Airline simulation ( Strategic Management course )

 we would need some help with a 
group assignment
.we currently manage an airline through a simulation, and we need to submit a midterm strategic audit.
I’m attaching both the guidelines to the assignment and out initial strategic audit.
we are currently in Quarter 5 of the assignment, and our 
stock price
 is at 29.86 dollars, our cumulative net income at 887,099 dollars, and our net income for the quarter is at 431,707 dollars.
we currently have a fleet of 3 aircrafts (1 owned, 2 
leased
), and we recently partnered up with a 
major airline
 to 
increase sales
 and expand our service.
Let me know if you could do this for us.
Deadline Nov 10 , 2013

OcchioAIR

Company 4

Alexandros Vassiliou

Mazen Alenazi

Zachary Exposito

Abdul Almuqati

Section I- Company’s Management Team:

CEO – Alex Vassiliou

· Major decision making and locking in management’s decisions

· Communication with management team

· Keeping everyone motivated and on track with company’s mission and strategy

· Making sure that every assignment is completed in time and with high quality

· Assisting management team with drawing outcomes from various reports

· Setting meeting agendas

· Representing the company to the rest of the world (class)

· Talking to press (if needed)

· Overlooking everyday operations

· Leading the team to successful and solid results at the end of the each quarter

Chief Operating Officer (COO)- Abdul Almuqati

· Follow and help form strategic plans

· Operate under the company’s mission and vision

· Maintain high quality service

· Enforce quality controls

· Customer service

standards

· Resolve and stay on top of customer service issues

· Make sure that all departments of operations are ran smoothly

· Keep close communication with all management team and follow adjacent way of operating

· Always try to remain within budget set by CFO and the whole team

· Assist CEO with everyday decisions

Chief Financial Officer (CFO)- Zachary Exposito

· Reporting accurate and timely historical financial information

· Quarterly financial reporting to all officers in the company

· Advise on all investment strategies taking into account risk and liquidity

· Oversee and monitor the capital structure of the company including all debt and equity allocation

· Maximize efficiency and capitalization

· Economic strategizing and forecasting

· Approve and oversee all acquisitions and financial adjustments (expenses, loans etc.)

· Approve, disapprove all financial delicious (advertising, expansion, promotional items, etc.)

· Minimize loss, cut costs, and maximize profits

· Work closely with COO on all strategic and tactical matters as they relate to budget management, cost benefit analysis, forecasting needs and the securing of new funding

· Keep CEO updated about the company’s financial standings

Chief Marketing Officer (CMO)- Mazen Alenazi

· Constantly researching and analyzing the current market

· Form the company’s pricing policy to remain competitive

· Analyze customers, target market, potential customers, and competitors

· Understanding current and potential customers

· Designing the company’s advertising campaign

· Building company’s image

· Design graphics, visuals etc

· Communicating value

· Attracting new business

· Response modeling

· Marketing

ROI optimization

Chief Human Resource Officer (CHRO)- Alex Vassiliou

· Set the company’s hiring policies

· Recruit and design and an HR team

· Attract talent to the company

· Design and create training and growth opportunities for employees

· Suggest employee salaries, benefits, perks and more

· Communicate with all employees to gain understanding of their levels of satisfaction in the firm

· Build company culture

· Organize quarterly and yearly events to maximize bonding, team sprit and company culture

Section II- Threats & Opportunities in the External Environment:

Societal (macro)

· Opportunities

· Natural: Unlimited fuel supply

· Economic environment is stable

· Cash is available

· Our company has a lot of depth in terms of financing

· Inflation is low

· Prices are stable

· People ages

1

8-70 tend to fly

· Life expectancy is growing

· Americans tend to live long lives

· Level of education

· People are becoming much more educated and aware. Thus better connected and eager to travel

· Fragment of industry

· Threats

· Natural: fuel cost is variable

· Cannot have a fixed price for gas at all times-

· Winter weather threats

· Storms, hurricanes, unstable weather

· Employees: strike, unionize

· Cheap to own a car

Task (Industry)

· Porter’s Five Force model

· Potential Entrants

· Our market is open to everyone, but due to mainly the huge financial commitment associated with starting and entering the airline industry, potential entrants cannot be considered as a major threat. This reality an opportunity for Occhio AIR.

· Buyers

· This group of individuals and/or companies considered as buyers or better consumers may be a threat to our company. Since the airline industry is a service oriented industry, in which we are selling our service/ product, we are dependent on the buyers to support us. Since there are numerous airlines to choose from, their power is pretty strong driving for more competition, which ultimately may be viewed as a threat.

· Substitutes

· In our case cars, public transport, trains and any other way of moving from place to place may be considered as a substitute for our service. The threat here is very faint, because there are no signs of public transport of any sort available to the public. The major threat is owning a car, which most Americans do, but it is in our own hand to control it. If our company can offer quality service, for a competitive price, and with flexible timetables then cars may not be considered a threat.

