Analysis of Business Problems in AMR Corporation - Research Paper Example

? Research and Analysis of Business Problems in AMR Corporation Insert BA 201 Final Term Paper Insert Section Number Insert Table of Contents Executive summary 3 Position 5 Sense 8 Uncover 10 Solve 12 Build 13 Achieve 14 Bibliography 16 Executive summary This research project is about research and analysis of problems faced by AMR Corporation and how the problems are prioritize. It also identifies alternatives to the major problem identified and analyzes the available alternatives to determining the most appropriate solution to the problem we are addressing. Moreover, we analyze in this project how the solution implementation can be done and the evaluations that will be made to measure both progress and outcome of the solution implementation process. In our project, we begin by identifying the position of the company that we are studying. In this, we use mainly the vision, mission, core values, and the stakeholders of this organization. This has been actually necessary since it helped us to understanding the decision-making framework of this company that we later used in the problem identification and problem finding. We also identified the decision making model used by this company and some of the human factors that affects the decision making process in this organization. After this, we later identified the problems that are faced by this company and analyze their importance, severity, and urgency to help us in the prioritization of those problems. After prioritization, we identify the one that requires to be addressed first and we go on in identifying the possible alternatives to this problem. We later analyze our alternatives to obtain the solution to our problem and thus decide the implementation process we will undertake. We later analysis the implementation process using feasibility analysis, cost/benefit analysis and ethical screening to determine whether the implementation process is worth undertaking. After this, we determine the steps we will take in implementing this solution and estimate the time the implementation of this process will take in about four months. In the last part, we determine how evaluation of the implementation process will be done to ensure success and how the outcome will be measured. I thus recommend that this project be undertaken in the above-mentioned company to solve theproblem that might be barring the company from excelling. However, in this research I did not include the budget of the implementation process and the actual cost that the company might expect to incur during the project undertaking. I thus would like to propose that a small research on the materials and equipment needed and their costs be done before implementation to give the company the actual cost of undertaking this problem solution. Position AMR Corporation is a group of companies operating in the aviation sector.This corporation has two airline subsidiaries, which are American Airlines and AMR Eagle Holding Corporation. These two subsidiaries have various divisions. The key person in this Corporation is Thomas W. Horton who is both the president and the CEO. AMR Corporation is a public companythat offers transportation services majoring in airline services. It has very high operating cost and net income that results to high total income. It has a property in London as well as other places.Previously it has acquired several certificated airline holdings to expand its operations. Moreover, being a public organization it has several stakeholders like employees, shareholder, passengers, NGOs and government bodies (American Airline 2012). Vision Statement The Vision of AMR Corporation is to have a sustainable future where it could minimize its operation cost, while maintaining high quality and reliable services to its customers and at the same time offer good working environment for employees. Mission statement Providing exceptional services and amenities in order to provide an enjoyable, comfortable and convenient experience on our airline (American Airline 2012) Mission statement of this company shows that its major area of concern is ensuring comfort, enjoyment and convenience of its customers during flights. This cannot be achieved when the company is running bankrupt and that is why there is a need to adjust the way the company operates in order to meet the mission statements attributes of the company. The decision making process in this corporation can be very complicated since it has to ensure that the interest of all the stakeholders are considered. The complexity shows that there is need for use of decision-making models.According to Slate (11), adecision making process involves problem identification, alternative identification, choose usual action, evaluating alternatives available, choosing the best among the alternatives, implement choice and generation of new alternatives. Thus, to effectively undertake these process the corporation feels it necessary to use a decision making model. This makes the decision-making process to be more organized and formal thus encouraging accountability. The decision making model used by this company in its decision making process is the rational model. The advantage of using this kind of model is that it is more organized and formal (Yuthas 9). In the decision-making process,the team gathers the information mainly from the stakeholders. It then uses this information to identify problems of the company and later use the same information obtained from the stakeholders to identify alternatives to the identified problems. After identifying the possible alternatives, the research team analyzes this alternative to obtain the one that maximizes utility for adaption. Another thing that complicates the issue of decision making in this organization is the issue of the stakeholders. According to Hage (2), stakeholders are the group of people and individuals who directly or indirectly influence (or are influenced) the achievement of aims of the company. They can be categorized into four categories, which