...What are the challenges associated with managing in a business with high fixed costs like airlines? One of the challenges associated with managing in a business with high fixed costs, like airlines, is how to generate enough revenue during the peak season to reduce the effect of losses during off-peak seasons. Airlines must generate enough seasonal revenue during heavy travel periods, predominantly the summer months, to offset losses experienced during other seasons when profits from travel are low and costs remain the same. One way that airlines are doing this is through an additional fee structure for extra baggage or flight changes. Another challenge that airlines face is the threat of employee strikes, such as the Iberian Airlines pilot strike, which often have detrimental effects on the airlines profits by causing changes in flight schedules and increases in employee pay (Chen, Iberian Airlines and the Implications of High Fixed Costs). As a recent Wall Street Journal article, "Delta Air's Profit Up on Business Travel Gains", reports airlines are increasing their profits this quarter as a result of increased business travel. The article further points out that while the demand for trans-Atlantic flights by banking sector business travelers is down, the demand for those flights by consulting and business-services travelers is up (Carey, 2011). The airline industry's largest costs are salaries, fuel and planes. Using larger airplanes could be a method to neutralize...
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...* What are the challenges associated with managing in a business with high fixed costs like airlines? How should airlines tackle these challenges? These are just a few Ideas I have on how to generate revenue to combat against high fixed costs. According to the “The Five Competitive Forces that Shape Strategy” Airlines from the years 1992 – 2006 had a profitably of 5.9% compared to average industry with in the united states of 14.9% in this same time period. This can be attributed to the high fixed costs of this industry for example salaries, gate fees, and jet fuel. This industry can be very price sensitive on what to charge for a tickets since there are so many airlines to choose from, and alternatives to flying, like driving yourself, taking a train or bus. For an airline to be profitable I believe an it should focus on being the best at a particular market of air travel and not try to be the airline for everyone. If an airline wants to be a leader in business travel they should focus on that and try to provide more non-stop flights to their destinations as business travelers need to get from point A to point B on time. If the airline can build brand loyalty in this sector by proving they are consistently on time they could be the airline of choice for business travelers. I believe an airline should also try to keep their fleet to one type of jet. This will make it easier for their mechanics to work on these jets and keep their fleets in the air. One of the...
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...Determination 3 3. Symbiosis, Charisma and Integrity 3 4. ORGANIZATIONAL STRATEGY 3 1. Safety First 3 2. High Aircraft Utilization 4 3. Low Cost 4 4. Streamline Operations 4 5. Lean Distribution System 4 6. Point to point network 4 7. Managing Stakeholder’s interests 5 5. ORGANIZATIONAL STRUCTURE 6 1. Centralization 6 2. Hierarchy level 6 3. Formalization 6 4. Departmentalization 7 6. ORGANIZATIONAL CULTURE 7 1. Open Communication, Break down hierarchy 7 2. Encourage people to pursue their passions 7 3. Work-hard, play-hard culture 8 4. Staff Welfare 8 7. RELATION BETWEEN STRATEGY, STRUCTURE AND CULTURE 8 8. CHALLENGES OF AIRASIA 9 9. CONCLUSION 9 10. REFERENCES 10 11. APPENDIX 10 1. Organizational Structure 10 2. Survey 10 1. INTRODUCTION Our group would like to study about successful organization to enhance our learning experience. We have discussed few topics and finally AirAsia was selected for our group project because AirAsia is one of the role model for Low Cost Carrier industries. We also conducted a survey on low cost airways (Appendix 1). Tony Fernandez is a great leader and he has unique strategy, his courage lead AirAsia as a one of the powerful organization...
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...Summary Corporate Culture & Southwest Airline Case Analysis CORPORATE CULTURE Corporate culture is an incredibly powerful factor in a company’s long-term success. No matter how good your strategy is, when it comes down to it, people always make the difference. Corporate Culture * Is the meshing of shared values, beliefs, business principles, and traditions that imbues a firm’s operating style, behavioral norms, ingrained attitudes, and work atmosphere. * Is important because it influences the firm’s actions and approaches to conducting business Corporate culture refers to the shared values, ingrained attitudes, core beliefs and company traditions that determine norms of behavior, accepted work practices, and styles of operating. How was a corporate culture developed and nurtured in your organization? A company’s culture is grounded in and shaped by its core values and ethical standards. I am working at PT. Tempo Scan Pacific, Tbk. and known as Tempo Group. Tempo Group has a “Corporate Culture” implemented in the 5 core values : 1. Honesty 2. Equality 3. Usefulness 4. Responsibility 5. Perseverance Here are a few ways my organization can facilitate the creation of a nurturing the culture : * Communications: This allows information and ideas to flow up from entry-level ranks to the top management of the company, but information from upper management is also shared more readily with the entire company. Always communicate...
