Program capstone

Introduction

In the study of business research elements through comparison and contrast, the two companies that operate airlines are the point of focus. The companies are Air Tran Airways and American Trans Air (ATA). Air Tran Airways is owned by Southwest Airlines and no longer has obligations to publish financial statements for shareholders. http://investor.airtran.com/phoenix.zhtml?c=64267&p=irol-reportsAnnual Air Tran provides air travel throughout the Midwest and Eastern United States. American Trans Air operates across Chicago-Midway, Indianapolis, Dallas, New York, San Francisco, Washington DC, etc and some other international destinations such as Mexico/ Caribbean.

Business Environment

Economic environment refers to those economic factors that influence the working mechanism of business; they include factors like economic policies, income levels and distribution, trade cycles etc. (Jain & Trehan, 2009 p 28). The two airlines share the same economic environment. All of them have to comply with federal policies relating to growth and sustainability. All of them are affected by the economic cycles of boom, decline, depression and recovery in almost similar manner only that during boom the one that is perceived to be classy will be mostly booked while during recession people are sensitive to costs and try to save on whatever they spend. The size of the market in which they operate extends to international flights. American Trans Air on the hand relied on contracts such as on military charter where it could transport soldiers and FedEx which when it lost during the high fuel cost it could not sustain itself but file for bankruptcy.

Legal environment refers to the code of conduct that governs the boundaries of acceptable business activity (Meiners, Ringleb & Edwards, 2009) while social environment refers to the influence exercised by social and cultural factors which the business cannot change but have itself to adjust to fit into the environment (Jain & Trehan, 2009 p 32). Factors in the social environment include attitude, education, family, habits, preferences, customs and traditions etc that influence consumption behavior. When it comes to the social and legal environment the two airlines have the same applications only when they step outside to international boundaries.

Managerial, operational and financial issues

Air Tran is managed by a board of directors though the daily running is conducted by the team of executive officers starting at the top with the president (Bob Jordan), followed by the Executive vice president in charge of operations and customer service and the rest who are senior vice presidents in different sections.

Company culture and performance

Air Tran has been selected four times winner for offering low cost flight services. The company has its culture rooted in affordability and quality customer services. Half of Air Tran flights originate or are terminated in Atlanta Georgia. The company uses departure schedule and seat to lower costs to its customers. The company operates short non-stop linkages between its major hubs and other destinations with an about 700 flights in a day to 69 destinations. This shows the company is determined to meet the customer needs when they need it while meeting their goal of expanding sales revenues. The tradition of the company includes among others competitive prices, superior service, enthusiasm and skills of employees. http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NDIyMjQ1fENoaWxkSUQ9NDM2MTU5fFR5cGU9MQ==&t=1

ATA also was offering low cost flights and used a hub in Chicago Midway Airport. The company initially wanted to be known as a vocational airline and later began to change to the business factor; business airline. It can be remembered for popularizing the “pleasant Hawaiian Holidays” in line with its contractual characteristics.

Strategic decision making

Air Tran business strategy is focused on providing quality service that remains low-priced. It uses its major hub in Atlanta which acts like the brand and linking a network system from the hub. Its strategy also includes the utilization of modern Boeing aircrafts for economies of scale. While maintaining the low unit cost it has the best quality among low cost flights and was ranked third for six consecutive years overall. Other decisions that are strategic include the route system, scheduling, and market selection. ATA strategy before its fall was expansion as well as great order of Boeing planes. ATA was leading in winning major contracts that would usually bring lump some of revenues. This boosted its other operations. The addition of the name “Holdings Corp” to its name was a strategy with which it sought to avoid being confused with Air Tran Airways which was benefitting from its popularity.

Decision making style

The process of decision making may take the style where the leadership gives the participants control over the decision in what is called consensus decision making (Verma, 2009 p 3). Decisions may also go through collective participation whereby employees give their view but the final decision is chosen by the leader (Verma, 2009 p 3). There is the logical decision making where there are employed experts to find out what need to be changed or modified (Verma,2009 p 2). Democratic and autocratic styles may also be used at different times and in different sub-sectors of the organizations. When it come to customer service the organizations will listen to what the employees feel the customers prefer since they are the closest to them in this case it would be participatory but when it comes to the choice of planes and routes then there is the need of experts to study the trends that would be economical and yet preferred.

Management style

The organizations use the directing management style mostly while the other styles like the autocratic may still find places of application. In directing style the employees are told why, how, where and when something is supposed to be done. They have to work according to schedule for these are flights and after safety, time is very important.

