Company Analysis: Air Canada's Business Situation, Strategies & Performance

You have selected a company. Conduct research on the company and identify their current situation. The latest annual report for the company is provided for your use. You will be presenting your recommendations to the company. Your job is to provide a report addressing he following information:

1. Business Mission
   1. What business is your company in?
   2. What business should they be in the future?
   3. What are the business capabilities?

2. Performance Objectives

1. How is the business performing currently? Provide three examples that support your statement.
2. From data in the financial statements provided calculate a GMROI for the company.
3. Identify two (2) performance measures under each of the following three categories and explain why the measures would be appropriate for the company:

1. Input
2. Output

• Productivity

3. Merchandise Flow
   1. Describe the merchandise flow for the company.

1. Make one (1) recommendation about changing the merchandise flow.

4. Category Management
   1. For the purpose of this section (category management) identify one (1) category that the company sells.

1. What type of merchandise does this category represent?
2. Where is the category in its’ life cycle?
3. Develop an assortment plan for the category.  Justify the choices you are making.

5. Branding Strategies

1. Debate about the mix of national brands and private label brands sold by the company.
2. Determine if the company should expand or contract the number of private label brands available. Justify your decision.
3. Determine the private brand strategy the company is following. Make a recommendation on whether to continue with this strategy or to change to another private brand strategy. Provide an example and justify the recommendation.

6. Pricing Strategies
   1. When setting prices, describe how the company takes into account

1. Cost
2. Demand

• Competition

1. Legal considerations

1. Make two (2) recommendations on how setting prices could change.
2. What price adjustments does the company engage in?

1. Make two (2) recommendation on possible price adjustments.
2. What pricing strategy is the company following?

1. Make one (1) recommendation on changing the pricing strategy used.
2. How does the company currently use pricing (apart from pricing adjustments) to stimulate sales?

1. Make two (2) recommendation on how the company can stimulate sales.

7. Customer Loyalty

1. As part of its CRM process, how is the company getting customer loyalty?

1. Make three (3) recommendations on how the company can increase customer loyalty.

8. Summary
   1. Provided a summary of the analysis and recommendations you have compiled.
   2. Express an opinion on the future success of the company.

Business of the company

Business of the company

The company Air Canada is a largest provider of scheduled passenger services in Canada, it also helps in U.S. transborder market to exchange goods at international level outside Canada. The company operates passenger flights inter cities with around 1,602 daily scheduled flights on an average to 217 direct destinations on major continents. The businesses operates at high scales and have to deal with huge managements and permissions (Goworek, McGoldrick & McGoldrick, 2015).

Opinions for the future business plans

The ongoing business plans are good but in order to better the performance of the company, the company officials have some new plans for 2019. A new reservation system will be introduced, to manage the upcoming flight and help the reschedule more efficiently causing a hassle free for passengers (Fernie & Sparks, 2014).

Business capabilities

The company can invest in web and mobile platforms in order to get the most of the revenue the upcoming years. The company can have partnerships with the retailers in the market to see the capabilities of the company. Also, the company can invest in how to make flights more convenient, pocket friendly, low assumptions of fuel and more advertisement of the brand.

Performance objectives

1-Performance of the business and proofs for them

In order to measure the performance of a company it is evident to look at its financial performance in the recent which will show its overall performance in the market which can be done through highlights presented by Air Canada in their Annual Report.

 

Figure 1: Performance index

(Source: Annual reports of the firm)

The image is extract from the annual report of Air Canada which acts as an evidence of companies performance in recent years. In the initial section of table the financial performance of the company is measured. It seen that operating revenues have increased in the firm by 395 but the operation tin income of the company increased by from 18 to 133 this shows that company controlled there cost.  The operating margin of the company has also increased by Tree percent. The company last year suffered loss but i the current year was le incur profit which shows the company regained its financial profitability in the last year. In operational sense it can be said that frequencies of Flight have increased average fleet utilization hashave increased which is a positive operational sign for the company (Richey & Skinner, 2015).  

Opinions for the future business plans

Particulars	Formula	2017	2016
Gross Margin		1364	1345
Inventory		91	79
GMROI	Gross margin/Inventory	14.98901	17.02532

Table 1: GMROI of the company

(Source: Self generated)

GMROI of the company has decreased from last year this means the return over inventory within the merchandise has decreased but still the company is incur cost over its inventory value iwhich is a positive sign for the company.