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...Mỹ Hạnh BABAIU13076 2. Park Do Hyun BABAUN13080 * 3. Nguyễn Thị Hoài BABAIU13090 * 4. Nguyễn Lê Phương Khanh BABAIU13107 * 5. Đỗ Thị Thanh Hoa BABAIU13089 I. Introduction. Nowadays, airlines industry is one of profitable businesses in the world. Both government and private enterprise are dominant in the industry. In Vietnam, aviation market is forecasted to be the world's 7th fastest-growing in 2013-2017 period. The Vietnam airlines industry stands a high chance of developing strongly, but there must be an investment in technology, infrastructure in order to reduce the cost as well. And Vietnam Airlines is a largest aviation brand name in Vietnam which has been wholly owned by government. In this report, we make some analyses to appreciate Vietnam Airlines exactly and realize suitable and unsuitable aspects. Company background Vietnamese name . . . . . . . . . . . . . . . Tong Cong ty Hang khong Vietnam English name . . . . . . . . . . . . . . . . . . . Vietnam Airlines Company Limited Transaction name . . . . . . . . . . . . . . . . Vietnam Airlines. Abbreviated name . . . . . . . . . . . . . . . . VIETNAM AIRLINES Head Office . . . . . . . . . . . . . . . . . . . . . No. 200, Nguyen Son Street, Bo De Ward, Long...
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...Assignment 2 1. What are some of the reasons a company would separate its online operations into a new company? The reasons why a company would separate its online operations into a new company would be that the predictable e-business volume will be large, a new business model has to be developed if there are constraints from the current one, there is no reliance on the legacy system or current operations, and the online company is given freedom to attract new talent, set their own prices, raise funding and make new alliances. Separating the online operations would reduce internal conflicts; build a new and more efficient system and also have the ability to create new brands more proficiently. To avoid store cannibalism, to settle a new subsidiary and look for new branding opportunities: 4/5 2. Explain why supply chain management should be aligned with corporate strategy. Justify your answer with an example. Supply chain management should be aligned with corporate strategy because supply chain is a process that runs through almost every division and operation in an organization. When supply chain is aligned with corporate strategy it produces optimal operational performance. Organizations have to manage inventory, get supplies on time for products, and arrange to have that final product reach its final destination in a timely manner. Aligning this with corporate strategy is important, as companies need to keep inventory manageable so they can keep cost down offer competitive...
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...ASSIGNMENT – BMMF5103 OUM BUSINESS SCHOOL SEPTEMBER 2014 BMMF5103 MANAGERIAL FINANCE MATRICULATION NO IDENTITY CARD NO. TELEPHONE NO. E-MAIL LEARNING CENTRE : : : : : CGS00965001 830825-14-5638 019-2289044 nuraishah.baharudin@gmail.com Kuala Lumpur Learning Centre ASSIGNMENT – BMMF5103 TABLE OF CONTENT Introduction to the companies’ background…………………………………………………….….2 Calculation of relevant financial ratios of both companies……..………………………………….4 Analysis of the relevant financial for both companies and Comparison and evaluation of the two companies financial performance based on the computed ratios…………………………………..13 Conclusion…………………………..……………………………………………………………...42 References…………………………..………………………………………………………….…..45 Appendix A Appendix B 1 ASSIGNMENT – BMMF5103 Introduction to the Companies’ Background Malaysia Airlines Berhad Malaysia Airlines’ journey in achieving its current reputable position has been a remarkable one. On 12th October 1937, Malayan Airways Limited (MAL) was born. In 1965, with the separation of Singapore from Malaysia, MAL became a bi-national airline and was renamed Malaysia-Singapore Airlines (MSA). Malaysia introduced Malaysian Airline Limited, which was subsequently renamed Malaysian Airline System, headquartered at the Sultan Abdul Aziz Shah Airport in Subang, Selangor, and took to the skies on 1st October 1972. The airline operates a fleet of 129 aircrafts, flying to nearly 111 destinations...
