and Pettitt, S. (2006) Principles of Marketing. 4th ed. Harlow: Financial Times Prentice Hall.
Brigham, E., (2010). Strategic Financial Management: Theory and Practice. 5th Edition. Harper Press: Liverpool.
Davis, J. A. (2010) Competitive Success, How Branding Adds Value. 5th ed. London: Kogan Page. pp. 89-95
Foxall, G., (2008). Strategic marketing management. 6th ed. Harlow: Prentice Hall Companion.

If you feel that you need help, shoot an email, chat with us, or even send a ping through WhatsApp.
WhatsApp/Call: +44.7412470170
Email: uk@assignmentshelp4u.com

#thesiswriting, #UKuniversities, #assignmenthelp, #UKcolleges, #assignmentUK, #assignmentmaker, #researchpaper, #homeworkhelper, #writingservices, #assignmenthelper, #assignmentwritinghelp, #collegehomeworkhelp, #studentshelp, #topUKuniversities #studentlife, #research, #dissertationhelp, #UKstudent #assignmentshelp, #assignmentdue, #confidentialassignment, #assignmenthelper, #assignmentuniversity, #follow #studenthelp, #homeworksucks, #domyhomework, #assignmenthelponline, #MBAassignment, #writersforassignment,#MBAdissertation, #MBAassignments