David Neeleman is in a good mood. Fresh off a flight from Sao Paulo and gearing up for a round of TV interviews, Neeleman, 50, agrees to meet over lunch at a Cosi sandwich outlet in Greenwich, Connecticut, near his home in New Canaan.... Neeleman has a happy story to tell: Investment firm TPG has just bought a $30 million stake in his Brazilian airline Azul Linhas Aereas Brasileiras, and Azul has set an industry record, carrying 2.2 million customers in its first year. Azul's early success is all the more sweet for Neeleman given the bitterness he felt after his ouster from JetBlue Airways.... After dabbling with the idea of starting an ethanol company in California, Neeleman went to check out a Brazilian airline called BRA Transportes Aeros as a favor to some investor friends." It was the furthest thing from an airline I've ever seen," says Neeleman." I thought, 'If these guys will invest $150 million in this, it must be worth looking around.' “(BRA suspended operations in late 2007.) Neeleman quickly raised $150 million to launch his own start-up airline.T hen, just as he was finalizing route plans and securing government clearance to fly, the global economy crashed. With its financing and plane orders locked in. he pushed ahead with his launch in December 2008. Remarkably, Azul-"blue" in Portuguese-is on track to make a profit on 2010.N eeleman, the chairman, owns about 15% and controls the voting shares. Azul's long-term success will depend in part on how well Neeleman has learned from his mistakes. One challenge, says Vaughn Cordle, managing partner of Washington-based research firm AirlineForecasts, will be curbing his ambition." The greatest threat is if they let Azul grow above a sustainable rate," says Cordle." That's what happened at JetBlue.'' Neeleman acknowledges the Brazilian market's many challenges, from taxes to infrastructure, and insists he's keeping his expectations in check. But in the same breath he talks about the opportunity. He wants to revolutionize the Brazilian market by bringing air travel to the masses. And he wants redemption. Brazil was a logical place for Neeleman to go. He spent his first five years there, the son of a reporter for United Press International who had first visited the country as a Mormon missionary. At 19, Neeleman returned to the country of his birth to do his own two-year missionary stint.... His time in Brazil left him with two distinctive advantages: fluency in Portuguese and dual citizenship, which allowed him to get around Brazil's 20% cap on foreign ownership of airlines. Neeleman's instincts told him Brazil was ripe for a new aviation venture. Only a fraction of its 19 2 million people currently fly; per capita, Americans fly about eight times more, according to Airports Council International." We're not even close to the level of air travel in mature economies," says Libano Miranda Barroso, CEO of Tam, Brazil's largest airline, with a 46% market share. "Even our projection for 2027 is equivalent to what the U.S. used to have in the 1970s." Neeleman is determined to change that by creating a new market of fliers. His target is the 52% of Brazilian households that earn between I , 064 and 4,591 reais a month (about $594 to $2,565) making up Brazil's middle class. They are a fast-growing group that traditionally travels by bus. Many carriers have tried to tap this population, only to be thwarted by strained airports and high costs. As Renato Pascowitch, executive director of domestic Brazilian carrier OceanAir, puts it, fliers "often can't afford to take a taxi to the airport. So how do you get these passengers to board your plane, even if you are offering dirt-cheap tickets?" Neeleman's reply: "We give them a free ride to the airport." Complementary transportation is all the more crucial because Azul, like Southwest and Ryanair, flies nonstop between secondary airports. Its main hub is Viracopos/Campinas International Airport in Campinas, an attractive and well-run city about 50 miles north of Sao Paulo. Campinas has about 2.6 million people, and some 30 million live within a 120-mile radius. Azul offers bus service from pickup points in seven cities, with about 50 bus trips a day. But the real draw is the low fares. Tickets, if purchased in advance, run about the same as a bus trip. Traveling from Sao Paulo to Salvador by bus, for example, costs about $150 each way and takes 23 hours; on Azul, the lowest one-way fare is just over $100. Christina Maisonnette of Rio de Janeiro had been planning to drive to Natal, a coastal town, before opting to fly. "I hope they survive," she says of Azul. "I want to be able to fly more often." Like JetBlue in its early days, Azul now has the benefit of a brand-new fleet of planes and a young staff, which means low maintenance costs and cheap labor. Profit margins could come under pressure as costs rise over time and as competitors come in with lower fares to steal business. Even before the ice storm, JetBlue's profitability had been eroding for those very reasons…………………………….. For Discussion I. Based on Michael Porter's discussion of the characteristics of an effective strategy, does Azul Linhas Aereas Brasileiras have a good growth strategy? Explain. 2. To what extent is Azul Linhas Aereas Brasileiras following the five steps of the strategic management process? 3. Conduct an environmental scan or SWOT analysis of Azul Linhas Aereas Brasileiras's current reality and recommend whether the company's current strategy is poised to succeed. 4. To what extent will Porter's five competitive forces help or hurt Azul Linhas Aereas Brasileiras's growth strategy? Discuss. 5. What is the greatest takeaway from this case in terms of strategic management?