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...Mukhtar, Chairman Pakistan International Airline Corporation (PIAC) was reading the final version of the PIAC audited annual report. He immediately called the Managing Director, PIAC to arrange a meeting to discuss the auditor’s report. The particular part of auditors’ opinion that caught his attention was the following: “We draw attention to note 1.2 to the unconsolidated financial statements, which states that the Corporation incurred a loss of Rs. 26,767.207 million during the year ended December 31, 2011, resulting in accumulated loss of Rs. 119,016.727 million as of December 31, 2011, and as of that date, the Corporation’s current liabilities exceeded its current assets by Rs. 88,221.403 million. These conditions indicate the existence of a material uncertainty which may cast doubt about the Corporation’s ability to continue as a going concern. Our opinion is not qualified in respect of this matter.” The agenda of the meeting was quite clear i.e., how to keep PIA solvent. PIAC Brief History2: In 1946 Quaid-e-Azam Muhammad Ali Jinnah realized the need for an airline network for the forming country and ask for the help of an industrialist Mirza Ahmad Ispahani to develop a flag carrier for the nation. Meanwhile, an airline called “Orient Airways”', registered in Calcutta, was formed on 23 October 1946. In May 1947 the airline was granted a license to fly. This was the first post-war airline flight by a South Asian registered airline company. Two months after this service began...
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...acquired and merged aerospace companies are Hughes Space and Communications, North American Aviation, McDonnell Douglas, Rockwell International and Jappesen (Boeing, 2012). The purpose of this report is twofold and accordingly the report is divided into two parts. The first part consists of a critical evaluation of the internal and external business environments of Boeing to find out to at what extent Boeing is strategically fit with its current business environment. In the second part, an improvement strategy will be recommended to the company to effectively manage its supply chain practices after critically reviewing the feasibility, acceptability and suitability of the strategy. Contents Executive summary 1 Introduction to Boeing 787 Dreamliner 3 (PART A) 4 S.W.O.T analysis of Boeing 787 Dreamliner 4 Strengths: 4 Weaknesses: 5 Opportunities: 6 Threats: 6 Boeing 787 Dreamliner competitiveness 7 Business model of Boeing Dreamliner 787 9 B787 SYSTEMS AND EQUIPMENT: 9 MANUFACTURING/QUALITY: 9 Design and features of Boeing 787 Dreamliner: 10 Strategic alliance of Boeing 787 Dreamliner 12 Challenges posed by the business model: 12 Exostar’s Supply Chain Management Solution 13 Benefits of Strategic alliance and an effective manufacturing model 15 Recommendations and conclusion for Boeing 787 Dreamliner 16 References 17 Appendix 18 Introduction to Boeing 787 Dreamliner Source: (http://wallpaperswide.com/boeing_787_dreamliner-wallpapers.html) ...
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...way as an innovator, launching a large range of new products and processes to make photography simpler, more useful and more enjoyable. With the rapid growth of digital photography, competition against its product and being slow to embrace the move to digital technology Kodak has fallen on hard times. In January 2012, Kodak and its US subsidiaries filed voluntary petitions for Chapter 11 business reorganisation1 in the US Bankruptcy Court for the Southern District of New York. A company spokesperson said the aim of the business reorganisation was to enable Kodak to bolster liquidity, sell off nonstrategic intellectual property, and enable the company to focus on the most valuable business lines. The process will allow Kodak to continue normal business operations while it attempts to emerge a profitable and sustainable enterprise2. Kodak: Snapshot of an innovative icon slow to move with the times In filing for bankruptcy protection, Kodak executives say they are seeking to follow the path of US corporations that have reinvented themselves after a court-supervised reorganisation, like United Airlines and Chrysler. Antonio Perez, the company’s oft-criticised chief executive who has been trying to turn the company...
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...Decision Implementation 39 References 40 Introduction Delta Airlines was founded by C.E. Woolman, an agriculture extension agent (Anthony, Kacmar, & Perrewe, 2010). C.E Woolman was not a banker, venture capitalist or war pilot, as many of the competing airlines were. He didn’t have the aggressive military style that many of the other airline founders had. What C.E. Woolman instilled within the employees at all levels of the organization is that people matter and should be treated fairly and equitably. This philosophy led Delta Airlines to be the leader in customer service from the company’s inception through the many mergers over the years. Through the difficult financial times when other airlines were laying off employees and filing for bankruptcy, Delta continued to pay their people well and keep them employed. There was an exception during the Ronald Allen CEO era of 1987 thru 1997. Human relations took a significant down turn during his tenure as CEO, especially during 1993 and 1994, but Delta decided to part ways with Allen and began repairing those fragile relationships with its employees. Delta Airlines still focuses on the human relations factor and has been able to repair the relationship with its employees, they believe it is their key to success. External Environment General The airline industry is a fast growing sector demonstrating a very strong growth rate. It is associated with a number of social and economic...
