Conversely, any reduction of in the number of passengers from the breakeven point will result in a loss for the firm. This is assuming that every passenger has the same contribution margin. In some cases, an addition of a first class passenger and the removal of 2 coach passengers may actually increase the profit. 2. You are a management analyst for XYZ aircraft manufacturing company.
JetBlue Airways: Managing Growth Case Analysis Instructed by: Prof. Jonathan Lee Section3 Team 2 Jie Yan | 103795915 | Ling Lu | 103999797 | Nan Liu | 103744807 | Renhan Zhu | 103943651 | Yishi Shi | 103956048 | 2014/10/20 Part I: Issue Identification In May 2007, David Barger, President and CEO of JetBlue Airways, expressed the great need to slow down the airline’s growth in response to increasing fuel costs and the consequences stemmed from the Valentine’s Day crisis. As an LCC, JetBlue had to decrease its growth rate by reducing deliveries of E190 and A320 due to its weak financial position and the market’s softening demand. Considering the performance of JetBlue after the addition of E190 to its fleet, JetBlue overestimated its capacity of handling this large scale of expansion. The new CEO, David Barger was now facing with JetBlue’s key issue that he should reconsider the distribution of E190 and A320, and building long-term managing strategies for sustainable development. Besides, with a big movement of launching E190 in 2005, some small but critical problems loomed: Compensation of pilots, satisfaction of customers and employees, challenges for staff to adopt unexpected changes, complexity resulting from the integration of E190 and A320.
Such technological advancement placed a lot of financial burden on the operations of Jet Blue. The airline industry continues to feel the effect from the U.S economic slowdown and rise of crude oil/jet fuel prices, which have risen to record numbers with no predictable end in sight. The slow economic growth has compelled both business and individual travelers to cut back on travel expenditure thereby compelling airlines such as Jet Blue to initiate energy conservation measures, targeting specific markets and exploring the possibility of partnership with other airlines. Linked to the volatility of jet fuel prices is the increased in competition posed by new entrants to the airline industry. New entrants such as Virgin America are bracing the competition by offering lower fares to customers.
The smaller, more efficient aircraft is the trademark of Embraer’s success. In 2009 when the global ecnomic crisis hit sales fell by a substantial amount. Executive jets are normal goods so the overall decrease in consumer income along with fewer buyers led to a sharp decrease in demand. Another factor that causes demand to shift left is the tastes and preferences of the buyer. During rough financial periods people tend to look down on Executive Jets as unnecessary and overkill.
Should Netflix do something to gain back market shares? A Business Case Analysis Symptoms In September 2011, CEO Reed Hastings and fellow executives made a decision to increase their rates 60%, which has led to customer dissatisfaction, increase in more competition, and loss of revenue The reports show that after the price increase shares dropped a substantial amount (15%). Customers became dissatisfied because of the price increase and as a result canceled there membership (2.5 million canceled and projected to be over 6.5 million by end of quarter). Competition has increased due to the fact that their prices are no longer competitive and has given blockbuster to come in and collect all the dissatisfied customers as their subscribers. Problems The first actionable problem is the increase in pricing for the service that we provide here at Netflix.
List Objectives for the PR Campaign In order to explain its operations into the overseas market, JetBlue Airlines had to overcome a few stumbling blocks that occurred earlier this year. One major stumbling block occurred when JetBlue cancelled hundreds of flights due to icy conditions and a black log of stranded passengers and flight crews. Jenny Dervin, JetBlue Airlines company spokesman said a decision by JetBlue’s hub, Networks’ John F. Kennedy International Airport, to limit all airlines to two runways was a major stumbling block in the company’s efforts to get back on track. (JetBlue weather woes not yet overcome, CNN.com) David Neelman, Founder and CEO of JetBlue, repeatedly apologized for the wave of cancellations and delays and said, “I think the best thing we can do is say we’re sorry and give them their money back, and give them a free ticket and then kind of plead with them to come and fly again.” Once a passenger has a bad experience with any airline, that passenger will think twice before booking another flight with the same airline. JetBlue needed to devise a new public relations campaign to regain those customers who lost confidence in the flight service and to attract new customers who may be interested in using the new overseas services.
British Airways, in 1996, faced an uncertain future as the competitive airline landscape was in a state of flux with smaller low-cost airlines invading the market and larger airlines setting up prudent alliances to stay profitable (Barsoux). CEO Bob Ayling announced a new program designed to cut operating costs to compete within the new economic arena. Employees naturally expected that part of the “Business Efficiency Program” was a significant reduction in staffing and benefits, which led to a bitter divide between British Airways and its workforce. The resulting strike, however, was not the actual problem that warrants discussion; the problem is how British Airways arrived at a strike and how the opposing sides treated each other throughout the negotiation process. The aspects that fueled the negative negotiation process were numerous, but focusing on two overarching themes helps explain the problem: psychological contracts without mutuality and procedural injustice.
If the company continues to loose billions of dollars year after year adjustments need to be made somewhere, so the concentration should be put in the plants that are successful and slow production in the lagging plants or just simply close down. Second I would choose to reduce the SUV and truck lines because of the high gas prices throughout the country simply because the smaller cars would be more gas efficient, more cost efficient, and a lot of money being lost through the lack of being able to sell the expensive SUV’s which also doubles in cost to fill up and drive on a daily basis. Most Americans are buying the smaller cars because of the recession or the public opinion that we are in a recession. Third, would be to go ahead and sell the premium automobile group to somebody that would be able to make use and profit off of the lack of sales year after year. Cars like Jaguar and especially Aston Martins which are one of the most expensive cars in the world, don’t really sell on a large scale in the US except for the wealthy percentage of the population, so selling the premium automobile group should be a good business decision especially since the PAG group doesn’t fit the way Ford intended their business to be operated.
With these factors taken into consideration, a decrease in consumer expenditure would be a direct causation to a lowering of both organisations activity. For example, due to recession unemployment will rise as the companies can’t afford to pay employees, and therefor people as a whole have less money to spend, and so donating to causes such as Oxfam would come more unlikely as there will be less money revolving them. This could cause a cut on their government funding as more money will need to be invested to government funding for those out of employment. With a low flow of money inward to the company it means they wont afford the expenditure necessary to fund projects for helping those, therefore lowering the activity of the charity. The same rule may apply to Arsenal FC.
The whole luxury goods industry in the U.S. dropped over 14%, and R&R revenues declined 10%. Although R&R suspended new-store opening and hiring, the condition still struggle. So, now the CEO of R&R Linda Watkins not only has to cope with the SPH lawsuit and the huge amount of punitive payment, but also the reputation damage during this hard time. Central Issue How CEO of R&R Linda Watkins fix some flaw of the Ownership Culture (SPH program) during this hard time. Recommended Course of Action Linda should revise the Ownership Culture partly, such as adding extra commission for excellent sales.