· Suppliers

· In our market, suppliers do not have a significant role. The prices for aircrafts is already pre-set by the simulation, while there is no control over gas prices either. So in general suppliers cannot have an active role in the market.

· Other Stakeholders

· Base on the case it is unknown if there are any unions present, or government regulations which may present an opportunity or a threat. If such situations arise then the playing field may be unleveled and opportunities or threat respectively, may come up.

Section III- Strengths & Weaknesses of Occhio AIR:

Corporate Structure

· Strengths

· Management team is highly skilled, motivated and energetic

· Strong and deep financial leverage

· Fresh staffing and human resource strategy

· Company vision and corporate culture is changing

· Weaknesses

· Very little experience in the airline industry

· C-level executives are fairly new to such a venture

· Weak company culture

· High employee turnover so far

· Low motivation

Corporate Culture

· We have in hand a company with strong basis, especially financially, great potentials to grow but with a very ugly vision, operation and overall culture. What we want to do with the new Occhio AIR, formerly know as MCA, is to create a hip, clean and customer oriented airline, which will provide amazing service to its customers at a value for money price. We will try to change the overall brand identity to fit this new vision and we seek to achieve a close to 100% customer satisfaction. MCA was a low-class, simple and basic airline company, which provided mediocre service to its customers. Occhio AIR want to change that and elevate the customer experience by providing world-class service, amazing hospitality and even luxurious amenities when possible at a very competitive price.

Functional Strengths and Weaknesses

· Strengths

· Money is available

· Simple organizational structure

· Existing customers

· FAA regulations

· safe way to travel.

· All competitors have 3 aircrafts .

· Airline staff is highly trained from pilots ,flight attendants to mechanics and ground staff.

· Establish different levels of service and make associated pricing decisions.

· Lease and purchase aircraft options.

· Weaknesses

· No website

· Customer service

· We cannot manipulate decisions regarding customer service, since it is mostly given by the simulation

· Still at a very young, maturing state

· Marketing

Section IV- Occhio AIR Mission Statement:

· Occhio AIR is a hip, clean and customer oriented airline, which provides amazing service to its customers at a value for money price. Operated and staffed with young professionals, with high expertise and knowledge in their fields, Occhio AIR is always energetic and very customer driven. As an active member of the fast paced and highly competitive airline industry, we are here to change some of the classic practices and innovate to provide consumers the best possible product. We seek to achieve a close to 100% customer satisfaction and elevate customer experience by providing world-class service, amazing hospitality and even luxurious amenities when possible at a very competitive price. Occhio AIR, “Simply Fly”.

Section V- Management Team’s Top Objectives:

· Grow overall sales to reach 85% of seat capacity

· Strategies to achieve this

· New upgraded and more spacious fleet: Replace old aircrafts with new ones in Q1

· New routes Q1

· Sales executives: Hire 2 in Q1 and hire a team of 5 by the end of Q5

· Better service

· Bathroom on board

· Snacks and beverages included with ticket

· Pair and sell online and with travel agents

· To Increase shareholder value by more than 10%

· Strategies to achieve this

· Maintain corporate stability by managing company financials on a daily basis. Q1 and on

· Keep overhead low

· Increase performance and efficiency

· Purchase assets for growth

· Keep cost low for consumers

· To increase revenue by 10% by the end of the third quarter

· Strategies to achieve this

· Keep our service as luxurious as costing allows as

· Offer good prices, with a lot of value to the consumer

· Keep our aircrafts clean and fresh

· Add more routes and times

· Try to meet even the most demanding customer’s needs

Section VI- How to measure Management Team’s Top Objectives:

Objective 1:

· In order to measure the performance towards achieving this objective our top management will have to closely analyze various statements at the end of each quarter. Our COO, CFO and CMO will have to closely work together to track quarterly profits, market research, passenger to capacity ratios and tickets sold on a monthly basis and of course by each quarter. The COO will be mainly responsible to maintain high standards of cleanliness, customer satisfaction and overall smooth operations in regards with our airline, while the CMO will be responsible to promote, attract and create more business for us. At the same time our CHRO will need to staff and train our sales people to enhance and push our marketing plan, while the CFO will keep track of the profit and loss statement to make sure what we can afford to give to the customer and how far we could go with promotion, staffing, advertising etc.

Objective 2:

· We will measure our objectives through several ways and steps. Finance is one of the most important departments considering we have to measure all risk and take into account all expenses and overheard. Without proper financials and management the company will not be profitable and liability will outweigh assets. After each quarter the CFO and his department will be generating financials for gross profits, net profits, degree of operation, capital structure, ROE, & ROA. Reporting all data is essential for all officers of the company. Information should be updated monthly with an end of the quarter report. Each individual officer should develop a progress report for each quarter to present to the company. The CFO will prepare financial and performance statement; the CMO will prepare a report for all current marketing strategies, expenses, performance of marketing strategies and future marketing strategies; the COO should report all progress as well. In this manner, we can run the company much more efficiently and maximize profits. We can also determine what future decisions to make financially and managerially.

