Sales and Earnings Trends
Every business has its own challenges to solve and Gorilla Express is not an exception. The company like any other airline has faced and is still facing many start-up challenges in the market. These challenges are limiting the airline from reaching its full potential as well as not being able to meet its objectives. The airline is so far doing well with only but if these challenges are completely addressed, the company can do much better (McDonald and Keegan, 2002).
The company so far has over US $214,475 in cash and over $6,099,000 as the total projected cash available. The operation cost of the company is quite high at the moment and one of my first priorities is to ensure that this cost is reduced up to not more than 75% of the current operating cost. Currently, the airline is spending up to %1,018,610 in flight operations, $893,036 in fuel, and over $7,000 in ensuring that workers are trained well to suit the current market needs. The company, however, spends as low as $12,000 in market research. This is one of the areas that the management should heavily invest in since it determines the survival of the company in the future. The airline should do intensive research on the available market gaps so as to come up with a water-tight plan on how to make the company grow.
Start-Up Problems And How They Are Being Overcome.
Starting the airline is not a big issue but securing a market share and making sure that the company does not lose its share to its competitors is all that it takes. The biggest challenge that the company has and is still facing is to compete with big airlines in the market that has already established themselves. No one wants to try a new airline since many of the customers feel that they will not get quality services. The company is solving this problem by carrying out an intensive marketing campaign that is well coordinated within the target market. The company has also been offering unbeatable offers to new clients so as to attract as many customers as possible. So far more than 80% of all new customers rate the airline well and promise to travel with us again (O'Bryan, 2009).
There are other logistical challenges being faced by the company ranging from airline management to cargo handling. Some of the services that the airline is expected to offer are very expensive to offer on small scale. This leaves the company with no option than to outsource from major airlines. So far the airline has been unable to independently operate will seek help from other airlines, this is making it difficult to expand to other markets. Flight delays and other unavoidable merits are part of the big challenge the airline has been unable to amicably solve. The airline has, however, signed short-term agreements with a few large airlines to help it manage this challenges.
The company also has a serious challenge of meeting its objectives since its inception. There are many challenges that need to be addressed, even with the signing of performance contracts with employees, the airline always fails to meet its objectives. The company might be making profits but still, it is below the target. The company is currently considering to invest more in market research so as to understand the market better and unable its technical team to make informed decisions based on facts. The company is currently operating on projections and shallow market research and this might be the big reason why its objectives are not met. The other problem that is threatening the existence of the airline is losing its employees to bigger airlines, the company is only left with very few personnel that is not sufficient to run the airline. Many of the companys technical team prefer to work in already established airlines for purposes of job security. The company has increased its payment deals to up to 45% to all workers irrespective of their ranks. This is a way of motivating them to remain in the company.
Discuss Dividend Plans And Policy, Expansion Plans, And Future Prospects.
It is the dream of every investor to see his or her grow and Airline investors are not different. Since the airline is now fully established and the company has a command on the local market, it is important to come up with a development plan that will propel the airline to the next level. For the next two to three years as the manager of the airline, I will ensure that the airline grows in all aspects. The five routes that the airline is currently in command cannot guarantee success to the company. I will, therefore, ensure that the airline operates in at least eight routes during my first year as the airlines management.
My biggest concern for the first year is to create a good customer relationship with the already existing market before venturing or developing a development plan for the airline. This will be through ensuring that the companys services are up to standard and that each complaint raised is keenly looked into. To achieve this, each of the companys employee will have to sign a performance to contract. It is useless to invest in new markets if as a company we cannot fully manage the little that we have. The main reason for investing in customer satisfaction is to ensure that the airline remains competitive in the few routes it is operating in.
The next progress plan will be to acquire the necessary materials that will improve the efficiency of the airline in services delivery. The company will acquire state of the art facilities and focus more on expanding the existing market and not risking my investors resources in new markets. New markets come with new challenges and it might be very expensive for the airline to venture. To avoid such risk which may affect the overall performance of the airline, I would prefer to concentrate on the markets that the company is familiar with and face challenges that we can handle comfortably (Great Britain, 1990).
