Factors that could have been optimized during the simulation
1. In this simulation you chose a sector to operate in (budget, mid–range or luxury). What have you learned about these sectors as a result of your experience in this simulation? Reflecting on theory what did you do well and what would you have done differently at the beginning of the simulation and why? What would you have done differently to be more successful during the simulation and why?
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?
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?
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? Evaluate how these helped you.
Bliss Air is one of the airlines that were involved in its management overhauling process for two years. However, the existing company is not only in need for decisive decision makers but also needs decision-making policies to carry its simulation process.
The report chart formulates that Bliss Air is one of the mid-range airlines in the industry that has grown exceptionally even after a strategic drift in its decisions after a year of inception highlighting its visions and missions, with decision making strategies in management.1. The airline's sector is a mid-range sector that possesses a huge population and constitutes all kinds of people who. The Bliss Air Airline has concentrated on the mid-range sectors out of three sectors to not only increase the company's sales volume but also keeps in mind the quality and productivity factor. Nevertheless, if analyzed in other areas, a luxury sector is a profit-generating sector with its primary and foremost aim being quality. However, the luxury airlines have supreme quality whereas when compared with mid-range class then the factor shifts to quality and price. On the other hand, the companies having both price and quality as their objectives need to focus and contest in both the sectors. A mid-range airline needs to review the concentration and maintenance based on the market research to assess the significant factor for the consumers as well as competitors (Hartnell 2015). Nonetheless, the airline company started with a luxury airline sector, but it did not meet the requirements of a luxury sector and was not able to provide with quality and heavy expenses made on promotion strategy. However, the cost was growing with no profit and hence, there was a shift from luxury to mid-range airlines in a year.
The following factors that could have reinvented at the time of simulation were the strategic approach, pricing (fare), systematic approach, large customer base.
Strategic Approach - At the beginning, there was no strategic approach applied that is the reason the shift is from luxury to mid-range sector. However, there was a need for a strategic approach that could define the goals and missions of the Bliss Air airline company. However, as stated it had been better if the strategy could have been mixed strategy with pricing, marketing and promotional activities (Robinson 2014).
Pricing (fare) - A cue in price is a tactic used in marketing when to influence customers or competitors depending on the future or past prices. However, Bliss Air airline being a luxurious airline, at first, kept a price that was more than the affordable price for the general public. Hence, the price is an important factor but not devising a clear strategy lead to expenses on promotional measures and ultimately resulted in a loss to the airline (Somervuori 2014).
Measures taken during the simulation
Large Customer Base - The focus laid on large customer base and not target population which resulted in extra expenses on promoting rather on pricing or setting target population.
Systematic Approach - There was no systematic approach as defined except gathering a broad consumer base. The flight maneuver, fuel and maintenance cost did not rise because of the increase in the number of passengers that is the reason that loss was not significant. Hence, if a systematic approach had been prevalent from the beginning, then Bliss Air would have profit than what the airline made (Chen and Pawilkowski 2015).
A better reservation system that enhances the productivity of the airline.
Pricing strategy based on the booking dates and less booking rates when booked in advance with coupons of gathering extra points.
Proper allocation of funds and forecasting profit in a guided business plan.
Proper guidance to the customers and make them feel satisfied (Belobaba, Odoni and Barnhart 2015).
Directed investment in the market research sector for situational analysis based on PESTEL (external) and SWOT (internal) industry analysis for sales forecasting and focusing on sales volume by employing more sales employee.2. The KPI's known as Key Performance Indicators adopted at the onset of the airline is different from now because the sector adopted at the first did not yield results. However, Key Performance Indicators did not lead to the success of the Bliss Air and resulted in reframing. Thus, after analyzing the visions, missions and objectives with the stakeholders; it led to measured progress to achieve the objectives. However, the four KPIs, which need to be analyzed in the airline industry, are customer satisfaction, financial performance index, flight operation, employee satisfaction and internal process quality (Marr 2013).
Customer Satisfaction – Customer recommendation based on customer satisfaction is a measure of success that can be measured on Global Performance Monitor (GPM) with follow-up online survey carried out by independent market research will help in reviewing the condition of sales and profitability. The result will be based on the percentage of the target population customers and will be enacted from the 7th quarter.
Financial performance index – The financial performance will be attained through investments, and the success of the business will provide an adequate return to stakeholders in the 7th quarter. The operating margin is the index to analyze the key financial performance through fares as the customer base is enlarged because shifting to mid –range after a year of inception has helped the airline know more about comfortable travel than a luxurious one.
Employee satisfaction – The airline industry is a monopolistic market with differentiation in prices. Thus, many high-performing organizations are recognizing engaged employees and are committed to organizational goals. However, the strategy adopted should be ensuring customer service and ensuring the needs of employees as well. The strategy built to hire employee should be performance based (Arhall and Cox 2013).