· Example of financial report;

A.

Gross Profit Margins

2011

 

2010

 

3,095,385 – 2,991,451/3,095385

3,074,022-2,949,655/3,074,022

 

3.40%

 

4.04%

Objective 3

· This objective falls mostly under the COO and CHRO’s supervision. These executives will have to track closely all returns and expenses at the end of each quarter and on a more regular basis, as much as once a week. To reach and maintain high customer satisfaction standard the COO should establish an excellent customer service team with the help of human resource department and the CHRO, which will try to attract and hire amazing individuals. At the same time the top management should closely monitor what competitors are doing or not doing with their customers, and adopt practices that seem successful. As a customer-driven company we should seek to remain on top of our game at all time, and create an awareness for our world-class customer service.

Section VII- Two Policies the Management Team Created:

· Pricing Policy

· As a management team we decided that our pricing policy would fall under an overall value for money culture. We charge relatively cheap for the service and quality we offer, always remaining positive profit margins. Some routes which we want to attract more traffic, are also on a three month sale, offering consumers an even cheaper ticket for the same outstanding service. This is the first and most valued policy we created, which will be our guideline through the years.

· Dividend Pay Policy

· As most companies we have stockholders which we deeply value and respect. To show them our gratitude and dedication, we decided as a management team to pay dividends quarterly to all stockholders, if we remain at a profitable state. This dividend pay includes a bonus for all of our employees as well, which all get some performance measure bonus. This is done to show them as well our appreciation and gratitude, for their help and input.

1

1

Occhio AIR
Company 4

Alexandros Vassiliou
Mazen Alenazi
Zachary Exposito
Abdul Almuqati

Airline Midterm Strategic Audit Report Outline – Due November 11th

The following is an outline for your midterm audit. Complete each section in the order I have presented it below. Be sure to include the headings in the papers you hand in to me. Be sure to include a title page for your Strategic Audit with your company name, number, and logo as well as the names of all group members. Audits missing complete and accurate title pages will lose 10 points of their grade.

I. Introduction: Include a short paragraph stating where you wanted your company to be by now (end Q5) and where you are now. (worth up to 5 points)

II. Corporate governance

· Top management – explain to me how you are now organized now that you know how to “play” the game. At first, you may have assigned each other roles that were not the best for each of your skills. At this point, you should step back, look at what each actually does, and reassess your roles and titles (if necessary). (worth up to 5 points)

III. In the next section explain the threats and opportunities in the external environmental for the airline industry and YOUR airline
at the end of Q5
.
DO NOT JUST REPEAT WHAT YOU INCLUDED IN YOUR INITIAL STRATEGIC PLAN AS THE INDUSTRY HAS CHANGED AND NOW IS COMPRISED OF THE COMPANIES IN YOUR CLASS!
Information about what to look at to determine threats and opportunities mainly comes from Chapter 4 and class discussions. (worth up to 10 points)

· Separate societal (macro) and task (industry) level opportunities and threats that you perceive for your airline.

· DO NOT just repeat the same threats and opportunities you listed for your Initial Strategic Plan unless you can confirm that they still exist.

IV. In this fourth section, explain your company’s internal environmental assessment (S, W), which includes your airline’s current strengths and weaknesses. Be sure to carefully assess how your company is doing now in all of the following dimensions. See Chapter 5 for guidance on what areas in your company to assess. (worth up to 10 points)

· Your corporate structure—is your current structure helping or hurting your airline?

· Corporate culture –what is the culture (style) of the airline you have developed since Q1, and is it helping you succeed?

· Functional strengths and weaknesses which areas are strong for your airline, and where do you have weaknesses?

V. What is your airline’s mission statement? If you have changed it since the Initial Strategic Plan, tell me what they both are, and explain why you made the change. (worth up to 5 points)

VI. In this sixth section, list your management teams’ three objectives for Q1-Q5 and explain whether or not you achieved them and why/why not. Use concrete data to do so. If the Q1-Q5 objectives you included in your Initial Strategic Plan were not measurable or quantifiable, then rewrite them so that you can complete this section accurately. (worth up to 10 points for analysis of each objectives)

· Include a line or bar graph for each objective, showing what your results have been for each of the first 5 quarters. (If you have information for all the other teams, you may include it in the graphs.)

· For each objective, explain the reasons for your performance.

VII. In the seventh section, list your management team’s three objectives for Q6-10, and include 3 strategies you will employ for each objective. You may change your objectives from Q1-5 or the data you will use to evaluate your performance (measures). Use the same format given for your company’s Initial Strategic Plan. (worth up to 10 points for each set of objectives plus supporting strategies)

· State how you will measure performance for each of your objectives. (This means, what data from your quarterly results will you analyze for each objective?)

· State the name and title of the member of your management team who is responsible for tracking this data.

VIII. What are your policies? Are these the same policies you had for Q1-Q5? (worth up to 5 points)