Photo AI
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
Define the term performance indicator.
Answer
A performance indicator refers to a measure which highlights how well (or how poorly) an organisation has been achieving its objectives. These indicators can be financial, such as 'number of sales', or non-financial, such as 'number of customer complaints'.
Step 2
Identify and explain how two stakeholder groups of Flyalot Airlines would have been adversely affected.
Answer
-
Customers: The reduction in the number of flights or services can lead to customer dissatisfaction, as fewer options are available to them. This erosion of trust may result in customers seeking alternative airlines.
-
Employees: With a drop in customer numbers leading to decreased profit, employees might face redundancies or changes in their roles. Job security becomes a concern, affecting morale and productivity.
Step 3
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
-
Marketing: Flyalot Airlines could run a promotional campaign to attract new customers. This includes discounts and special offers to regain lost clientele.
-
Finance: The finance department could explore options to refinance loans to reduce interest costs, thus potentially increasing available funds for marketing initiatives.
Step 4
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
-
Marketing: For the marketing strategy, a suitable performance indicator could be the 'number of new customer bookings'. This metric will help assess the effectiveness of promotional campaigns.
-
Finance: For the finance strategy, measuring 'reduction in interest expenses' as a performance indicator will inform management about the financial health resulting from successful refinancing.