RegionFly: Cutting Costs in the Airline Industry

RegionFly: Cutting Costs in the Airline Industry Description

RegionFly is a small, private airline specializing in ultra-premium services. Founded shortly after the "Golden Age of airline travel," RegionFly's financial performance had been strong for several decades. More recently, however, the results have taken a downward trend, due in part to the impact of the Great Recession on the entire airline industry. Not only were premium service providers affected more significantly, but the recent wave of mergers and acquisitions involving large airlines also leveraged new economies of scale, thereby reducing costs and increasing the competitive pressure on air travel prices. As a result of the deterioration in their financial performance, RegionFly was recently acquired by a larger provider, and several top managers were replaced. The new management team, supported by an external consulting firm, introduced a series of aggressive cost-cutting measures that resulted in a downsizing of the workforce, and impacted some distinctive features of the services provided by RegionFly that had been historically associated with the success of the company. Additionally, top management introduced a new product profitability criterion to be used in support of strategic decisions related to the composition of the product mix offering. The application of the new criterion lead to the elimination of two of the seven routes included in RegionFly's portfolio. To the surprise of top management, however, the cost-cutting and product-cutting measures did not result in an improvement in the profitability of the company, which, in fact, deteriorated even further. As the profitability of another route falls under the threshold, management is faced with an important decision: should the product profitability criterion be enforced, thus eliminating yet another route from the portfolio? "RegionFly: Cutting Costs in the Airline Industry" provides an introduction to costs allocations, to the evaluation of product profitability, and to the impact of the methodology used to allocate fixed costs on strategic decisions, such as eliminating product lines or firm segments.

Case Description RegionFly: Cutting Costs in the Airline Industry

Strategic Managment Tools Used in Case Study Analysis of RegionFly: Cutting Costs in the Airline Industry

STEP 1. Problem Identification in RegionFly: Cutting Costs in the Airline Industry case study

STEP 2. External Environment Analysis - PESTEL / PEST / STEP Analysis of RegionFly: Cutting Costs in the Airline Industry case study

STEP 3. Industry Specific / Porter Five Forces Analysis of RegionFly: Cutting Costs in the Airline Industry case study

STEP 4. Evaluating Alternatives / SWOT Analysis of RegionFly: Cutting Costs in the Airline Industry case study

STEP 5. Porter Value Chain Analysis / VRIO / VRIN Analysis RegionFly: Cutting Costs in the Airline Industry case study

STEP 6. Recommendations RegionFly: Cutting Costs in the Airline Industry case study

STEP 7. Basis of Recommendations for RegionFly: Cutting Costs in the Airline Industry case study

Case Analysis of RegionFly: Cutting Costs in the Airline Industry

RegionFly: Cutting Costs in the Airline Industry is a Harvard Business (HBR) Case Study on Finance & Accounting , Texas Business School provides HBR case study assignment help for just $9. Texas Business School(TBS) case study solution is based on HBR Case Study Method framework, TBS expertise & global insights. RegionFly: Cutting Costs in the Airline Industry is designed and drafted in a manner to allow the HBR case study reader to analyze a real-world problem by putting reader into the position of the decision maker. RegionFly: Cutting Costs in the Airline Industry case study will help professionals, MBA, EMBA, and leaders to develop a broad and clear understanding of casecategory challenges. RegionFly: Cutting Costs in the Airline Industry will also provide insight into areas such as – wordlist , strategy, leadership, sales and marketing, and negotiations.

Case Study Solutions Background Work

RegionFly: Cutting Costs in the Airline Industry case study solution is focused on solving the strategic and operational challenges the protagonist of the case is facing. The challenges involve – evaluation of strategic options, key role of Finance & Accounting, leadership qualities of the protagonist, and dynamics of the external environment. The challenge in front of the protagonist, of RegionFly: Cutting Costs in the Airline Industry, is to not only build a competitive position of the organization but also to sustain it over a period of time.

