OPERATIONS ASSIGNMENT: As flying becomes a commodity and as airlines strive to o

Question

OPERATIONS ASSIGNMENT: As flying becomes a commodity and as airlines strive to offer the lowest fares possible, Southwest is finding it increasingly hard to distinguish itself from its competition. A proposal has been made to offer a business class on its longer flights. This class would have more comfortable seats, more legroom, and complimentary magazines, movies, meals, drinks, and Wi-Fi. A toilet would be dedicated to this section. These passengers would also get priority boarding and de-boarding of flights. If the experiment is successful Southwest would consider rolling out business class on all its flights.

Question: What role do the other functions (specifically, Finance, Marketing, and HR) have to play in

examining the feasibility of this idea and successfully implementing it?

Explanation / Answer

Each function will conduct its own appraisal regarding the feasibility of the idea of the business class section for all the flights.

The finance function will evaluate the proposal in terms of the cost associated with the proposal and the cash inflows taking place over a period of time. Any proposal should help the company build more wealth and it is only possible after the analysis of fixed cost associated with the building of business class section, increased revenue level with higher ticket price and other variable cost incurred on a customer basis. If it creates a positive net present worth, then it is financially feasible otherwise it is not feasible.

Marketing function creates a marketing appraisal and identifies the presence of demand of such business class section in the market. It helps to distinguish a particular audience who want to fly in business class and pay extra. This demand for business class and lack of supply or lack of quality supply of such services, makes marketing function to give a green signal to go for a business class section. Though, it is important to consider the market attractiveness, purchasing power of the consumers, and the market conditions with use of porters five force model analysis and SWOT analysis.

The HR function identifies the need of human resource with specific skills that can cater the demand of business class customers. It will either hire at the internal level or from the external sources as well as provide training to the existing employee base to be able to cater the business class customers in best ways. Here, the HR function will ensure that the organization owns the HR capabilities to serve these customers as per the expectations and achieve the organizational goals.

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