are political stakeholders, economical stakeholders, social stakeholders, and technological stakeholders. A good relationship between all these categories of stakeholders must be maintained to enhance a good decision making presence thus a good problem solving structure. In this company, we identify the key stakeholders as the public since it is a public organization. Other stakeholders are the government, collaboratingcompanies, and the competing companies of this organization. All the stakeholders play a very important role in providing necessary information to the decision making team. The information these stakeholders provide is what is used in identifying the problem and suggesting solutions in the decision making process. The company has designed various ways of obtaining information from its stakeholders for the decision making process and so far they have been effective. Another major aspect of the problem solving process in this organization is the human nature of the key people in the decision making team. This people sometime portray some kind of biasness in their decision making process. Some of this biasness leads to making of inaccurate or inappropriate decisions thus acting as a hindrance to the problem solving process.Some of the biasness that can be portrayed among the key decision makers is framing biasness, probability biasness and overconfidence biasness.Framing biasness relates to the manner in which we construct mental framework to organize and make sense of information we use in the decision-making.Probability biasness refers to our ability to make accurate estimates of probability of an event or outcome.In addition, overconfidence biasness involves a feeling of confidence about answers or decisions even when they are wrong (Yuthas 13). The key decision makers of this company are keen to avoid having high levels of biasness when making their decisions. They ensure that in most cases before any decision is made information and data to support the decision are collected, analyzed, and interpreted. If the results obtained support the decision then, the decision making team goes on to implement the decision. Otherwise it is discarded and an alternative to that is sought. Moreover, proper evaluation is made on the decision or alternative chosen before the implementation of any decision. In this company accountability for any decision made by any of the members of the key decision making team is mandatory. Sense To solve the problems in this organization, it is necessary to identify and properly define those problems. To identify the problems faced by this company we undertook a research on the company. In our research, we decided to collect data and information from the various stakeholders of the company. We thus identified them and decided who among them could be our best source of the information we needed. In addition, we went to the company’s record to search for some additional information that can help us in the problem identification and problem defining. We identified the shareholders and the customers as the main source of information that we needed. Obtaining the information from the shareholders was somehow difficult since they are distributed all over the United States. As a result, we decided to go to the company’s records and look for their mail address. After obtaining this information, we decided to undertake a survey using a mailed questionnaire. The advantage of a mailed questionnaire is that it is inexpensive and can be used to survey a large number of respondents within a very short period of time (Royse 224). To obtain the information from the customers we decided to conduct a survey in form of aninterview-administered questionnaire. Both of these groups were large thus, we decided to use a simple random sampling. Simple random sampling is the selection of the sampling units in such a manner that each of the elements in our population has an equal chance of being selected for the sample (Levy and Lemeshow 45). The information and data that we collected revealed that the customers were not satisfied with the services that the organization is offering lately. Majority indicated that there has been a decline in the quality of services provided by this corporation in the past five years. The finding also indicated that the shareholders are not happy about the progress of the company. Most of them said that the value of their shares has been in a decline since the beginning of this year. They also said that they were not comfortable with the rate of dividend they were given at the closure of the last financial year. We also discovered that the company has been retrenching its employees in the last two years. From the research, we were able to find and identify four problem faced by these organization. These problems were: The inability of this company to withstand its high cost of operation to maintain its profitability The problem of deteriorating of the quality of services provided by this corporation to its customers The inability of the organization to maintain high values of its shares in a marketing environment which has become very competitive The inability of the company to maintain its large number of employee due to decline in its revenues However, the magnitude of severity differed among the above four problems. To identify how important each of the problems was, weused stakeholder interaction and environmental scanning. According to Moutinho and Chien (1), environmental scanning is looking outwards to the environment in which a company operates in order to adapt, to take advantage of emerging opportunities, and to minimize potential threats. Since the problems we had identified were not equal in effects they bring to the company, we felt that it was necessary to prioritize these problems. These could enable the decision making team to deal with the most urgent and most critical problems first. According to Mayleret al (1), problem prioritization should take into account the severity of the problems.To prioritize the problems that we had found, we analyzed