Input

As the firm operate in Aviation sector and is a service providing company expenses for the purpose of rendering service and operating will considered as input which was measured at $ 14,888 million in the year 2017 which increased from $ 13,332 million in the year 2016.  

Output

The output can be measured using the flight frequency and average fleet utilization which has increased from the last year as well.

Productivity

As the operational efficiency of the company has increased the overall productivity of the firm has increased due to the increase in overall fleet utilization and aircraft frequency which has increased the overall prevue of the company (Varley & Rafiq, 2014).

1- Description for the merchandise flow for the company

Merchandise flow is the flow of good which is to be bought and sold for the operations of the firm. It can be said that as Air Canada is operate in the aviation sector the company has to have fuel as inventory in order to successfully operate in the market. As fuel is major inventory kept in stock by the company the merchandise flow of the company are as follows:

Flow of merchandise = Opening inventory - Closing inventory + Purchase

= 79 - 91 + 2927

= 2915

The merchandise flow of the company is high which show that companies maintain proper stock in inventory for its future operational activities (Bartlett & Ellis, 2017).   

2- Recommendation for the change in the merchandise flow.

As it can seen that merchandise flow within the company is high and that the company is able to maintain order stock in for their future operation there are no such recommendation which to help the company in order to effectively maintain effective stock. As the purchases are to high it is recommended that stock is properly used before further purchase are made for fuel (Choi & Shen, 2017).

Identifying the category that the company sells

The company sells the comfort of the passengers to travel to a different city within the country or outside the country. This category needs huge management in terms of the policies, permissions and ability.  

Business capabilities

Type of merchandise does category management represent

The companies represent itself as the best Canadian airline passenger transport company in Canada. The Air Canada needs to manage a lot from the international markets, teams, international air support, airports, etc in order to maintain the continuous uninterrupted flow of flight.

The life cycle of the management of flight will last until the company operates the flights and help customers to travel to their destinations.

The assortment plan for the company Air Canada could be like to provide more comfortable rides to their destinations by offering some or introducing new features in the cabin areas. Air Canada is a aviation brand which is known for its high quality air travel services and the company should look o increase the following further. If customer have any kind of problems ( such as time management , cancellations or could be anything ) they should be prioritized first . The basis for any company are their customers regardless of the fact that which kind of company it is , works in small or big scale, therefore should be prioritized first (Gupta, 2018). 

Debating about the mix of the national brand and the private label brands sold by the company

The national brand promoted by Air Canada is Suncor Company, Canadian National Railway Corporation and Star Alliance.

Discussing about the expansion or contraction of the number of private label brands

Now being the biggest airline company in the country there various private label brand which have approached  Air Canada to promote the brand of their products.

Determining the private brand strategy followed by the company and recommendation for the strategy with an example

The private brand strategy which used by the company is to promote brand international and create an brand position to enter the international airline i place in which Air Canada is not present. It would be recommended that Air Canada should also brand them as an private label brand in the international market to expand the dimension of operating in the branding segment (Shin, Moon, Oh & Kim, 2017).

Description of when setting prices how company looks for the following accounts

• Cost: Cost of the operation is taken in consideration in the initial phase as its helps the company to determine the cost which will incurred for running fleets from place to another. This setup the cost which is be taken by one passenger to go from one place to another.
• Demand: Demand is also a major factor which affects the pricing strategy of the company. No it can be said that when the demand of certain destinations and flights are high the price is also set high which ultimately increases the revenue of the company (Pole, 2015).
• Competition: As operating in an highly competitive market Air Canada takes into consideration fo prices offered by its rivals in the airline industry based on which the pricing is done to make it formidable which gives its a competitive edge over others in the market.
• Legal considerations: the company also follows the government norms to make the price accordingly and not set prices which is not affordable by the population the country.

Cost plus pricing and markup pricing will be two most suitable pricing method which can be used by an organization in order to  change prices and offers more attractive prizes to the customer which will increase the consumer ase as well as the revenue of the company.

Performance objectives

Price adjustment and price protection policy which is company follows is differs on the type of refund. If the refund is needed for cancellation of ticket percentage of price adjustments are made where as when refunds are demand for fault service the refund depends on claim made by the consumer. On the other hand demand price adjustment used by the company to price the products (Anitsal, Moon & Anitsal, 2015).

The two methods which can be used by the company to promote the sales are discount and allowance as well as segment pricing as this will be suitable for the company to increases sales and profit.

As the company focuses on Price sensitivity the company uses the Cost plus pricing strategy in order to operate in the market.

