Business 2 Tasks

timer Asked: Oct 17th, 2018
account_balance_wallet $15

Question Description


I'm in a group simulation and we are running an airline...My responsibility this week is to come up with the decision on the information below:

Fare StructureNormal
Fare per Mile35 cents
Cabin/Food ServiceFree soft drinks, and pretzels or peanuts.

Do you agree with this decision. Should this decision be changed? Here is some other data about the airline to make your decision. You r decision should be at least 250+ words long:

Fares Decision
Fare per Mile35 Cents
Fare StructureNormal
Cabin/Food ServiceFree soft drinks, and pretzels or peanuts.
Marketing Decision
Promotion Budget$2,500
Advertising Budget$2,500
In-Flight MagazineNo
Current Salespersons0
Salespersons Hired0
Estimated Salesperson Cost$0
Cargo Marketing Budget$0
Compensation Decision
Quality & Training Budget$1,000
Compensation PolicyPay prevailing wages for regional airlines.
Fleet Decision
MaintenanceLevel 1: minimal cleaning and maintenance.
Fuel ContractAll fuel purchased on the spot market this quarter
AcquisitionsNo acquisitions have been made.
DisposalsNo aircraft disposals
Routes Decision
Aircraft# FltsSeatsFare Sale
9A - 600 MilesBeechcraft 1900238Regular Fare
10B - 400 MilesBeechcraft 1900357Regular Fare
11C - 340 MilesBeechcraft 1900238Regular Fare
12D - 360 MilesBeechcraft 1900357Regular Fare
13E - 400 MilesBeechcraft 1900357Regular Fare
Corporate Decision
Social Performance Budget$0
Social Responsibility AreaNo Area Selected
Financing Decision
Stock Sold$0
Dividend Paid$0
Stock DividendNo
Short-Term Loan$0
Long-Term Loan$0
Purchase 3-month CD$0
Special Decision
IncidentPress Release or Not?
ChoiceNo option chosen

Then complete this discussion POST:



This discussion helps you develop the skills to master the following course competency:

  • Formulate business decisions for immediate actions based on integrated analyses.

Revisit the MBA6028 Course Alignment Map to review how all activities assist you in achieving the course competencies and overall program outcomes.


Discuss the process that your team used for making decisions in this first period. What do you expect the result to be? If you answer this discussion after the results are in, discuss how the results met or deviated from your expectations. For this discussion, answer the following questions at a high level:

  • What choices did you make in your first round?
  • How did the results reflect or not reflect your desired outcome of those choices, or how do you expect them to work out?
  • What did you learn in the process?

Tutor Answer

School: Rice University



Student’s Name
Institutional Affiliation




I agree with the decision to tag the price of travel at 35 cents per mile for the airline. I
settled for the structure of the airline’s fare through consideration of a range of expenditures
since air ticket stands as the main source of income for the airline. One of the factors was the
compensation of the cabin crew as well as the cost involved in training and improvement of their
quality. It is appropriate that the fare is able to cater for the compensation of the crew members
who provide the much needed services during travelling time. Additionally, passengers, through
the payment of this fare rate will cover the cost of free soft drinks, and pretzels or peanuts.
Another consideration made before arriving at this decision was that the fare should cater for the
marketing cost that the airline expects to incur. The marketing strategy for the airline involves
the promotion, advertising, salesperson, magazine and cargo marketing costs. Another cost that
the fare charged must cover is the fleet cost which comprise of maintenance, fuel, acquisition
and disposal expenditures. Moreover the airline considered the cost incurred in the process of
corporate social responsibility (CSR) as well as the social performance budget. Finally, the
airline tagged the fare rate at a price that would facilitate in the payment of its long-term and
short-term debts, payment of dividends to the shareholders and other financial obligations. In my
opinion, the set fare rate is normal and should not be changed at all. My view is based on the fact
that the fare rate will enable the airline settle its expenditure and at the same time generate


Discussion post

The decision to tag the airline’s fare rate at 35 cents per mile was reached after
conduction simulations exercise by the team members. The simulation in reaching the firstperiod decision involved consideration of various expenditure that aircraft incurred through the
entire travel. After the consideration of the costs, the fare rate was set at a significantly higher
price to cater for any overhead expenditures as well as ensuring the airline generated profits from
the venture.
After conducting the simulation exercise, the results reflected that the most lucrative
routes that the airline would operate at the new rate (35 cents per mile) would be the, 9A - 600
Miles, 10B - 400 Miles, 11C - 340 Miles, 12D - 360 Miles and 13E - 400 Miles. The results
further indicated that marketing would be the highest expenditure for the airline with a total of
$5000 to be used in pro...

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Excellent job

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