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...Fixed costs do not vary with the scale of operations, and will be incurred even if the flight is cancelled. Examples of fixed cost are the rental cost of leased planes, which is time- but not operations-sensitive, and general administrative costs such as salaries. Constant costs, which cease if the flight is cancelled but are invariant to the volume of traffic carried, are also high. Examples of constant costs are the subsistence allowance paid to the cabin crew, and landing fees, which do not depend on the number of passengers, but will not be incurred if the flight is cancelled. Variable costs, which vary with the volume of traffic carried, have traditionally been quite low in the airline industry. They include ticket commissions, baggage handling, and cabin amenities including food and beverages, among other passenger-related costs. With the recent spate of cost cutting, where ticket commissions to travel agents have been eliminated by the major airlines (with the exception of Southwest Airlines), a cap of $100 commission on international flights, and drastic reductions in the quantity and quality of meals, variable costs have gone down. To counter the effects of the September 11, 2001 terrorist attacks, U.S. airlines have reduced fares to lure back lost passengers. As a result, load factors for 2002 are estimated to be around 72 percent, but the breakeven passenger load factor has risen to 81 percent, so losses for 2002 are estimated at $9 billion. (3) Thus there is...
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...Strategies for Growth and Value Creation Case Analysis: JetBlue – Managing Growth Prepared by, Alexander Martinus Christian (1342980602) Dina Sandri Fani (1342981574) Muhammad Irsan (1340001263) Puntin Kulmongkon (1342980514) BINUS BUSINESS SCHOOL BINUS UNIVERSITY JAKARTA 2015 I. Case Synopsis JetBlue Airways, Inc. (JetBlue) is a low-cost carrier (LCC) that is based in New York’s John F. Kennedy International Airport. The founder, David Neeleman, developed JetBlue’s business plans in 1998, and established the company in February 1999 after raising the needed financial resource to create the airline. JetBlue started its operations in February 2000, with its first flight from JFK to Fort Lauderdale airport in Florida. The September 11, 2001 terrorist attacks caused a very devastating time for the airline industry. Even though this occurred only a year after JetBlue started as a LCC, the company was one of three airlines to produce a profit at the end of 2001. Their performance in this year alone showed many other airlines that JetBlue was a big competitor in the airline industry who couldn’t be ignored. In the following years JetBlue grew substantially as one of best-rated airlines in the industry for customer satisfaction. In May 2007, JetBlue now decides to change its command structure. David Neeleman is being replaced by David Barger, former chief operating officer (COO) and president of the company, as chief executive officer (CEO). After gaining...
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...AND FALL OF KINGFISHER AIRLINES IN THOSE YEARS. Indian Aviation Industry It is one of the fastest Growing Aviation Market. There are approximately one billion people and 0.05% of them fly. More and more middle class families now prefer air transport than other traditional mode of transport. The Indian travel market has nearly tripled to $ 51 billion by 2011, from $16.3 billion in 2005-06. Origin of Indian civil aviation industry India occupies an eminent position in the civil aviation sector with a large fleet of aircrafts. Estimates show that the domestic and international passenger traffic in India is growing tremendously PEST ANALYSIS – AIRLINE INDUSTRY Political Factors India’s political environment – Tension with Pakistan, Government’s inability to control issues (riots etc) September 11 th - huge drop in air traffic due to safety and security concerns Trade relations with other countries have to be good Economic Factors Recession- airlines are considered as a luxury High operation costs due to low demand resulted in laying off employees Social Factors People from varied income groups have to be catered Destination, kinds of food served have to be chosen carefully Technological Factors Use of Internet- online ticket booking, updated flight information & handling of customer complaints restructuring the existing airports to world class appeal Porters 5 forces Threat of New Entrants is low The airline industry is so saturated...
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...The University of the West Indies, St. Augustine Faculty of Social Sciences Department of Management Studies M.Sc. Aviation Management AVMT 6001 – Accounting for Business Decisions AVMT 6001 – Group Project 2 Managerial Accounting - JetBlue Airways Corporation Group Members: Cherrish Bridgemohan - 807001633 Rajiv Debie - 04708006 Israel Duncan - 814004144 Kenrick Duncan - 814002425 Neil Shepherd - 814004177 Signatures: Cherrish Bridgemohan ___________________________ Rajiv Debie Israel Duncan Kenrick Duncan Neil Shepherd ___________________________ ___________________________ ___________________________ ___________________________ November 16, 2014 Table of Contents I. II. Table of Abbreviations ........................................................................................................................ 5 Executive Summary............................................................................................................................ 6 III. Introduction......................................................................................................................................... 7 IV. Background – JetBlue Airways ......................................................................................................... 7 V. Management Accounting Information.............................................................................................. 8 Financial Accounting versus Management Accounting ...........................
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