both the urgency and severity of the problem we had identified. After our analysis, we found out that the inability of this company to withstand its high cost of operation to maintain its profitability is the most critical and the most urgent of the four problems. One of the reasons why it was the most urgent and critical is because it was believed to influence all the other three problems. Another reason was that in good time it might result to the closure of the corporation. This problem has also tainted the image of this organization between both the shareholders and the customers thus making it unable to compete with its competitors and thus it should be urgently settled. Uncover We can identify the cause of a problem before undertaking the initiative of solving it in various ways. This is necessary since it helps in avoiding the re-occurrence of the problem later. Various ways that we can use to identify the cause of a problem are the mental maps, fishbone diagram and causal loops. We can organize the problem we identified into a mental map in which a statement of a problem is written in the center of a paper, and then various aspects of the problems are identified and written on the same paper. Then we draw lines connecting the items that seem to be most important and the central problem and then draw lines connecting sub-factors and important factors. To uncover the causes of this problem we decided to do a cost-and-effect analysis by use of fishbone diagram. According to Wealleans (57), this is a visual aid to some form of thinking. The other uses of a fishbone diagram are root cause determination of the problem, providing a clear graphical display of sources of variation and assisting in the process improvement actions (Fryman 195). Using our cause-and-effects analysis, we were able to identify three causes of this problem. One of the causes of this problem as identified by our analysis is the mismanagement of the resources of this organization. The senior management of this organization has been paying themselves hefty allowances in addition to their salaries. This has made the cost of operation of this company very high thus making it unable to cater for them. These allowances are not moderated hence no accountability. Another possible cause of this problem is the increase in competition in the area of company operation. Of late, there have been emerging private companies in the aviation sector. These companies come with new marketing strategies that impose very stiff competition to the existing companies. The increase in competition has forced the company to increase its advertising costs thus increasing its operational costs. Another possible cause of this problem is the inability of the current management to adapt the recent technologies in the aviation sector. The new technology available could lower the cost of operation while maintaining the quality of services provided. In addition, the technology can enhance accessibility to information that can assist the corporation in its key decision making thus ensuring that poor decisions are avoided. After undertaking a causal analysis, we found out that the most probable causes of this problem are the mismanagement of the company’s resources by the management. The hefty and unaccounted for allowances that the senior management pays themselves are what is making the cost of operation of this organization unbearable. After identifying the major causes of this problem, it is now possible to suggest the alternatives for this problem in order to determine the most effective solution. To identify the alternative of this problem we decided that the best way is to undertake a brainstorming. Brainstorming is a short session, during which a group of people or individual tries to come up with as many ideas as possible about a particular subject or solution to a particular problem (Winstanley 62). During the brain storming,we came up with four alternatives to our problem, which were: Introduction of a company constitution which defines what the senior management could or could not do Introduction an overseeing committee to oversee all the allowances given to the senior management to check whether they are genuine and ethical before they implemented To retrench all the senior management employees and replace them with a new and well qualified team Demote all the senior manager to junior positions and promote the middle level managers to these senior positions Solve The alternatives we have identified above give us the list of possible solutions to our problems. All of them can work to a certain extend and each of them has its merits and demerits. To identify the best solution we had to collect some additional information about these possible solutions. The kind of information we collected is the possible consequences of each of the alternatives and the image it will bring to the key stakeholders. We did both a descriptive analysis and a quantitative analysis of the information we obtained to identify the best choice among these alternatives. From our analysis, we identified the creation of a constitution to govern the activities of this company and which will keep some laws in place to be the best alternative. Although this solution has its demerits like the difficulty in identifying the group of experts to be included in this activity, the advantages we anticipated it to bring to the company were great. This alternative in addition to solving the problem could also improve the image of the company both in the customer and shareholders and thus restoring the organizations competitiveness. Build To determine how possible the implementation of this solution is we need to undertake a feasibility analysis and a cost/benefit analysis. Feasibility analysis is the analysis of the possibility, practicability, manageability, and serviceability of decisions made in relation to the opportunities available for the company (Steven115). Our feasibility analysis was in form of a research in the area of corporate laws to see whether there are laws to be adapted in this