> Three activities are candidates for crashing on a project network for a large computer installation (all are, of course, critical). Activity details are in the following table: a) What action would you take to reduce the critical path by 1 day? b) Assu
> What is the minimum cost of crashing the following project that Roger Solano manages at Slippery Rock University by 4 days? NORMAL CRASH TIME ACTIVITY (DAYS) (DAYS) TIME NORMAL CRASH IMMEDIATE COST COST PREDECESSOR(S) A 6 5 $ 900 $1,000 6 300 400 4
> Assume that the activities in Problem 3.11 have the following costs to shorten: A, $300/week; B, $100/week; C, $200/ week; E, $100/week; and F, $400/week. Assume also that you can crash an activity down to 0 weeks in duration and that every week you can
> George Kyparisis (using data from Problem 1.5) determines his costs to be as follows: Labor: $10 per hour Resin: $5 per pound Capital expense: 1% per month of investment Energy: $0.50 per BTU Show the percent change in productivity for one month last
> Using PERT, Adam Munson was able to determine that the expected project completion time for the construction of a pleasure yacht is 21 months, and the project variance is 4. a) What is the probability that the project will be completed in 17 months? b) W
> Four Squares Productions, a firm hired to coordinate the release of the movie Pirates of the Caribbean: On Stranger Tides (starring Johnny Depp), identified 16 activities to be completed before the release of the film. a) How many weeks in advance of the
> Rich Cole Control Devices, Inc., produces custom built relay devices for auto makers. The most recent project undertaken by Cole requires 14 different activities. Cole’s managers would like to determine the total project completion time
> The estimated times and immediate predecessors for the activities in a project at George Kyparis’s retinal scanning company are given in the following table. Assume that the activity times are independent. a) Calculate the expected ti
> Kelle Carpet and Trim installs carpet in commercial offices. Peter Kelle has been very concerned with the amount of time it took to complete several recent jobs. Some of his workers are very unreliable. A list of activities and their optimistic completio
> A renovation of the gift shop at Orlando Amway Center has six activities (in hours). For the following estimates of a, m, and b, calculates the expected time and the standard deviation for each activity: ACTIVITY m b A 11 15 19 B 27 31 41 18 18 18 D
> Ross Hopkins, president of Hopkins Hospitality, has developed the tasks, durations, and predecessor relationships in the following table for building new motels. Draw the AON network and answer the questions that follow. a) What is the expected (estima
> The Rover 6 is a new custom-designed sports car. An analysis of the task of building the Rover 6 reveals the following list of relevant activities, their immediate predecessors, and their duration: a) Draw a network diagram for the project. b) Mark the
> Dave Fletcher (see Problem 3.12) was able to determine the activity times for constructing his laser scanning machine. Fletcher would like to determine ES, EF, LS, LF, and slack for each activity. The total project completion time and the critical path s
> The following is a table of activities associated with a project at Rafay Ishfaq’s software firm in Chicago, their durations, and what activities each must precede: a) Draw an AON diagram of the project, including activity durations.
