In the year 2016, after more than a decade of loss-making, Air India posted an operating profit of INR 1.05 billion. Over the years, Air India's greatest problem has been its crippling debt. At the end of fiscal 2014-15, the airline had a total debt of INR 513.67 billion. While the airline managed to phase out more than INR 50 billion of debt from its books during the year 2015-16, its total debt still stood at INR 460 billion. In order to facilitate the revival of Air India, Ashwani Lohani, known as the "turnaround man", was appointed Chairman and Managing Director of Air India. As Lohani piloted Air India towards revival, efforts were being made to convert INR 100 billion of Air India's debt into equity, a move that would substantially reduce its interest burden and give banks a major say in its functioning. Lohani was in talks with banks and investors who could play a critical role in Air India's debt restructuring. Lohani mulled over the various options related to debt restructuring. It remained to be seen whether Lohani's image as the "turnaround man" coupled with Air India's operating profits would increase investor confidence and help Air India deal with its debt burden. While Air India's modest operating profit was good news, it remained to be seen if it could provide relief to the sick airline's actual financials. It also remained to be seen whether Lohani's attempts at improving employee relations with the organization and the operational changes he was introducing to Air India could help turn the tide for the ailing airline. As of July, 2017, two questions remained: Had Air India really turned the corner under Lohani's leadership? Could Air India's short-term progress help it to overcome the huge debt that had become the "elephant in the room"?
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Case Analysis of Air India: Maharaja in Debt Trap
Air India: Maharaja in Debt Trap 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. Air India: Maharaja in Debt Trap 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. Air India: Maharaja in Debt Trap case study will help professionals, MBA, EMBA, and leaders to develop a broad and clear understanding of casecategory challenges. Air India: Maharaja in Debt Trap will also provide insight into areas such as – wordlist , strategy, leadership, sales and marketing, and negotiations.
Case Study Solutions Background Work
Air India: Maharaja in Debt Trap
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 Air India: Maharaja in Debt Trap, 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 Air India: Maharaja in Debt Trap 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, Air India: Maharaja in Debt Trap 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 – Air India: Maharaja in Debt Trap
Step 1 – Problem Identification of Air India: Maharaja in Debt Trap - Harvard Business School Case Study
The first step to solve HBR Air India: Maharaja in Debt Trap 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 Air Debt 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 Air Debt, 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 Air India: Maharaja in Debt Trap.
The external environment analysis of Air India: Maharaja in Debt Trap 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 Air India: Maharaja in Debt Trap case study. PESTEL analysis of " Air India: Maharaja in Debt Trap" 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 Air India: Maharaja in Debt Trap macro-environment and how it impacts the businesses of the firm.
How to do PESTEL Analysis for Air India: Maharaja in Debt Trap
To do comprehensive PESTEL analysis of case study – Air India: Maharaja in Debt Trap , we have researched numerous components under the six factors of PESTEL analysis.
Political Factors that Impact Air India: Maharaja in Debt Trap
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 Air India: Maharaja in Debt Trap
Government policies have significant impact on the business environment of any country. The firm in “ Air India: Maharaja in Debt Trap ” 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 Air Debt is operating, firms are required to store customer data within the premises of the country. Air Debt 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. Air India: Maharaja in Debt Trap has numerous instances where the competition regulations aspects can be scrutinized.
Import restrictions on products – Before entering the new market, Air Debt in case study Air India: Maharaja in Debt Trap" 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. Air Debt in case study “ Air India: Maharaja in Debt Trap ” should look into these export restrictions policies.
Foreign Direct Investment Policies – Government policies favors local companies over international policies, Air Debt in case study “ Air India: Maharaja in Debt Trap ” should understand in minute details regarding the Foreign Direct Investment policies of the prospective market.
Taxation & Regulation Impact on Air India: Maharaja in Debt Trap
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 “ Air India: Maharaja in Debt Trap ” 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 Air Debt can compete against other competitors.
Government Scheme & Subsidies Impact on Air India: Maharaja in Debt Trap
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 Air India: Maharaja in Debt Trap 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 Air India: Maharaja in Debt Trap
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 – Air Debt 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 Air India: Maharaja in Debt Trap
Social Factors that Impact Air India: Maharaja in Debt Trap
Technological Factors that Impact Air India: Maharaja in Debt Trap
Environmental Factors that Impact Air India: Maharaja in Debt Trap
Legal Factors that Impact Air India: Maharaja in Debt Trap
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 Air India: Maharaja in Debt Trap case study. PESTEL analysis of " Air India: Maharaja in Debt Trap" 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.
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