Designing-Business?

I am needing help with a question. I had to choose a company in the transportation industry. I chose Delta Airlines. I had to select an objective and chose: Increase earnings by 5% through efficient use of the invested capital.

Now, I have to list five activities required to achieve this objective. Also, three Management Information System (MIS) resources that will be required to complete the identified activities.

Any help would be great! Thanks so much!

We begin by noting that the question requires a list of activities that "increase earnings" (i.e. increase revenue and/or decrease expense) using "invested capital" (i.e. shareholder contributions, rather than debt financing).

Here are a few examples that would achieve the objective. The first two are based on leaving operations the same but changing the capital-debt structure; the last three are based on changing operations.

(1) Issue additional stock, and use the proceeds to pay down company debt. The reduction in debt would decrease interest expense and thus increase profits, and this would be effected by the "efficient use of invested capital". Since you chose Delta, you should obtain their last annual report and include actual amounts in your answer.

(2) Reduce dividends paid, and use the funds to pay down company debt. The reduction in debt would be the same as above.

(3) Reduce average fares, which will increase market share. The increase in market share will result in an increase in revenue and thus an increase in profits. But be careful: in the airline industry, expenses are not elastic, so reducing fares will reduce revenue more than expenses, so the increase in market share has to be large enough to offset this effect.

(4) Eliminate Unprofitable Routes. (This is the corollary of the activity above: rather than increase market share, this reduced the market share.) A review of Delta's annual report, together with a little analysis and guess-work, will identify many Delta routes that are not profitable. Eliminating such routes will reduce expenses and thus increase profits. However, one must be careful in applying this solution, since many routes that appear to be unprofitable in themselves are "feeder routes" that are necessary to make other routes profitable.

(5) Purchase More Fuel-Efficient Equipment. (Equipment means "planes".) In the industry, fuel cost is the single-most volatile cost: a small increase in the cost of oil translates into a huge cost increase for the industry. By purchasing more fuel-efficient equipment, airlines can reduce both the short-term expenses of fuel (thus increasing profits) and the long-term volatility of oil price changes.

Hope this helps.

I don't think I can answer you completely.

Let me give you an example of reducing expenses.

I'm not certain which airline did this, but I did read it somewhere.
They removed "one olive" from their salads, served in first class.

They saved $40,000.00 in one year.

A small amount with huge volume can accomplish a lot.
The above would not be considered waste, but at my second job at 19, I reduced inventory shortage and theft in a business where it ran 5%, down to 3%.

I earned $30.00 per week.