> George Kyparisis makes bowling balls in his Miami plant. With recent increases in his costs, he has a newfound interest in efficiency. George is interested in determining the productivity of his organization. He would like to know if his organization is
> The activities described by the following table are given for the Howard Corporation in Kansas: a) Draw the appropriate AON PERT diagram for J.C. Howard’s management team. b) Find the critical path. c) What is the project completion t
> Task time estimates for the modification of an assembly line at Jim Goodale’s Carbondale, Illinois, factory are as follows: a) Draw the project network using AON. b) Identify the critical path. c) What is the expected project length?
> Roger Ginde is developing a program in supply chain management certification for managers. Ginde has listed a number of activities that must be completed before a training program of this nature could be conducted. The activities, immediate predecessors,
> James Lawson has decided to run for a seat as Congressman from the House of Representatives, District 34, in Florida. He views his 8-month campaign for office as a major project and wishes to create a work breakdown structure (WBS) to help control the de
> The work breakdown structure (WBS) for building a house (levels 1 and 2) is shown below: a) Add two level-3 activities to each of the level-2 activities to provide more detail to the WBS. b) Select one of your level-3 activities and add two level-4 act
> Briefly describe the contributions of the four individuals identified in the preceding question.
> Does Boeing practice a multinational operations strategy, a global operations strategy, or a transnational operations strategy? Support your choice with specific references to Boeing’s operations and the characteristics of each type of organization.
> Rao Technologies, a California-based high-tech manufacturer, is considering outsourcing some of its electronics production. Four firms have responded to its request for bids, and CEO Mohan Rao has started to perform an analysis on the scores his OM team
> Walker Accounting Software is marketed to small accounting firms throughout the U.S. and Canada. Owner George Walker has decided to outsource the company’s help desk and is considering three providers: Manila Call Center (Philippines),
> Fernando Garza’s firm wishes to use factor rating to help select an outsourcing provider of logistics services. a) With weights from 1–5 (5 highest) and ratings 1–100 (100 highest), use the following
> Why should one study operations management?
> Claudia Pragram Technologies, Inc., has narrowed its choice of outsourcing provider to two firms located in different countries. Pragram wants to decide which one of the two countries is the better choice, based on risk-avoidance criteria. She has polled
> Identify how changes in the external environment affect the OM strategy for a company. For instance, discuss what impact the following external factors might have on OM strategy: a) Major increases in oil prices. b) Water- and air-quality legislation. c)
> Identify how changes within an organization affect the OM strategy for a company. For instance, discuss what impact the following internal factors might have on OM strategy: a) Maturing of a product. b) Technology innovation in the manufacturing process.
> Within the food service industry (restaurants that serve meals to customers, but not just fast food), find examples of firms that have sustained competitive advantage by competing on the basis of (1) cost leadership, (2) response, and (3) differentiation
> The text provides three primary strategic approaches (differentiation, cost, and response) for achieving competitive advantage. Provide an example of each not given in the text. Support your choices. (Hint: Note the examples provided in the text.)
> Based on the competitiveness ranking developed by the Global Competitiveness Index (www.weforum.org), rank the following countries from most competitive to least: Mexico, Switzerland, the U.S., and China.
> Based on the corruption perception index developed by Transparency International (www.transparency.org), rank the following countries from most corrupt to least: Venezuela, Denmark, the U.S., Switzerland, and China.
> Match the product with the proper parent company and country in the table below: PRODUCT PARENT COMPANY COUNTRY Arrow Shirts a. Volkswagen 1. France 2. Great Britain Braun Household b. Bidermann International Appliances c. Bridgestone d. Campbell So
> Identify four people who have contributed to the theory and techniques of operations management.
> As part of a study for the Department of Labor Statistics, you are assigned the task of evaluating the improvement in productivity of small businesses. Data for one of the small businesses you are to evaluate are shown at right. The data are the monthly
> Describe the meaning of slack, and discuss how it can be determined.
