Your first decision when running your airline was to choose the sector it operated in — budget, mid range or luxury.
How did you make this choice? Looking back, would you have chosen another sector? Why?
In regard to making decision on sectors, we had the option to choose from all three sectors (Budget, Mid-Range and Luxury). It has been observed that the sector of Budget Airline was more concentrated on the aspect of offering low cost tickets in order to increase the company’s sales volume and for this purpose they are more often intend to compromise with the quality factor as well. The Luxury Airline sector is more focused towards offering quality oriented services to their customers and for this associated purpose the companies have to offer tickets to their customers of high prices and their ultimate goal is to maximise their profitability factor. The MidRange Airline sector seemed to concentrate on both factors (Price & Quality) side by side. Companies in such a category have to compete with both other sectors in order to achieve the desired goal of keeping their sales figures on the increasing side and also maximise the value of their shareholders.
In relation to all three sectors discussed above, we found it better to go with the option of entering Mid-Range Airline sector. This decision was made after carefully evaluating the opportunities and threats through the PESTLE (Political, Economical, Sociological, Technological, Legislative and Environmental) Analysis (Thomas, 2007). This sector also appeared to be a favourable option through the use of Porter Five Forces Model for examining the attractiveness of the given industry (Cafferky, 2005). So, the decision was made to enter the Mid-Range sector with the goal of giving tough time to all major players operating in the other two sectors.
The company name had been decided to be Sasta Airline. The word ‘Sasta’ is a Hindi word which means cheap. From the strategic point of view, it was decided to adopt focus cost strategy. So, it meant that we would have to differentiate our company on the basis of cost factor in particular category.
Reasons for Choosing Mid-Range Airline Sector
It had been examined that there were three major reasons which had intended us to operate as a company in Mid-Range Airline sector, these reasons are briefly discussed below:
a) Normal Operational Cost: It has been predicted that as a mid range airline company we would need only a normal operational cost. Luxury airlines case is different; they needed to invest a big amount for good output and budget airlines would invest very low cost on its operational activities. So, by analysing the given aspect it had been assumed that the choice for entering Mid-Range Airline could keep the company’s operations efficient and also would maximise the company’s profitability.
b) Normal Fare: As the name indicates Sasta is available in normal ticket rates and good quality. So this would help all class people to travel with us. Normal ticket rates will help to reduce expense at the same time mid range airlines will providing customers with good quality also.
c) Large Customer Invasion: High level of sales is strongly linked with the normal ticket rates. This would help to occupy almost all seats in mid range airlines. The main aim of normal ticket rates seemed to be comfortable for upper class, middle class and lower class people. The ticket rates and the quality provided would attract more people to mid-range airlines.
We select mid range airlines because we felt this airline could make more profit and generate more sales than luxury and budget airlines with its fewer expenses. MidRange airlines have the place in between luxury airline and budget airline and It seemed covenant to frame strategies in Mid-Range airline So, because of all of these reasons, we never thought of entering any other sector.
The simulation software provided a dashboard which presented important data on performance, such as net profit, share price etc. From the list of performance indicators, you should have chosen a selection to concentrate on. These are known as Key Performance Indicators (KPIs) and are very important in business.
What were the KPI’s you used in running your airline and did these change? Critically appraise the value of the information you had available to you in the dashboard during the simulation. How did you use this to affect your strategic decision making? (Reliability, Quality, Net Income & Share Price).
In relation with the Simulation Software, it has been determined that there had been four significant factors (Reliability, Quality, Net Income and Share Price) which were used as Key Performance Indicator and also emerged to be significant for the Sasta Airline’s operations. Moreover, it has also been understood that two indicators (such as Reliability and Quality) were significant to the company from the marketing perspective and the other two (such as Net Income and Share Price) were important from the financial perspective. Both of these perspectives are critical for building strong basis for the company’s strategic point of view as well as from the phase of control and implementation.
Sasta Airline being a part of Mid-Range Airline sector needed to concentrate on the all four KPI’s in order to keep the company’s operations on the positive. Before the beginning of Simulation we made plan to concentrate seriously on each of the given KPI. And it seemed that we were successful in implementing the proposed strategy over the first periods but thereafter we seemed to concentrate more on the financial factors because of the fact that our company’s financial aspects were getting worse and worse period after period and I think that this particular issue intended us to focus more on the financial KPIs which had been resulted in weakening the control of Sasta Airline’s over the marketing KPIs and thus forced us to finish the final two periods in a devastating manner. So, all of these things meant that the focus over significant KPIs changes over the time period but the company should need to monitor all KPIs with serious intension all the time in order to strengthen and maintain its grip over the major KPIs.
In Accordance with the Simulation Software, it has been seen that this software not only shows the numeric values of all of the KPIs but also the exhibit the graphical representation of all of these KPIs in order to make easier for the company’s management to review and analyse its company’s performance over certain time period which would also intended the company to formulate or reorganise its strategy in a timely manner. I think that we used all of these information for monitoring purposes but important thing was that our proposed strategy which seemed stronger in the initial phases seemed to be ineffective and didn’t able to resolve the given issue of decreasing of value of both financial measures (Net Income & Share Price).
I think that the information about KPIs results in the Simulation Software have direct influence on the company strategic decision making process. And this happen because of the fact that it used to keep the company’s management aware about the existing trend and also supporting them to reconsider different options with the intension of keeping all of the figures on the favourable side. .I think that our Airline company was unable to perform well because of our wrong approach as we focused only on converting the trend of decreasing financial measures which directed our company towards the way of decreasing of all KPIs values and thus affected the company’s decision making process as well as overall performance in a negative manner.
In general, I believe that the information about KPIs which had been incorporated in Simulation software is determined to be of great value and also useful for the purpose of analysis and evaluation. And I think that in order to enhance the quality of given set of indicator’s information, this software should also have information for the major players operating in their given Airline sector.