Strategic Management Tools Used in Case Study Solution

The RegionFly: Cutting Costs in the Airline Industry case study solution requires the MBA, EMBA, executive, professional to have a deep understanding of various strategic management tools such as SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis.

Texas Business School Approach to Finance & Accounting Solutions

In the Texas Business School, RegionFly: Cutting Costs in the Airline Industry case study solution – following strategic tools are used - SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis.

We have additionally used the concept of supply chain management and leadership framework to build a comprehensive case study solution for the case – RegionFly: Cutting Costs in the Airline Industry

Step 1 – Problem Identification of RegionFly: Cutting Costs in the Airline Industry - Harvard Business School Case Study

The first step to solve HBR RegionFly: Cutting Costs in the Airline Industry case study solution is to identify the problem present in the case. The problem statement of the case is provided in the beginning of the case where the protagonist is contemplating various options in the face of numerous challenges that Regionfly Criterion is facing right now. Even though the problem statement is essentially – “Finance & Accounting” challenge but it has impacted by others factors such as communication in the organization, uncertainty in the external environment, leadership in Regionfly Criterion, style of leadership and organization structure, marketing and sales, organizational behavior, strategy, internal politics, stakeholders priorities and more.

Step 2 – External Environment Analysis

Texas Business School approach of case study analysis – Conclusion, Reasons, Evidences - provides a framework to analyze every HBR case study. It requires conducting robust external environmental analysis to decipher evidences for the reasons presented in the RegionFly: Cutting Costs in the Airline Industry.

The external environment analysis of RegionFly: Cutting Costs in the Airline Industry will ensure that we are keeping a tab on the macro-environment factors that are directly and indirectly impacting the business of the firm.

What is PESTEL Analysis? Briefly Explained

PESTEL stands for political, economic, social, technological, environmental and legal factors that impact the external environment of firm in RegionFly: Cutting Costs in the Airline Industry case study. PESTEL analysis of " RegionFly: Cutting Costs in the Airline Industry" can help us understand why the organization is performing badly, what are the factors in the external environment that are impacting the performance of the organization, and how the organization can either manage or mitigate the impact of these external factors.

How to do PESTEL / PEST / STEP Analysis? What are the components of PESTEL Analysis?

As mentioned above PESTEL Analysis has six elements – political, economic, social, technological, environmental, and legal. All the six elements are explained in context with RegionFly: Cutting Costs in the Airline Industry macro-environment and how it impacts the businesses of the firm.

How to do PESTEL Analysis for RegionFly: Cutting Costs in the Airline Industry

To do comprehensive PESTEL analysis of case study – RegionFly: Cutting Costs in the Airline Industry , we have researched numerous components under the six factors of PESTEL analysis.

Political Factors that Impact RegionFly: Cutting Costs in the Airline Industry

Political factors impact seven key decision making areas – economic environment, socio-cultural environment, rate of innovation & investment in research & development, environmental laws, legal requirements, and acceptance of new technologies.

Policy Making Impact on RegionFly: Cutting Costs in the Airline Industry

Government policies have significant impact on the business environment of any country. The firm in “ RegionFly: Cutting Costs in the Airline Industry ” needs to navigate these policy decisions to create either an edge for itself or reduce the negative impact of the policy as far as possible.

Data safety laws – The countries in which Regionfly Criterion is operating, firms are required to store customer data within the premises of the country. Regionfly Criterion needs to restructure its IT policies to accommodate these changes. In the EU countries, firms are required to make special provision for privacy issues and other laws.

Competition Regulations – Numerous countries have strong competition laws both regarding the monopoly conditions and day to day fair business practices. RegionFly: Cutting Costs in the Airline Industry has numerous instances where the competition regulations aspects can be scrutinized.

Import restrictions on products – Before entering the new market, Regionfly Criterion in case study RegionFly: Cutting Costs in the Airline Industry" should look into the import restrictions that may be present in the prospective market.

