Page 1 of 3 pages Confidential – For Internal Distribution Only
TransGlobal Confidential Internal Memo
Interviews With Company Leaders: Company A
The notes below are a summary of recent conversations with company leaders at Company A. As much
as possible, I have summarized these in a question-and-answer format. I tried to transcribe actual
statements as they were made, but I was unable to capture every detail of each conversation.
As an introductory note, I’ll observe that smaller firms tend to be far less structured and less
bureaucratic than TransGlobal. Sometimes, this translates into quicker and more flexible decision
making. It also can result in some elements of good management falling through the cracks to some
degree. Also, I’ll note that my opportunities for discussions were quite limited, so these notes are not
comprehensive.
INTERVIEW #1: Vice President of Sales
Why do your customers come to your airline? Why do some customers choose other airlines? How do
your customers make their buying decisions?
“Our customers are very often repeat customers; close to two-thirds of our sales each year go to
individuals who have flown with us before. Plus, we have extraordinarily positive word-of-mouth
advertising. This is supported by our Bring a Friend promotional program, which encourages
customers to send us additional customers. This has been very popular. Just last year, we conducted a
poll and learned that 75% of our customers would recommend us to a friend or family member.
“Also, we provide our customers with some special features on our flights, and we don’t charge for
the first checked bag, either. Customers appreciate the feeling of going first class. We also add in little
extras at times to provide our passengers with a sense of excitement and entertainment. This is
generally done by flight staff and ground staff; they use little things like special treats or small toys for
kids, things like that. A year ago, we overdid this a bit and added unnecessary expenses to our Cost of
Goods Sold, but we’ve corrected that in the past 12 months.
“We hold about 19% of the overall regional market, though that is about three points down this year
from prior years. A few of the bigger companies have started moving into regional specialty markets
in the past 10 years, cutting into our traffic. We’re still competing well, though, especially because our
fleet is built around the smaller volumes.
“As a contrast, our competitors usually emphasize low price, and we do lose some customers to them
for that reason. A few of them have also started bundling services, for example, including hotel
Page 2 of 3 pages Confidential – For Internal Distribution Only
arrangements, destination-specific restaurant dining packages, and golf and recreation options along
with their flights. We’ve looked into this a bit, but our present IT systems aren’t built for that sort of
complexity; it would take a sizable investment to go in that direction. We could afford such an
investment, but even so, we’re not sure it’s justifiable.”
NOTES: The VP of Sales also indicated that he would like to hire additional personnel and use a New
York advertising firm to boost traffic in the off-season. He indicated some difficulty in selling this idea
to others in the company; he seemed confident that he could boost overall gross revenue by $1–2
million with an investment of just $100,000.
INTERVIEW #2: Chief Financial Officer
How would you describe the company’s financial picture? Are you optimistic about the future?
“We’re coming off a great year. Our revenues hit an all-time high (above $29 million); year-over-year
growth is favorable; and profit-wise, our latest net earnings are bouncing back nicely from the prior
year. The prior year was a bummer in many ways—we had some excess costs and a variety of issues
with quality.
“On the other hand, some trends are worrisome. Our two largest costs are personnel and fuel … and
the third is our payments on capital equipment. With a fleet of 55 aircraft, we’ve got a lot of
maintenance, too. As a company, we’re dedicated to safety first, but some of the more cosmetic and
customer-friendly upgrades have been deferred over the years.
“It’s been difficult to acquire new aircraft over the past 10 years, so our fleet is now showing some
age. There are some more advanced aircraft available, and we do have the available cash to build up
our fleet. Despite the age of our aircraft, they’re still fully safe, of course, but the luxury feel that we’d
like to offer our customers isn’t always apparent, if you know what I mean.”
INTERVIEW #3: Chief Operating Officer
Tell me a bit about your operating processes. Where does your firm excel in delivering value? Where are
there issues or process improvements needed? Do you use total quality management methods? Are you
an innovative company?
“Well, let me start by telling you that I am somewhat new on the job; I’ve only been here for two
months. When I was recruited, the company president advised me that there might be some quality
issues and productivity challenges, too—and wow, was she right about that! Our team is really good
at managing to meet the FAA and other legal and regulatory requirements, but beyond that, this place
is locked somewhere in the last century!
“Don’t get me wrong, we keep our customers happy, sure, but at a large cost. We probably have twice
as many baggage handlers, check-in attendants, customer service specialists, and so on as our next
Page 3 of 3 pages Confidential – For Internal Distribution Only
competitor has, all because we’ve not employed technology to the level that we should have. The
result is buried costs, and these will likely jump up and bite us in the shorts someday soon.
“I’m also concerned about recruitment, especially for pilots and for skilled technicians. Because we
operate in a great location, we have not been keeping up on our compensation levels, and this may
make recruitment difficult soon.
“On the bright side, our on-time arrival performance is top notch (88% on time, improved from the
prior year at 84%); lost or delayed baggage is at 2%; and customer satisfaction is in the top 10% in the
industry. We get, oh, maybe three passenger complaints a week … and none of those ever amount to
anything much.”
NOTES: The COO went on to explain that his prior employers had emphasized efficiency in all
processes but that the Company A leaders seemed somewhat lax in the pursuit of cost savings and
standardization. He plans to focus on process improvement in the next quarter, starting with what
might be good opportunities for staff reductions in some supporting roles.
INTERVIEW #4: HR Director
How do the company’s employees contribute to the success of the company? How would you describe
the culture of working here? What challenges and opportunities do you have?
“We’ve got a strong workforce, from the custodians and cleaning crews all the way to the pilots and
management team. Everyone who needs to take annual refresher courses gets them … but we have
no budget for extras. Sometimes I worry that we’re falling behind and that we’re losing our most
valuable employees.
“Last week, I learned that 15% of our employees had left in the past year—a third of those were
retirements, but the others were all because of more attractive job offers elsewhere. I did some
digging and found that this has been typical for us for the past three years. And, by the way, that
happens to coincide with the arrival of our president, Ms. Huntington.”
NOTES: The HR director made it clear that the company does not make substantial investments in
training and development beyond what is strictly required for licensing and safety. She feels that this
limits the opportunities for creativity and innovation, but she also understands budget restrictions.
Among her concerns are the limited opportunities for upward career mobility and too few career path
opportunities in the company. I gained the impression that the HR Director was feeling some sense of
burnout and counting the days until retirement.
—
1st of 3 pages Confidential – Only for internal distribution
Internal Memorandum from TransGlobal
Interviews with Business Owners: Company A
The following notes are a summary of recent conversations with Company A executives. as much as
As much as possible, I have summarized these in the form of a question-and-answer format. I attempted to transcribe actual text.
I was able to record statements as they were made, but I was unable to record every detail of each conversation.
To begin, I’d like to point out that smaller businesses are far less structured and less organized.
TransGlobal is less bureaucratic. This can sometimes translate into faster and more flexible decision-making.
making. It can also lead to some aspects of good management falling through the cracks.
degree. In addition, I’d like to point out that my opportunities for discussion were quite limited.
