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The Strategy Simulation

Airline

Airline is designed for MBA and undergraduate courses in Strategic Management, Operations Strategy, and general strategy courses.

Overview

Airline requires students to implement their strategy by making a wide range of decisions in marketing, operations, management, human resource development, finances, and asset management. Additionally, they will encounter a series of real-life real-time environmental incidents that include diversification, hiring practices, safety issues, distribution channels, and more. A unique aspect of Airline is its service context, which is very applicable to issues in today's economy.

The Case

Groups of 2-5 students in up to 12 teams are put in the role of a management team that takes over a regional airline with three planes.

The company currently operates in multiple cities but has the option of expanding into new markets, including international and resort routes. Groups must decide how best to position their airline and develop an operational plan to support that strategy.

To read the full copy of the case for the simulation, request a Faculty ID here!

The Airline simulation also comes with 14 "incidents" (mini-cases) that challenge students to wrestle with various behavioral elements of their business. These include:

• Press Release or Not?
• Channels of Distribution
• Competitor's Safety Problem: an ethical issue
• Diversification--Auto Rental
• Dual Designate
• The Charter Trip
• Hire Competitors' Employees
• Hiring Decision
• Purchasing Policies
• Advertising Campaign
• Air Ambulance Service
• Flight for Congressman
• Kickback Problem
• Diversification Planning

These incidents all have outcomes that affect the team's performance. They make great discussion topics in addition to covering important aspects of managing a business.

Objectives

Overall, Airline provides an environment for students to see how their strategy turns out. To that end, the simulation has multiple key objectives:

• Learn to formulate their overall strategy: through corporate positioning, routes to pursue, fleet acquisitions, potential entry into cargo business.
• Understand the importance of marketing: establish the price of tickets, advertising, promotion, number of salespersons, promotional fares in each market served, type of cabin (food) service, and market research studies.
• Utilize operations management: through the scheduling of aircraft and number of trips in each market, maintenance level, fuel forecasting/pricing, quality programs budget.
• Manage human resources: through wages paid, bonus or other incentive plans, training and development.
• Manage the financial components: through the leasing or purchase of new aircraft, capital acquisition through equity or borrowed funds (short- or long-term loans), cash management through the issuing of CDs, dividends.
• Asset management: equipment acquisition and disposal.  Firms may choose between seven different configurations and sizes of aircraft (actual manufacturer's specifications are given).

Performance Measures

With Airline, instructors have a comprehensive set of metrics (18 in total) to judge team performance. For full access to all performance measures, request a Faculty ID. In general, team performance can be judged by the following:

• Cumulative Net Income
• Stock Price
• Earnings Per Share
• Reliability
• Quality
• Return on Sales, Return on Equity, Return on Assets
• And more!

Any of the 18 measures areas can be weighted and combined by the instructor to form an overall score to evaluate how their teams perform.

If you are an instructor and would like to review Airline for your class, please fill out our Faculty ID Request!