Export restrictions on products – Apart from direct product export restrictions in field of technology and agriculture, a number of countries also have capital controls. Regionfly Criterion in case study “ RegionFly: Cutting Costs in the Airline Industry ” should look into these export restrictions policies.

Foreign Direct Investment Policies – Government policies favors local companies over international policies, Regionfly Criterion in case study “ RegionFly: Cutting Costs in the Airline Industry ” should understand in minute details regarding the Foreign Direct Investment policies of the prospective market.

Taxation & Regulation Impact on RegionFly: Cutting Costs in the Airline Industry

Corporate Taxes – The rate of taxes is often used by governments to lure foreign direct investments or increase domestic investment in a certain sector. Corporate taxation can be divided into two categories – taxes on profits and taxes on operations. Taxes on profits number is important for companies that already have a sustainable business model, while taxes on operations is far more significant for companies that are looking to set up new plants or operations.

Tariffs – Chekout how much tariffs the firm needs to pay in the “ RegionFly: Cutting Costs in the Airline Industry ” case study. The level of tariffs will determine the viability of the business model that the firm is contemplating. If the tariffs are high then it will be extremely difficult to compete with the local competitors. But if the tariffs are between 5-10% then Regionfly Criterion can compete against other competitors.

Government Scheme & Subsidies Impact on RegionFly: Cutting Costs in the Airline Industry

Research and Development Subsidies and Policies – Governments often provide tax breaks and other incentives for companies to innovate in various sectors of priority. Managers at RegionFly: Cutting Costs in the Airline Industry case study have to assess whether their business can benefit from such government assistance and subsidies.

Consumer protection – Different countries have different consumer protection laws. Managers need to clarify not only the consumer protection laws in advance but also legal implications if the firm fails to meet any of them.

Political System & Stability, and its Impact on RegionFly: Cutting Costs in the Airline Industry

Political System and Its Implications – Different political systems have different approach to free market and entrepreneurship. Managers need to assess these factors even before entering the market.

Freedom of Press is critical for fair trade and transparency. Countries where freedom of press is not prevalent there are high chances of both political and commercial corruption.

Corruption level – Regionfly Criterion needs to assess the level of corruptions both at the official level and at the market level, even before entering a new market. To tackle the menace of corruption – a firm should have a clear SOP that provides managers at each level what to do when they encounter instances of either systematic corruption or bureaucrats looking to take bribes from the firm.

Independence of judiciary – It is critical for fair business practices. If a country doesn’t have independent judiciary then there is no point entry into such a country for business.

Government attitude towards trade unions – Different political systems and government have different attitude towards trade unions and collective bargaining. The firm needs to assess – its comfort dealing with the unions and regulations regarding unions in a given market or industry. If both are on the same page then it makes sense to enter, otherwise it doesn’t.

Economic Factors that Impact RegionFly: Cutting Costs in the Airline Industry

Social Factors that Impact RegionFly: Cutting Costs in the Airline Industry

Technological Factors that Impact RegionFly: Cutting Costs in the Airline Industry

Environmental Factors that Impact RegionFly: Cutting Costs in the Airline Industry

Legal Factors that Impact RegionFly: Cutting Costs in the Airline Industry

Step 3 – Industry Specific Analysis

What is Porter Five Forces Analysis

PESTEL stands for political, economic, social, technological, environmental and legal factors that impact the external environment of firm in RegionFly: Cutting Costs in the Airline Industry case study. PESTEL analysis of " RegionFly: Cutting Costs in the Airline Industry" can help us understand why the organization is performing badly, what are the factors in the external environment that are impacting the performance of the organization, and how the organization can either manage or mitigate the impact of these external factors.

Step 4 – SWOT Analysis / Internal Environment Analysis

Step 5 – Porter Value Chain / VRIO / VRIN Analysis

Step 6 – Evaluating Alternatives & Recommendations

Step 7 – Basis for Recommendations

References :: RegionFly: Cutting Costs in the Airline Industry case study solution