Entr 3100 Definition of Success & Critical Issues

Definition of Success & Critical Issues

OurPLANE’s would need to achieve a margin of the initial investment of 10% and maintain an average annual operating margin of 25% by December 2009, enabling the company to grow. In order to do this, OurPLANE’s must address the following issues:

• The economy is entering into a recession which has caused inflation in oil prices causing the costs to increase and resulting in a decrease in the hourly margins;
• Due to the recession, multiple business and individuals have filed for bankruptcy, including a supplier of OurPLANE’s providing the company an opportunity to take advantage of this situation to grow to the next step;
• With the economy downfall and no appropriate medium to reach their target market would result in OurPLANE’s becoming stagnant and unable to grow or a decline of business.

Situational Analysis

With the current economic crisis emerging would result in an increase in cost for the company for monthly maintenance as well as hourly cost resulting in a decrease in margin of the “selling price” would remain the same, the company’s operational strategy of gaining margins on all three fees would lose its speciality, negatively affecting profits and retained earnings as the company already isn’t meeting a few of the three margins.

This downfall has resulted in many businesses folding, which is a small foreshadowing for OurPLANE’s to be vigilant with their finances as a decline in profits resulting in the company to fold. However, the result of businesses filing for bankruptcy has led the company’s supplier also filing for bankruptcy, providing OurPLANE’s the opportunity in increase their fleet.

Although the opportunity aforementioned would increase the company’s fleet and help OurPLANE’s achieve the low cost leadership strategy, the economy downfall has left many individuals and corporations becoming hesitant to acquire a share of an aircraft.

Casson and “his team” has taken to themselves to  create a marketing strategy which would bring more clients. However, without the appropriate marketing personnel, recreating a marketing strategy to attract more clients would ineffective, resulting in an inability to reach an appropriate number of new clients which disallows the company to grow.

With their current promotion, 100% of the shares are not sold for each plane which is resulting in a loss of investment. If the company does decide to invest in increasing their fleet, without a suitable promotional plan, the company would be unable to generate a profit as there would be none to limited shareholders for each plane.

Although Casson is looking to grow the business via many means, it should be his least worries due to the upcoming global recession

Decision Criteria

A feasible option must include the following:

• Must address the environmental and economical issues
• Must maintain a average margin of monthly fees of 86.5% and margin of hourly fees of 10% by December 2009
• Must provide OurPLANE’s the ability to grow

Options Analysis

Option 1 - Status Quo With Price Increase

This option would allow OurPLANE’s to stay status quo, and only address the