Recommending the change for the pricing strategy used

Cost plus marketing strategy can be replaced by mark up costing as this will increased financial viability of the company.

Company's current pricing to stimulate sells

The company uses the demand strategy to stimulate sells as the price as demand of the air ticket determines its cost.

Recommending two methods for sale stimulation of the company

The company can follow cheap pricing strategy as well as markup strategy to simulate sales within the company (Ashley, Kibbe & Thornton, 2014).

Explanation Of The How Company Is Getting Customer Loyalty

The company Air Canada latest technology in aircraft, new aircrafts, new airport amenities, training and latest safety equipment hired which builds customers trust for their safety. According to the numbers, Air Canada carried 48.1 million passengers in 2017 which is much more than that was in 2009 when the company started getting its fame. The company also, was awarded with few awards in the past for the best customer services. The company Air Canada offers 1300 destinations in 191 countries, having a huge distributed area of the services, hence influencing customers to loyalty in the company.  

Recommendations for the Increment of Loyalty Of The Customers For The Company.

The company should advertise about the safety measures taken by them, as their customer come in the first priority list. The company is also introducing a new plan in order to gain the loyalty of the passengers by providing them discounts, subsidies and free beverages in flights and many more. This is the correct step by the company officials in order to gain the loyalty of the customers (Bartlett & Ellis, 2017). 

Input

Analysis and recommendations of the following research

In the context of the above research it can be said that company Air Canada is one of the biggest companies in Canada which provide connectivity of personals intercity in most of the countries. The company was also awarded for the quality of the service provided for the customers. The company was also named as best airlines in many countries such as North America  by Skytrax and Best Long-Haul Airline in the Americas for 2018 by Airline Ratings in their website. The company is also planning to launch new plans in the upcoming year. The plans like loyalty program, casualty losses, employee and labor relations, to improvise their relations within the company employees and the customers. It is recommended  that the company take more steps in order to improve the customer service , as it will help in increment of more customer and as well as in more brand promotion. The company should take care about the market investment, in new technologies and updating the ways to reserve the seats for passengers.

Opinions for the future success of the company
Firstly, the company should improve the customer service more, as this will grab the attention of the customers and help company achieve a positive customer response. The better the service of the customers, more passengers will come in the company and hence adding more profit to the organization. The company should keep adding new safety equipment in the flights in order to stay out of any trouble from their side. In addition, the company should spread the flight connectivity to the remote continents also as the company will have more customer and help the company to grow.

References

Anitsal, I., Moon, M. A., & Anitsal, M. M. (2015). Technology-Based Self-Service: Issues For Retail Management and Research. In Proceedings of the 2002 Academy of Marketing Science (AMS) Annual Conference (pp. 25-36). Springer, Cham.

Ashley, C., Kibbe, S., & Thornton, S. (2014). Experiential Learning in Second Life: A Simulation in Retail Management. Atlantic Marketing Journal, 3(2), 8.

Bartlett, M., & Ellis, B. (2017). U.S. Patent Application No. 29/571,076.

Choi, T. M., & Shen, B. (Eds.). (2017). Luxury fashion retail management. Springer Singapore.

Fernie, J., & Sparks, L. (2014). Logistics and retail management: emerging issues and new challenges in the retail supply chain. Kogan page publishers.

Goworek, H., McGoldrick, P. J., & McGoldrick, P. J. (2015). Retail marketing management: Principles and practice. Harlow, UK: Pearson.

Gupta, S. (2018). Need of Retail Management in Indian Economy.

Pole, K. (2015). Introduction to retail marketing management.

Richey, R. G., & Skinner, L. (2015). A Multi-Level Approach to Retail Management Education. In Revolution in Marketing: Market Driving Changes (pp. 120-120). Springer, Cham.

Shin, J. K., Moon, M., Oh, M. O., & Kim, J. H. (2017, July). EFFECTS OF ECO-FRIENDLY VMD ON GREEN CONSUMER BEHAVIOR IN FASHION RETAIL MANAGEMENT. In 2017 Global Fashion Management Conference at Vienna (pp. 369-370).

Varley, R., & Rafiq, M. (2014). Principles of retailing. Palgrave macmillan.

Zarkada-Fraser, A., & Fraser, C. (2015). Integrating social and economic orientated marketing: A study of retail management. In Proceedings of the 2000 Academy of Marketing Science (AMS) Annual Conference (pp. 219-223). Springer, Cham.