This is your first day on the job as a corporate strategy analyst at Kronos Travel Enterprises. Your job will be to act as an in-house consultant by studying the various business units of Kronos and making recommendations to enhance profitability.

Your first meeting is with the human resources department to watch a brief business orientation video for new employees featuring Jack Sams, the chairman and CEO. This will introduce you to the three business units of Kronos Travel Enterprises.

View the animation below to learn about Kronos.

Kronos Project Scenario

Welcome to the team! I'm pleased to have this opportunity to share a few thoughts with you and introduce you to some of the world-class businesses that we operate here at Kronos Travel Enterprises.

Our corporate offices are located near Raleigh, North Carolina. This area is known as the Research Triangle, due to the number of universities and high-technology industries dedicated to research in the area. It's a great base to focus on travel in the southeastern, eastern, and midwestern areas of the United States.

Most of our business comes through three units—Trans Airlines, Fable Resorts & Attractions, and Travel Plus travel planning. Trans Airlines is our regional airline business. From our hub in the Research Triangle, Trans Airlines connects travelers to major business centers in the Midwest and on the East Coast. We offer nonstop jet service from Raleigh-Durham to Chicago, Charlotte, Atlanta, Boston, Washington, DC, and New York several times a day.

Every day, we endeavor to meet the needs of all of our travelers. Many of our passengers are business travelers from the Triangle, but we also serve many students and leisure travelers. You can choose business or pleasure on Trans Airlines. We also offer daily nonstop jet service to Florida's Gulf Coast, a vacationer's paradise.

The Iliad resort, located near Kissimmee, is the jewel of our Fable Resorts & Attractions business. This resort has something for everyone. Families enjoy the adventure in our fable theme park, and our adult visitors especially value the comforts of our luxury hotel and resort complex.

As you can see, Kronos offers many options to the business or leisure traveler. But that's not all we do. We believe that today's travelers want convenience and service, so we have a business that's dedicated to helping our customers with all their travel plans.

Travel Plus provides travel-planning services that help both business and leisure travelers build itineraries, purchase airline tickets, reserve hotel accommodations and car rentals, and buy tickets to major attractions like sporting events, theme parks, and concerts.

These three business units offer a number of complementary services and have helped establish Kronos as the premier travel company in the region. I hope you've enjoyed this overview of our businesses here at Kronos Travel Enterprises. We're glad to have you on board!

Pricing with Market Power

For your first project as a corporate strategy analyst, you have been asked to find ways to improve the profitability of Trans Airlines, Kronos Travel Enterprise's regional airline business.

Jay, the vice president of corporate strategy at Kronos, would like you to study the current pricing strategy of the market that is the least profitable and, therefore, needs the most attention: flights on the Raleigh-Durham to Chicago route.

After you analyze the current pricing strategy, Jay would like you to consider a broader plan. He wants you to determine whether the company can use price discrimination effectively and, if so, to recommend a plan to implement price discrimination. Before you begin, read the e-mail from Jay that explains this project in more detail.

Hi, I hope you're getting acquainted and settling in. I have an important project for you. I need you to look at an underperforming market at Trans Airlines. The Raleigh-Durham to Chicago route is less profitable than our other routes. I need you to figure out what's going wrong and how to fix it.

Some background information on the route: For flights during certain times of the day, Trans is the only airline flying from Raleigh-Durham to Chicago. At the most competitive times of the day, only two other carriers serve this market. Trans Airlines is doing relatively well with our current pricing strategies, but we can do better. In addition, there is considerable pressure from Wall Street financial analysts and the shareholders to improve profitability. One immediate concern is the rising price of kerosene, which is the primary ingredient in the aviation jet fuel that we use.

Trans Airline’s current pricing strategy is to charge a single fare, based on fuel prices, to everyone on the same flight. Fares may differ from flight to flight, however.

Anticipating that fuel prices will rise, a working theory in the airline's marketing department is that Trans should raise its fares to improve profitability. I've had Tom, a marketing analyst at Trans, take a look at this problem. He has given me some suggestions, but I want your perspective on this.

I'd also like you to examine the possibility of charging more than one price for this route. Some Wall Street analysts have been telling us that we should implement a price-discrimination strategy. I want you to evaluate this idea and determine if it's feasible.

I'll make sure that you have all the information you need to prepare a memo for me. I appreciate your assistance with this project.

Let me know what you've come up with.

Thanks,
Jay

Price: $16.11

Solution: The downloadable solution consists of 4 pages, 1234 words.
Deliverable: Word Document