> Is It Ethical to Target the Homeless for Admittance into For-Profit Universities? Benson Rollins wants a college degree. The unemployed high school dropout who attends Alcoholics Anonymous and has been homeless for 10 months is being courted by the Univ
> Should Goldman Sachs Force Executives to Donate Some of Their Pay to Charity? Preparing for the negative publicity that's certain to fall on Wall Street when the first 2009 bonus checks are cut, Goldman Sachs is pondering the expansion of a program requ
> Should Companies Be Allowed to Ask Employees about Family Health History? Companies generally consider the costs and benefits associated with their strategies in order to be successful. This dilemma involves the conflict between a company's desire to de
> Should Surgical-Device Firms Be Allowed to Market Products for Off-Label Uses That Are Not Approved by the U.S. Government? Some 250,000 people last year underwent an operation in which tiny bits of heart tissue were burned into a maze pattern to rerout
> Fourth, executives need to directly participate in improvement projects not just "support" them.... By observing the successes and failures of improvement programs first hand, rather than relying on someone else's interpretation, executives can make more
> Executives know success in business depends on identifying and fixing problems before they become crises. It is the most basic rule in management: No matter how smart your strategies seem on paper, if you don't know how they're being executed and whether
> Most everyone in Silicon Valley and on Wall Street agrees: The eventual IPO of social-networking site Facebook could make its founder the world's richest twenty-something. Yet Chief Executive Mark Zuckerberg, now 25, seems intent on deferring that multib
> American corporations love team work. But few companies are as smitten as ICU Medical Inc. At the San Clemente, California, maker of medical devices, any worker can form a team to tackle any project. Team members set meetings, assign tasks, and create de
> Reasonable people can debate the artistic merits of James Cameron's work.... What's indisputable, however, is that the Avatar director's influence extends far beyond his movie credits. More than George Lucas or Steven Spielberg, Michael Bay, or Pixar, Ca
> The 15 General Motors dealers who flew to Detroit [in September 2009] for a dinner with GM management were not an easily rattled bunch. They had endured the worst auto sales slide in 25 years, as well as the bankruptcy of the iconic carmaker on which the
> Employees at SAS certainly feel kneaded. Every week, several dozen of them get massages at the on-site 6 6,000-square-foot recreation and fitness centre. You have to pay, but it's only $55 for an hour, and that's with pretax dollars. And the convenience
> Did Faulty Decision Making Lead to the Death of Luge Racer Nodar Kumaritashvili? Years before a young luge racer from the Republic of Georgia flew to his death at the Olympics here last week, officials made a series of decisions designed to make the icy
> When Volkswagen CEO Martin Winterkorn said two years ago that he was determined to zoom past Toyota to become the world's biggest automaker, the notion seemed laughable. At the time, the German automaker sold 3 million fewer vehicles than Toyota, was los
> Most small companies seeking to tap overseas markets know they'll have to navigate foreign laws, taxes, and regulations. But they also need to figure out how to avoid cultural blunders. Tom Bonkenburg, director of European operations for St. Onge Company
> Google's Values Conflict with Demands from the Chinese Government Isaac Mao saw this coming. In early 2007, a year after Google launched a China-based version of its search engine that adhered to Beijing's strict censorship rules, the prominent Chinese b
> Providence Regional Medical Center Uses a Variety of Management Theories to Profitably Treat Patients Walk into most hospitals, and you'll see patients scattered about the halls on gurneys or wheelchairs. They're waiting to be moved from intensive care
> Is Corporate Monitoring of Employee Behavior Outside of Work Going Too Far? Attempting to cut health care costs and increase productivity, companies are increasingly trying to get employees to lose weight, stop smoking, and exercise. For example, Incent
> You manage a group of software developers for a large organization and several days ago had the difficult task of notifying a friend who works for the company that he is being laid off. Even though he has performed wonderfully in the past and you hate to
> Following are selected financial data for your client for the current year and corresponding data for the client’s industry. Requirement 1. Write a memo to your client comparing his or her business to the industry averages and explain to the client