Leadership Style

Leadership styles can be placed first into two categories based on how decisions are made and followed over. We have the autocratic and the democratic leadership. Since the flight industry follows tight schedules the autocratic leadership takes shape where the executive officers tell employees what ought to be done and follows closely using supervisors (Lussier & Achua, 2010 p 70). Apart from the two there is also the employee centered and the job-centered leadership. In the flight industry the job is also another person who wants to served with enthusiasm according to Air Tran while focusing on the customer too much would mean neglecting the employee; bringing a different case than production of goods. Yet still some customers will value a brand by the way they treat their employees. In the Airline industry has to maintain balance by ensuring that the employees serve the customers attentively while also appearing well treated by the organization. ATA which was initially a big company with a s strong brand name would prefer the autocratic leadership also because of its age and tradition.

Communication style

Communication style comprises preferred ways of giving and receiving information in an organization (Saphiere and Kappler, 2005 p 5). Good communication style seeks to encourage to the person being communicated to, while also being encouraged. It also should build relationship and trust with others. Make decisions and solve problems. Interrupt and prefer to be interrupted (Saphiere and Kappler, 2005 p 5). The two organizations since they are aware of competitors usually will rarely communicate through memos; most communication will be done orally through the various sub-sections and the supervisor in that unit from the top executives. Most employees feel relieved if they are told why certain decisions are made and what impact they will have from the norm.

SWOT tool

The major threats to the industry are the economic cycles which sometimes make it necessary to have merges to reduce competition and marketing costs. Strengths are derived from the business environment; where the global and local economies are rejuvenating and the social trends where more people are choosing to fly. For Air Tran being a low cost airline as well as being high are just two qualities difficult to combine which is its big advantage to competitors. Also having a hub which is recognizable as a brand is advantageous. Weaknesses may include rising wages and ever fluctuating fuel costs; but these are shared with competitors too, so no stronger impact.

Operations strategy Framework

Air Tran airport operations are offered to a third party who handles above-wing only (passenger check-in, gate processing, and baggage office etc. services) and the under-wing services which includes directing craft, lavatory and other services. Air Tran uses their own employees for ground handling at 31 airports including Atlanta. Using insurance for risks, the company also purchases crafts with manufacturers warranties are part of the company’s strategy. Labor unions for employees are allowed so that they can be heard through it other than strikes. Fuel costs still remain the challenge of which Air Tran has no strategy to hedge itself against fluctuating fuel prices and it was the major challenge that created the fall of company. Computer reservations are working in the right direct easing and quickening sale of tickets. ATA would now embrace the new name and the liquidity with which new investors step in.

Potential Change factors

The fuel costs challenge may become bigger when the number of people who use flights increase as a result of changing social and economic environment. It is estimated that airport space will be the major cause of delays. The threat of global warming to the physical environment which usually results in change in flight schedule cannot be neglected. There will increase mergers which would result in fewer airlines which can cooperate to shield against new entrants into the field. Other changes could occur on the legal environment may be towards safety, tax and sustainability since there the threat of bankruptcy to giant companies happened. While for Air Tran the merger would change the management system, for ATA the new investment and the past experience would require a change in management.

References

Annual reports retrieved on July 31st, 2011 from http://investor.airtran.com/phoenix.zhtml?c=64267&p=irol-reportsAnnual

Jain TR., Trehan M & Trehan R, (2009) Business Environment. New Delhi: V.K (India) Enterprises.

Meiners E.R, Ringleb A. H & Edwards L.F., (2009). The legal environment of business. Natorp Boulevard: South-Western Cengage Learning.

Air Tran Holdings retrieved July 31st, 2011 from http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NDIyMjQ1fENoaWxkSUQ9NDM2MTU5fFR5cGU9MQ==&t=1

Verma D, (2009). Decision making style: social and creative dimensions. New Delhi: Global India Publications.

Lussier N.R & Achua F.C, (2010).Leadership: theory, application, & skill development. Natorp Boulevard: South-Western Cengage Learning.

Saphiere H.D & Kappler B. (2005).Communication highwire: leveraging the power of diverse communication styles. London: Nicholas Brealey Publishing.

You have just been promoted from front-line supervisor to be one of the firm’s senior managers. During your business education, you learned that the primary role of a manager is to make good decisions. As a supervisor, you had frequently been making routine decisions, but you realize that decision making for the overall company can and will have far greater impact on the company and its employees.

Your boss, the chief executive officer (CEO), realizes that you do not have much practice in this higher level, decision-making process and has asked you to write a memo describing your understanding of how to make important decisions.

Your memo should address the following questions:

Describe at least 3 criteria that would determine whether the manager is making good decisions. What should be done to better assure that you are making a good decision?
In the realm of decision making, what are assumptions? Rather than use a dictionary definition, cite several specific assumptions that would go with any real-life decision you have made or have seen made at a company at which you have worked.
Given the importance of proper assumptions, your boss asked you to assess the accuracy of certain business assumptions and what could you do to test or confirm the credibility of them. The following were major assumptions for each firm:
An automobile manufacturer’s assumption that the demand for SUVs would continue because gas prices would continue to rise
An airline’s assumption that there was a need for an airline that provided no added amenities