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IB BM Case Study

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10.06.08 1.From the data provided by Fun Air in Tables 2 and 3 for the year ending 1999, calculate: a) total revenue for the year b) the number of full price return tickets that had to be sold to break-even. Annual Overheads/(Ticket per person minus variable costs per passenger) 40270/(300-30)=150 tickets need to be sole to break-even? c) the total profit for the year 42095730?? 2. Prepare a S.W.O.T. (strengths, weaknesses, opportunities and threats) analysis for Fun Air and use this to comment on whether Jeff Martin should be confident about his firm's short-term future. One of the strength Fun Air has is that its CEO Jeff Martin has worked for twenty years as a marketing executive of a holiday company. He has experience and knows exactly what consumers thrives and needs. Another strength is that using Jeff Martin's experience, he has clearly pointed what consumers what and not on the market right now (which means less competition as for now) ...read more.


competition, decrease in profit to lack of consumers due to the decline in economic growth and reduction in air travel over the next two years. Jeff Martin should keep an eye out. I would advise him not to make any expansion on the short term wait until the economy heals a bit or when he has paid all the debt in buying his first three aircraft. 3. a) What is venture capital and why is Fun Air the type of organization that venture capitalists favor? Venture capital is capital investment into a firm by 'venture capitalists.' A venture capitalist is a person or investment firm that makes venture investments, and these venture capitalists are expected to bring managerial and technical expertise as well as capital to their investments. A venture capital fund refers to a pooled investment vehicle that primarily invests the financial capital of third-party investors in enterprises that are too risky for the standard capital markets or bank loans." ...read more.


They can also reduce their prices by having family sets by giving a discount for the children when adults buy their tickets. They can also expand into their competitors' market but with the slow economic growth and reduction in air travel they should be careful. 5. Examine the advantages and disadvantages of Fun Air's direct ticket sales policy. Fun Air's direct ticket sales policy can maximize their profits, reducing unnecessary costs and efficient. The direct ticket sales policy can let Fun Air have direct contact with consumers in which can help them market their products correctly. 6. Analyze Fun Air's existing organizational structure and corporate culture and comment on whether these could survive a significant growth in the business. Fun Air's employees are called partners and have shares in the business. Jeff Martin in on first name terms with all his employees. This helps boost up the employees' morale by making them feel important. If Fun Air decides to expand, these corporate culture and organizational structure might not survive considering the number of new employees they will need. (Do not exactly get organizational structure) ...read more.

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