> You just returned from a meeting with your bank loan officer, and you were a little taken aback by his comments. You’ve been doing business with this bank for a number of years, and the officer always seemed happy with your company’s performance. This is
> Net income was $175,000 in 2014, $190,000 in 2015, and $209,000 in 2016. The change from 2015 to 2016 is an increase of ____ percent. a. 10 b. 9 c. 8 d. 19
> Find the Columbia Sportswear Company Annual Report located in Appendix A and go to the Selected Financial Data starting on page 646. Now access the 2014 Annual Report for Under Armour, Inc. from the Internet. For instructions on how to access the report
> This case focuses on the financial statement analysis of Columbia Sportswear. Recall from this chapter that stakeholders use numerous ways to analyze and so better understand the financial position and results of operations of a company. Tools such as ve
> Robin Peterson, the CEO of Teldar Incorporated, was reviewing the financial statements for the first three months of the year. He saw that sales and net income were lower than expected. Because the reported net income and the related earnings per share w
> According to the Real World Accounting Video, a VC is a __________________. a. veteran communicator b. victorious commercialization c. venture capitalist d. vendor conduit
> According to the Real World Accounting Video, a VC is a __________________. a. veteran communicator b. victorious commercialization c. venture capitalist d. vendor conduit
> How is percentage change in a financial statement line item calculated?
> A company has experienced increases in accounts receivable and inventory turnover ratios and has net cash flow from operations that exceeds net income. All other things constant, what could you conclude about the company’s performance this year relative
> How are financial ratios used in decision making? a. They can be used as a substitute for consulting financial statements. b. They eliminate uncertainty regarding cash flows. c. They are only used in evaluating business liquidity. d. They help to
> What is a “red flag” with respect to financial statement analysis?
> Which statement is most likely to be true? a. An increase in inventory turnover indicates that inventory is not selling as quickly as it was. b. A decrease in inventory turnover indicates that inventory is not selling as quickly as it was. c. A change i
> How would you expect a recession to affect asset management ratios?
> Which of the following statements is true of financial statement analysis? a. Ratio analysis is more important than either horizontal or vertical analysis. b. Vertical analysis involves comparing amounts from one year’s financial statements to another y
> What are the major goals of each of the following types of ratios? a. Liquidity ratios b. Asset management ratios c. Solvency ratios d. Profitability ratios e. Market analysis ratios
> Rockport Company is experiencing a severe cash shortage due to its inability to collect accounts receivable. Which of the following would most likely identify this problem? a. Return on assets b. Current ratio c. Accounts receivable turnover d. Working
> What is benchmarking? What should a company that wishes to use benchmarking look for in establishing benchmarks?
> A business’s economic environment is a. how a business competes for customers, suppliers, and other critical resources. b. how a business is affected by the overall economy. c. how a business uses its business model to create a competitive advantage. d.
> In Chapter 11, we prepared a cash flow statement for Fitness Equipment Doctor, Inc. Now, we will analyze Fitness Equipment Doctor, Inc.’s financial statements using the tools we learned in this chapter. Following are the balance sheets for the months end
> The Financial Accounting Standards Board and the International Accounting Standards Board have identified the goal of comparability of financial statements as one toward which all companies should strive and consistency as the means of achieving that goa
> Cash is $12,000, net accounts receivable amounts to $18,000, inventory is $21,000, prepaid expenses total $3,000, and current liabilities are $37,500. What is the quick ratio? a. 1.44 b. 1.36 c. 0.80 d. 0.88
> What is the purpose of the common-size financial statement?
> Net working capital is a. a measure of the ability to meet short-term obligations with current assets. b. defined as current assets minus current liabilities. c. defined as current assets divided by current liabilities. d. both a and b.
> Which amount is the base amount for vertical analysis on the balance sheet?
> A statement that reports only percentages is called a ____ statement. a. comparative b. cumulative c. condensed d. common-size
> Which amount is the base amount for vertical analysis on the income statement?
