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The Global Financial Crisis has led to a substantial reduction in the number of customers for Flyalot Airlines - VCE - SSCE Business Management - Question 1 - 2010 - Paper 1
Question 1
The Global Financial Crisis has led to a substantial reduction in the number of customers for Flyalot Airlines. Management is predicting that a further drop in custo... show full transcript
Worked Solution & Example Answer:The Global Financial Crisis has led to a substantial reduction in the number of customers for Flyalot Airlines - VCE - SSCE Business Management - Question 1 - 2010 - Paper 1
Step 1
a. Define the term performance indicator.
Answer
A performance indicator refers to a measure that highlights how well (or how poorly) an organization has been achieving its objectives. These indicators can be financial, such as total revenue or profit margins, or non-financial, such as customer satisfaction ratings or employee engagement scores.
Step 2
b. Identify and explain how two stakeholder groups of Flyalot Airlines would have been adversely affected.
Answer
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Customers: With fewer flights and reduced capacity due to financial constraints, customers may face increased prices and limited service availability, leading to dissatisfaction and loss of loyalty.
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Employees: As customer numbers decline, there may be layoffs or reduced hours for staff, creating job insecurity and lower morale among employees.
Step 3
c. Identify two management functions. For each function discuss one strategy that Flyalot Airlines could use to overcome the problems caused by decreasing customer numbers.
Answer
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Marketing: One strategy could be to reduce ticket prices temporarily to attract more customers and stimulate sales.
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Finance: A strategy could involve refinancing existing loans to lower interest payments, thereby improving cash flow during tough economic times.
Step 4
d. For each of the strategies you have identified in part c, select and justify a performance indicator that could be used to measure the success of the strategy.
Answer
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For marketing's strategy of reducing ticket prices, a suitable performance indicator could be the number of tickets sold within a specific time frame. This reflects the effectiveness of pricing in attracting customers.
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For the finance strategy of refinancing loans, a relevant performance indicator could be the organization's cash flow ratio, which would show improved financial health as a result of lower interest obligations.