Where an airport has significant market power incentive-based regulation is the only price regulation that will deliver efficiency gains. Airports usually have high credit ratings and can bear risk more easily than airlines. Regulation should be designed to facilitate this. Standards Poor passenger experience with check-in and security processes is another factor leading to a commoditization of the airline product and a low customer willingness to pay. Standards being introduced and proposed by the fast travel and checkpoint of the future programs and others could play an important role in improving passenger experience and willingness to
Since Nok Air positions itself as “premium low-cost airline”, the firm is now facing the high cost. The costs include fuel engine price, the premium onboard service, foods and beverages, the cost of offering high weight of baggage, and so on. Also, as Nok Air has to hedge fuel engine from Thai Airways International Public Company Limited, it mainly drives Nok Air to have the higher cost, and it results in decreasing the profit (“Broken Wing Nok Air,” 2008). However, the firm cannot increase passenger ticket price. Otherwise, it will be inconsistent with Nok Air’s position.
Companies like Chipotle require raw material to make the products they offer to their customers. This is where supplier power is created, if a company works with multiple suppliers then their suppliers have little or no power this is because it would be unexpansive to switch suppliers. When a company works with limited suppliers they have a higher supplier power because of how expensive it would cost them to switch supplier at this point the supplier also has the power to raise prices to capture some of the industry’s profits. Most restaurants get their supplies from different suppliers so for the most part supplier power is week within the industry, unless you are chipotle. Chipotle uses organic produce and free-range and antibiotic-free meats which requires them to work with a few selected suppliers which increases its supplier power.
Vertical integration could cut operating costs making profit increase, but you have to weigh the pros and cons to help determine if that is worth doing. Panera is able to make their dough and sell it to many different franchisees, but is this enough money to offset the other costs? Location is a key success factor. If you are in a location where there tends to be a large amount of
During the 2011, Ryanair have decided to decrease the airfare rate as a lower cost airline, but the controversy started when they started charging passengers for various reasons that are not necessary. The passengers concluded it as the cheaper but not cheerful airline. Ryanair charged extra for the name change on the passengers boarding pass, a boarding pass fees, excessive luggage fees per kilo, credit card use fees of the total amount, a checked musical instrument fees, a reserved seat fees, and the charges for a water bottle that requested by the passengers. Besides that, Ryanair also happened very often in poor customer service, hidden credit card charges, frequent delays the flights, and extra payments for fees or taxes. Nevertheless, the main controversy was caused by the charges where happened inside the cabin of the plane.
Allowing for private investors to participate in the TSA would create an environment for innovative security structures. Investors would be incentivized to increase profits through airport checkpoints and would alleviate the federal government from funding the administration. The current workers for the TSA consists of 42,000 officers which isn’t enough to meet market demand (Zorthian). Each airport has various management complications to overcome and each location needs to rapidly adjust their workforce, to avoid being unproductive. If airport passenger screening is privatized the screening performance would most likely be enhanced by decreasing management issues and allowing for adaptable budgeting.
Threats: FlyDubai just like any other business faces threats to its existence. For instance, with the global financial crisis and later the Eurozone crisis, the number of travellers has significantly reduced due to economic hardships. This has affected the profit levels of the airline as well as slowed down its growth prospects. The airline also faces intense competition from other low cost airlines forcing it to extensively invest in product differentiation to counter the competition. This is an expensive
This means more profit for businesses because the rise on food and oil means more money in their wallet but less money in consumers’ wallets, “Similarly, when homeowners benefit from inflation because the price of their homes rises, while renters suffer because they are paying higher rent” (ch.8 p. 15). Hence government should step in to intervene in businesses, but it is a completely different story if we are running out of food and oil rather than just raising the price because they want to. When businesses are filling up their account with more money, but leaving their consumers with less money in their wallet there is a problem and it will hurt the supply and demand law. That being the case, government should be given the authority to regulate markets only to an extent to make sure the inflation level stays at a reasonable
There was also an increase in the sale of franchises as franchisees were unable to maintain the finances of owning the franchises. Nando’s approached and dealt with the situations by offering promotions and deals whereby their products would have been temporarily cheaper in order to attract customers and accommodate their financial difficulties. In order to maintain the amount franchises open, Nando’s dropped the franchise fees as well as their establishment costs and initial working capital in order to generate some profit. Over the past few years, many large international fast food brands have entered the local market in which Nando’s is situated, which poses a threat to the success and overall consumer base and so profit margin of the business. Nando’s has managed to rise and stay above the competition by
This can also be attributed to its high priced menu, since many large middle-class families simply can’t afford it. By broadening their public perception and pricing model, it will allow new customers and demographics to experience their restaurants and menu items. An opportunity that has yet to be capitalized on is a rewards program for frequent/loyal customers. This would keep them coming back and has the ability to create new loyal customers in the process. Finally, The Cheesecake Factory lacks in its advertising strategy.