MBA570 - Individual Assignment - Research - Week Two - 07-29-06

MBA570 - Individual Assignment - Research - Week Two - 07-29-06

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Situation Analysis 1 Situation Analysis and Problem Statement: Classic Airlines Robert Sikes, MBA570 University of Phoenix July 29, 2006
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Situation Analysis 2 Classic Airlines Overview The world’s fifth largest airline, Classic Airlines commands a fleet of more 375 jets that serve 240 cities with more than 2300 daily flights. In the 25 years since its inception, Classic has grown to an organization of 32,000 employees, and last year, it earned $10 million on $8.7 billion in sales. Though profitable, Classic is no stranger to the challenges that plague today‘s airlines. Increased uncertainty about flying has affected industry stock prices across the board, and Classic has seen a 10 percent decrease in share prices in the past year. With a concerned investment community on the watch, the airline industry operates under a microscope, subject to scrutiny from all sectors. Not surprisingly, the negativity from Wall Street to the media to the public has affected employee morale, which is the lowest it’s even been. Consumer confidence also appears to be waning. By January 2005, Classic’s declining Classic Rewards program measured a 19 percent decrease in the number of Classic Rewards members, and 21 percent decrease in flights per remaining member. Clearly, loyal customers were jumping ship and the ones still aboard seemed to be flying less frequently -- or at least less frequently with Classic Airlines. Rising costs, particularly of fuel and labor, have limited Classic‘s ability to compete for the valued frequent flier. Although the travel downturn that followed September 11, 2001 has subsided, Classic and many of its rivals overestimated the reversal and expanded too quickly. Now, these companies face a restrictive cost structure that younger airlines do not. To counter any further financial crisis, Classic’s Board of Directors recently mandated a 15 percent across-the-board cost reduction over the next 18 months. Within that mandate, Classic must still find a way to beef up its frequent flier program with methods that will demonstrate a measurable return on any investment (ROI). While the board is playing their cards close to the
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Situation Analysis 3 vest, the rumor mill is churning with word that if Classic can’t meet the reduction, the company faces bankruptcy. Marketing Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders. This definition relates to two primary goals of marketing: (1) assessing the needs of consumers and (2) satisfying them. For marketing to occur, it is necessary to have (1) two or more parties with unmet need, (2) a desire and ability to satisfy them, (3) communication between the parties, and (4) something to exchange (Kerin, 2006). Marketing means a promotion of products, including advertising. However, in the
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This note was uploaded on 06/12/2011 for the course ETHICS mba taught by Professor Wilkes during the Spring '05 term at University of Phoenix.

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MBA570 - Individual Assignment - Research - Week Two - 07-29-06

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