Fly-Nice: Decision Analysis
FLY-NICE: DECISION ANALYSIS
1. Introduction
Fly-Nice is an airline company which provides customer-friendly, point-to-point short-haul, low-fare service, although 60% of flights go to or leave from the same hub airport. The corporate strategy of Fly-Nice is to remain in the low-price market, but to expand passenger miles sold. Now there are two proposals have been made for the companyfs strategic development: One is to enter the long-haul, international market. The other is to offer a web site booking facility to customers.
This essay aims to conduct research on both proposals. Firstly, it will analysis particularly on the viability of the first proposal, which suggest to enter the long-haul, international market. Secondly, it will consider some proper techniques and theory which would be helpful for making a choice between the two alternatives.
2. The viability of entering the long-haul, international market
In this section, it will conduct a careful decision analysis of the first proposal. Above all, it will calculate the potential costs of taking an action to enter the long-haul, international market. Next, it will assess the risk and income by constructing a decision tree. A few valuable sources of data in supporting the case will be mentioned as well.
2.1 Potential costs
Before making a decision of investing to the long-haul, international flights, it should be firstly considered the potential cost of the action. In the problem formulation step, two problems are identified: (1) Deciding where is the operating cost and how much would it be. (2) Deciding what others information are required and how to gain them.
For the first problem, it could begin with taking into account the traditional categorization of airline operating costs. The published operating cost data of British Airways (Doganis: 2002), whose cost structure is fairly typical for a major...
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