Assignment

Case No-1

With a small year-round population, Branson, Missouri, is in a location not easily accessible by air service.45 The city, best known for its country music and music variety shows and family-style attractions, also has the kinds of outdoor activities that attracted more than 8 million visitors last year, earning it the unofficial nickname Vegas without the gambling. About 95 percent of those visitors come by car or bus. But now theres a new show in townthe Branson Airport. The $155 million airport, which opened in May 2009, is an experiment that many people are watching. The airport is generating interest from city governments and the travel industry because its the nations first commercial airport built and operated as a private, for-profit business with absolutely no government funding. As one expert said, ...unpretentious little Branson Airport could have an outsize effect it if works. It could turn what now is a mostly regional tourist spot into a national destination for tourists. Steve Peet, the airports chief executive, admits that he had no idea where Branson was in 2000. But by 2004, he was convinced there was money to be made flying tourists there. He says, If you were ever going to think about building a private commercial airport, this would be the place to do it. How many more visitors would come here if we made it easier and affordable for them? It seemed like an incredible opportunity. So,using private financing, he decided to build a new commercial airport a short distance south of Bransons popular music shows district. Both Peet and Jeff Bourk, executive director of the airport, continue to tackle the managerial challenges of turning that dream into reality.

Construction work on the airport terminal and the 7,140-foot runway (which can accommodate most narrow-body jets) went smoothly. Bourk believed that much of that was due to minimal red tape. Because the airport wasnt using federal assistance, it didnt face the restrictions that accompany taking government money,which also meant it could pick and choose the airlines it allowed in. To attract those airlines, the airport agreed to not allow other competitors in. Also, the airport owners kept the airlines operating costs low since airport employees do much of the work usually done by an airlines ground staff. Initially, the airports owners offered exclusive contracts to AirTran and Sun Country on certain routes to Branson. Now, Frontier Airlines and the newly-formed Branson AirExpress have added service. Mr. Peet emphasizes that they want the airlines to succeed. We want to build real service, sustainable service. The airport earns money from landing fees (based on number of passengers, not on weight), aircraft fuel sales, a percentage of every sale at the airports facility, and a $8.24 fee paid by the city of Branson for each arriving passenger. To reach Peets goal of 250,000 passengers a year, the airport needs only 685 passengers (five to six planeloads) a day. He says, What were doing is going to work. But first, they have to deal with some significant turbulence. Branson city officials (who have been elected and hired since the original agreement was signed) now say that the contract between the city and the airport regarding the arriving passenger fee may not even be constitutional. Airport officials respond that, We have a legal document and we expect to be paid. And Bourk maintains that Branson benefits from every tourist that goes through the airport. We bring in high-quality tourists all over the country to spend money in Branson for a cheap price of $8.24.

Discussion Questions

1. Using the four functions as your guide, what challenges would Jeff Bourk face in managing the Branson Airport?

2. Again, using the four functions as your guide, do you think the managerial challenges Jeff Bourk faced when getting the airport up and running are different from what he faces now in actually overseeing the airports operation? Explain.

3. What management roles would Jeff Bourk be playing as he (a) negotiates new contracts with potential airlines, (b) works with the airport employees in providing a high level of customer service to arriving and departing passengers, and (c) resolves the contractual issues with the city of Branson? Be specific and explain your choices. 4. What skills would be most important to a manager like Jeff Bourk? Explain your choices.

Case No-2

Chad's Creative Concepts designs and manufactures wood furniture. Founded by Chad Thomas on the banks of Lake Erie in Sandusky, Ohio, the company began by producing custom-made wooden furniture for vacation cabins located along the coast of Lake Erie and on nearby Kelly's Island and Bass Island. Being an "outdoors'' type himself, Thomas originally wanted to bring "a bit of the outdoors" inside. Chad's Creative Concepts developed a solid reputation for creative designs and high-quality workmanship. Sales eventually encompassed the entire Great Lakes region. Along with growth came additional opportunities. Traditionally, the company focused entirely on custom-made furniture, with the customer specifying the kind of wood from which the piece would be made. As the company's reputation grew and sales increased, the sales force began selling some of the more popular pieces to retail furniture outlets. This move into retail outlets led Chad's Creative Concepts into the production of a more standard line of furniture. Buyers of this line were much more price-sensitive and imposed more stringent delivery requirements than did clients for the custom line. Custom-designed furniture, however, continued to dominate sales, accounting for 60 percent of volume and 75 percent of dollar sales.Currently, the company operates a single manufacturing process in Sandusky, where both custom furniture and standard furniture are manufactured. The equipment is mainly general purpose in nature to provide the flexibility needed for producing custom pieces of furniture. The layout puts together saws in one section of the facility, lathes in another, and so on. The quality of the finished product reflects the quality of the wood chosen and the craftsmanship of individual workers. Both custom and standard furniture compete for processing time on the same equipment by the same craftspeople. During the past few months, sales of the standard line steadily increased, leading to more regular scheduling of this product line. However, when scheduling trade-offs had to be made, custom furniture was always given priority because of its higher sales and profit margins. Thus, scheduled lots of standard furniture pieces were left sitting around the plant in various stages of completion.

As he reviews the progress of Chad's Creative Concepts, Thomas is pleased to note that the company has grown. Sales of custom furniture remain strong, and sales of standard pieces are steadily increasing. However, finance and accounting indicate that profits are not what they should be. Costs associated with the standard line are rising. Dollars are being tied up in inventory, both in raw materials and work-in-process. Expensive public ware- house space has to be rented to accommodate the inventory volume. Thomas also is concerned with increased lead times for both custom and standard orders, which are causing longer promised delivery times. Capacity is being pushed, and no space is left in the plant for expansion. Thomas begins a careful assessment of the overall impact that the new standard line is having on his manufacturing process.

Case Questions:

1. What types of decisions must Chad Thomas make daily for his company's operations to run effectively? Over the long run?

2. How did sales and marketing affect operations when they began to sell standard pieces to retail outlets?

3. How has the move to producing standard furniture affected the company's financial structure?

4. What might Chad Thomas have done differently to avoid some of the problems he now faces?