> Horizontal analysis of a financial statement shows a. the relationship of each statement item to a specified base. b. percentage changes in comparative balance sheets. c. percentage changes in comparative income statements. d. both b and c.
> This concludes the accounting for Sensations Salon, Inc., that we began in Chapter 1. For this exercise, refer to the comparative balance sheet presented in the Continuing Exercise in Chapter 11. Requirements 1. Prepare a horizontal analysis of the
> Let’s look at Dick’s Sporting Goods (Dick’s) one last time. Think about Dick’s and how everything you’ve learned comes together. Think about accountants reporting what Dick’s has, where it got its money, and what it has been doing to create value. Is Dic
> On May 19, 1987, a short article in the Wall Street Journal reported that ZZZZ Best Company, Inc., of Reseda, California, had signed a contract for a $13.8 million insurance restoration project. This project was just the most recent of a series of large
> In 1995, Canadian native Maria Messina achieved one of the most sought-after career goals in the public accounting profession when she was promoted to partner with Deloitte & Touche, Chartered Accountants, the Canadian affiliate of the U.S.-based Deloitt
> Cyrus McCormick revolutionized American agriculture in the mid-nineteenth century when he invented a mechanical reaper. His horse-drawn harvester would become the primary product marketed by McCormick Harvesting Machine Company. Decades later, Cyrus McCo
> After graduating from West Virginia University in 1984 with a degree in accounting and finance, Gregory Podlucky decided to work with his father Gabriel, who had a small business empire in western Pennsylvania. 1 The senior Podlucky’s business interests
> Paul Polishan graduated with an accounting degree in 1969 and immediately accepted an entry-level position in the accounting department of The Leslie Fay Companies, a women’s apparel manufacturer based in New York City. Fred Pomerantz, Leslie Fay’s found
> Clifford Hotte had a problem. His company had come up short of its earnings target. For the fiscal year ended April 30, 1995, financial analysts had projected that Health Management, Inc. (HMI), a New York–based pharmaceuticals distributor, would post ea
> In 1971, 25-year-old Thomas Shine founded a small sporting goods company, Logo 7, that would eventually become known as Logo Athletic. Shine’s company manufactured and marketed a wide range of shirts, hats, jackets, and other apparel items that boldly di
> 8:15 a.m., Saturday, October 31 “So, Dani, seriously, what exactly am I going to be doing today?” 1 “I am serious, Tyler. I’m not sure what I’m supposed to be doing much less what I’m supposed to have you do. Like I said … Katelyn hasn’t told me anything
> In March 2000, the Securities and Exchange Commission (SEC) began requiring public companies to have their quarterly financial statements “reviewed” by their independent auditors. The broad purpose of this new requirement was to improve the quality and c
> In August 2004, an Internet-based investment advisory service included the common stock of LocatePlus Holdings Corporation in its “Stocks to Watch” 1 alert. The advisory service touted the New Age business model of LocatePlus, a company whose headquarte
> In 1999, a group of private investors founded Celebrity Sports Network, Inc., a company that retained professional athletes and former professional athletes to sponsor “fringe” sporting events such as professional wrestling, competitive dancing, and roll
> As David Robinson works his way through the large, festive crowd, he keeps bumping into people he knows. All the while, Robinson is hoping that he will avoid the one person he doesn’t want to meet face to face. 1 Belot Enterprises’ several hundred employ
> Prior to the Internet, the Bank Rate Monitor served as the primary source of information for U.S. consumers searching for the best available mortgage interest rates and interest rates on certificates of deposit. Over time, Bankrate, Inc., the company tha
> Thursday, October 24, 1929, easily ranks as the most dramatic day that Wall Street has ever seen. 1 That day witnessed the beginning of the Great Stock Market Crash that over the following few years would result in an almost 90 percent decline in the Dow
> During the 1980s, CBI Holding Company, Inc., a New York-based firm, served as the parent company for several wholly owned subsidiaries, principal among them Common Brothers, Inc. CBI’s subsidiaries marketed an extensive line of pharmaceutical products. T