constitution. We also did another research to identify a team to design the constitution. The cost/benefit analysis compares the costs to be incurred during a project implementation, the benefits derived from the project, and it involves use of cost-benefit models (Brent 4). In our cost/benefit analysis, we designed a model that involves all the benefits to be incurred in implementing the solution identified and the cost of undertaking the implementation process. This was actually necessary since it could help us determine the viability and importance of this solution implementation. Moreover, we undertook an ethical screening to determine the effects of implementing this solution to the company ethics. Ethical screening is diagrammatically portraying of an ethical decision making process (Carroll and Buchholtz 253). This was actually necessary since it could enable us to identify some of the ethical issues that implementation of this solution will violate. From our feasibility analysis, we found out that the implementation of this solution was actually possible,practical, and manageable. From our cost/benefit analysis we found out that the benefits of this solution outweighs the costs thus it was both viable and worth implementing. We also discovered from the ethical screening that there were no company ethics to be violated by implementation of this solution. Instead, ethical screening revealed that this solution implementation strengthens and supports the corporation’s ethics. Achieve The implementation of this solution will involve three steps and it will take about four months. The first step will involve implementation planning which will take about a month. In this step, an implementation team will be selected to choose the experts, professionalsand stakeholders to be involved in this implementation process. In addition, during this stage all the required materialsand equipment for the implementation process will be mobilized and put in place. The second step will be the main step of the implementation process and will take about two months. In this step, the selected team will have sitting and discussions to formulate the laws and regulations to be included in this constitution. After this step, we will have the last one where laws generated will be reviewed and the implementation strategy determined. Finally, the laws will be printed and kept in the corporation’s custody. In our process implementation, we will need to undertake several process evaluations. According to Royse et al. (116), the advantage of process evaluation is that it can be undertaken any time in the course of a program implementation. This kind of evaluation will be taken several times in the course of implementation of this solution.This will actually help in ensuring effectiveness in implementing this solution from the beginning to the end. In the beginning of the implementation process, we will identify the evaluation design to use throughout the implementation process. This design could help to identify the questions to be answered by the evaluation, the data to collect, how this data will be analyzed and how the resulting information will be used (Wholey et al. 2). The evaluation design we will identify will actually address the above requirements and thus ensuring that the evaluation process will give accurate information that will enhance the success of the implementation process. The outcome of the solution implementation will be measured through measuring the increase in the profitability of the organization and reduction of complains made by customers about poor services. The profitability will be measured in the company’s pre-tax annual profits of this financial year to be announced in mid-November. The reduction in the customers complains will be identified through a post-implementation survey that will be undertaken one month after the constitution is put in place and implemented. Bibliography American Airline. AMR Corporation-American’s Parent Company. , 28 May 2012. Brent, Robert, J. Applied Cost-Benefit Analysis. Cheltenham: Edward Elgar Publishing Ltd, 2008. Print. Carroll, Archie, B. and Buchholtz, Ann, K. Business & Society: Ethics, Sustainability and Stakeholder Management. Mason: Cengage Learning, 2011. Print. Fryman, Mark, A. Quality, and Process Improvement. Albany: Thomson learning, 2002. Print. Hage, M. A Stakeholders Concern towards an Economix Theory on Stakeholder Governance. Assen: Royal Van Gorcum, 2007. Print. Levy, Paul, S. and Lemeshow, Stanley. Sampling of Populations: Methods and Applications. Hoboken: John Wiley & Sons, 2011. Print. Mayler, Kerrie, et al.System Center Service Manager 2010 Unleashed. Indianapolis: Sams Publishing Group, 2011. Print. Moutinho, Luiz and Chien, Charles, S. Problems in Marketing: Applying Key Concepts and Techniques. London: SAGE Publications Ltd, 2008. Print. Royse, David et al.Program Evaluation: An Introduction. Mason, OH: Cengage Learning, 2009. Print. Royse, David, Daniel. Research Method in Social Work. Mason, OH: Cengage Learning, 2007. Print. Slade, Stephen. Goal-Based Decision Making: An Interpersonal Model. Hillsdale: Lawrence Erlbaum Associates, 1994. Print. Stevens, Robert, E. Market Opportunity Analysis: Text and Cases. Binghamton: Haworth Press, 2006. Print. Wealleans, David. The Organizational Measurement Manual. Hampshire: Gower Publishing Limited, 2001. Print. Wholey, Joseph, S. et al.Handbook of Practical Program Evaluation. San Francisco, CA: John Wiley & Sons, 2010. Print. Winstanley, Diana. Personal Effectiveness: A Guide to Action. London: CIPD Publishing, 2005. Print. Yuthas, Kristi. Problem Solving Handbook. Portland, OR: Portland State University, 2005. Print. Appendix 2010 2012 % change Employees 73800 60800 17.6% decrease Revenue $ 22.170 billions 18.370 billions 17.14% decrease Operating income $ 308 million $ 270 million 12.3% decrease Net income $ 471 million $ 401 million 14.86% decrease Total assets $ 25.088 billions $ 30. 51 billions 21.61% increase Total equity $ 28.651 billion $ 25. 352 billion 11.51% decrease Fishbone diagram Read More