Flight operation – The flight operation followed the terms of achieving 70% of mileage per day that could ensure better results. However, the design to operate on 8th as 75% mileage has been accomplished in the 7th quarter because the customer base has increased and more flights have flown with full capacity passengers that have focused on the reduction of expenses.
Evaluation of KPIs during the simulation
Internal Process Quality – The Bliss Air airline needs to make sure that the product and services offered to the customers are in customer's interest so that maximum profitability is increased keeping the expenses minimal and forecasting to achieve an 80% quality and to maintain it for the future time. However, this Key Performance Factor will be achieved because previously the airline functioned on the different sector (Marr 2013).
The information achieved through the value packs needs to be analysed based on the key performance indicators regarding flight operation, customer satisfaction or financial performance index. The change from one sector to other has been tough for the organization but has helped in outlining the future goals such as:
The change in sector will advance in more routes and number of flights
The booking fares to be decreased to accommodate more passengers in one flight.
The knowledge of luxury sector involves expenses that cannot be fulfilled that is the reason the shift was beneficial.
The addition of more in-flight services.
The allotted funds need to be used for the maintenance of aircraft to avoid any fines and accidents.
Merger and acquisition are two different concepts. Mergers are based when two companies constitute to one "new" company whereas acquisition is taking assets possession of one company from the other (Evans 2010). The synergy goal is common in both the concepts.
The risks should be identified before going into a merger or acquisition. The risks that can pose a threat regarding Bliss Air airline would be the cultural risk, customer retention risk while focusing on the customer base followed by company employees because Bliss Air being a new business will ensure that the employees and customers are retained. However, if merged with any other company, then the retention power might get reduced as a result of changed working style and nature of the enterprise. However, to restore capabilities the merged or acquiring company should be of a similar business with stronger operations (Roberts, Wallace and Moles 2012).
There are certain advantages as well if went for a merger of acquisition. Bliss Air airline company, which is just two years old, might face problem in acquiring assets of other companies as it does possess funds that could help it acquire assets from other businesses (Moss 2013).
However, if the merger takes place with a stronger airline company than Bliss Air like Emirates or British Airways, then Bliss Air will become economically strong being the subsidiary in the merger. In Bliss Air, during the 6th quarter when the business was facing problems in the sector change, the airline had an overdraft loan, which will be saved further if merged with the potential airline. The advantage not only includes the positive impact on stock price but impact in financial terms as well highlighting operational strategy. The example that can help in understanding the situation could be if the company acts smartly and does a merger in the mid-quarter when the financial position is strong then Bliss Air could yield positive results regarding competitive advantage. However, the mistakes at the beginning of simulation would not have affected the growth of the airline. The other operating costs that could have spread between the two companies would have been interesting expenses, fuel, market research, maintenance, taxes, and others (Fageda and Perdiguero 2014).
Impact of a merger or acquisition
The Bliss Air lacked in expense allocation and proper maintenance and with a powerful merge, these disadvantages of Bliss Air could be shadowed as the funds are shared between the two companies.
Hence, as a team of Bliss Air, the profit was made in the first two-quarters, but a later shift in the sector, the company suffered a continuous loss which led to a reduction of profit and increased cost. However, reduction in pricing can be avoided in a merger. Nevertheless, the Bliss Airline lacked operations on customer and employee satisfaction as well (Fageda and Perdiguero 2014).4. The key ways that an extraordinary nature, if an industry is analysed, is based on the three aspects namely executing, monitoring and planning. The team of management started its operation in a luxury sector but after experiencing troubles from the second quarter, it changed to mid range sector because the cost was rising, profits were diminishing, and more funds had been used in promotional activities. The appraisal on how the Bliss Airline functioned was unsatisfactory at first but later turned to be unsatisfactory. However, the results did not show positive response as the cost was rising. Nevertheless, the competitive nature of the company was diminishing because it failed in the course of business (Belbin 2012). The strategic and systematic approach were not followed, and the basic motive was between quality and price. Subsequently, after sector change, though the different marketing sectors started responding better the profits were still diminishing as the operational strategy still lacked despite wide consumer base. Moreover, the airline company did not follow any managerial approach and lacked in aircraft maintenance as well.
During the starting of Bliss Air airline, the strategy that was brought into play was Dependency Theory believing that the company will be influenced in a greater manner from the external environment, which includes, customers, stakeholders and public. Hence, during the operations of the business, investing in promotional strategies perceived to get a higher return on customer base with a competitive advantage, but the expenses rose, and the cost and service factor was understood (Kuilman and Wezel 2013). The reduced price after the change to mid-range sector yielded positive results as the customer base started expanding but the sales volume remained the same. Nonetheless, the need for a strategic approach, proper outlining of the consumer base, and systematic approach with pricing technique from the beginning would not have let the shifting take place. However, the results produced could have been profitable if the proper strategy could have been brought into force.
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