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Research on Classic Airlines
Pages 3 (753 words)
Classic Airlines is a corporation that faces many challenges. One of the inherent problems the firm is facing is that the company is currently barely obtaining a profit from its operation. The net margin of the company last year was a very thin 0.11%. The company was able to stay profitable, but the operating results of the company are below the industry average.
Fuel cost represents the largest cost driver in the airline industry. In 2011 the average price of jet fuel was $126.7/b (Iata, 2011). The marketing department at Classic Airlines is in a complete disaster. One of the biggest indicators of the failure of the department is reflected in the results of its customer rewards program. The customer rewards program at Classic Airlines experience a 19% reduction in its total members and a 21% reduction in the frequency of purchases by those customers. Customer retention is imperative for the success of a business enterprise. The 80/20 rule states that 80% of your business comes from 20% of your customers. The loyalty of the customer has declined significantly which will hurt the ability of the company to stay profitable in the long term. There are internal problems occurring within the human resources of the company. Employee morale is at the lowest point it has ever been in the history of the company. Employee morale is important because when morale goes down so does the productivity of the workers. The worries from the staff are justified and legitimate. One of the vice-presidents, Doug Sheffin who is also a union member, is concerned about the company’s ability to meet its current and future obligations with the employees in the future months. ...
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