BUSS2 Homework 'Eastern Airways' Feedback

Do you think that quality should continue to be the main operational target for Eastern Airways in the future or should it focus on other targets such as capacity utilisation or unit  costs? Justify your view. (15 marks)

Always start with a definition:

Quality is the extent to which a product fulfils customers expectations.

Operational targets are the goals or objectives pursued by the operations management team within an organisation.

For quality being the most important operational issue:

• the company uses quality as a USP (for example minimal delays in flight times) and needs to continue to do so

·  managing time effectively is important: delays increase costs

• reducing check-in times can help to reduce    staffing costs

• being successful in this particular niche market requires that the company provides its customers with a high quality product

• the company has acquired a reputation for quality and can use this for publicity as it expands

• as it expands it is more likely to come into direct competition with powerful rivals and may need to emphasise its quality rather than seeking to compete in terms of price

Against quality being the most important operational issue:

• the company must be profitable to satisfy its shareholders therefore controlling costs (and setting targets here) will be important

• the niche in which it operates is small and maybe it needs to consider operational targets, such as unit costs, to allow it to compete in other markets as it expands

• the company can benefit financially from setting targets for improving its level of capacity utilisation, this, in turn, will help with unit costs.

Issues for evaluation may include the following:

• the company should set a range of complementary operations targets to maximise its chances of success in the future

• quality targets may be very important but these are mixed up with customer service and other operational issues and cannot be considered in isolation.

Extension activity:

Analyse two possible consequences for Eastern Airways of its decision to operate in a niche market targeting business travellers. (9 marks)