As the manager, I will personally the process of acquiring new aircrafts that has a bigger carrying capacity and speed. All the company wants is to make a profit and not the number of aircrafts that it has, we cannot have many aircrafts with very low carrying capacity and expect to perform well in the market. The company will acquire aircrafts that have a maximum carrying capacity and that can operate effectively. Size, speed, and the cost will be the major determinants when acquiring these new aircrafts. The few small aircrafts will be reserved for serving the shorter routes that are managed by the company while the new crafts will engage new markets. The aircrafts will be acquired through leasing since it a new airline which requires instant cash just in case of any unforeseen happenings.
The company will regularly train its employees on new market trends so as to ensure that they remain posted on new market demands. The company will also draft a motivation plan for all its employees ranging from awarding of exemplarily performing employees to promoting them. To ensure that employees grievances are handled properly, the company will allow them to have representatives. This is also another way of ensuring that employees are loyal to the company and that it does not lose its best talents to its competitors.
To have the companys risks covered in a diverse manner, the airline will invest in a cub business and also offer other delivery services to its clients at a fee. The Company will acquire a few delivery vans and not more than 20 cubs. This will help the company to market itself to another market which is also potentially profitable if well managed. The delivery business can be used a promotion for the airline and can be considered as an aftersales service for clients.
The company will reduce the number of trips in each route to not more than three in every seven days unless on special or considered scenario like being hired for special deliveries. This will reduce the operation cost of the company and increase its profitability. It is not economically reasonable to have a flight on daily basis on to make a few dollars per day. The prices of the airline will be slightly lower for shorter routes than those of its competitors so as to ensure that the company does not lose its market share.
There are many other ways to ensure that the airline remains competitive irrespective of the size of the market it serves. One is setting fair prices for all as well as ensuring that cabin services offered to customers are good and up to standard. The company will have a fare structure that serves not more than two categories of customers. The first category will have a fair price that is higher and will get slightly better services than the second customer level.
The company will be personally liable for any luggage in its custody and shall compensate in case of loss. This is one of the ways in which the airline tends to be friendly to its customers and also guaranteeing them that the operations are safe, reliable, and trust worthy. The airline will also introduce a membership card for its customers that will help them earn points that are redeemable for a range of products and services. The company will set a standard amount of five dollars per point so as to increase customer loyalty to the company. Customers also want to benefit from the profit that the company is making and this is one way to convince them.
As a way of marketing the company and also giving back to the society, it is important to ensure that the company has at least a project or two to finance for the benefit of the community. Gorilla express will start a charity work of issuing education bursaries to young talents to enable them to venture into higher levels of education. The company will set aside US$4000 each year to boost different young talents in the society.
Projections for the Remaining Part of the Year.
This performance projection is based on the current performance of the company. The company management is familiar with all market dynamics and all other considerations have been taken care of. This projection is based on the assumption that the company will continue to perform well as it has been for the first quarter of the year or even better. The company expects to have up to $10,070,826 in cash and other receivables by the end of this financial year. Since the company expects to acquire or develop new infrastructure to enhance efficiency in service delivery and the overall performance of the airline, the total net worthy of the fixed assets will increase to $4,324,000. This also means the short-term loans will increase to $1,803,076. The company does not, however, intend to use these loans as part of its salary increment programs. The short-term loans will be specifically be made for setting up infrastructure.
The airline also expects to acquire new aircrafts in order to serve the new markets. This means that the total long-term loans for the company will increase to more than $8,656,092. The airline cannot purchase the aircraft in cash because of its current financial position. Since the company will have other investments, all the receivables from these investments will help in servicing these long-term loans. These receivables will come from the cub business as well as the delivery investment that will be operational by the end of the second quarter of this financial year. These investments both combined are expected to contribute up to $780,000 in the first year.
Short-term Investment $0
Accounts Receivable $2,303,234
Total Current Assets $2,517,709
Aircraft Cost $1,800,000
Less Depreciation -$789,000
Net Aircraft $1,011,000
Total Fixed Assets $1,081,000
Total Assets $3,598,709
Accounts Payable $1,447,500
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