Facts and Analysis on American Airlines and eTrade, Case Study Example

E-Trade is an innovative financial services company, offering online interactive brokerage and banking solutions. The company was founded in 1992, and has recently introduced some innovative mobile trading options and made its services exclusively available on Blackberry phones. The Mobile Pro Application was a market hit, and the systematic approach to mobile technology did pay off.

A recent study assumes that in 2006, over 43 percent of Internet users were banking online. (Patton, 2006) According to the interview published in the research, the main reason E-Trade has a competitive advantage on the market is that many large banks hesitated to develop Internet based applications and provide convenient access to customers. The right approach to develop a business model was used, and customers’ need for convenient banking was considered. Today, the company offers the same ease of application when applying for a loan or investing money.

As the company has never had a brick and mortar operation, the costs of integrating the systems were saved, and all resources could be used to improve the services, options and products. The largest competition of E-Trade today is the innovative segment of the banking sector, which is slowly but surely catching up with the company, developing more competitive online and mobile banking solutions.

Although the sales figures of the company have been declining since 2008, the operation income has gone up in 2010. (NASDAQ ETFC Balance Sheet) The company should focus on reducing the cost of operations  while further increasing the company’s operating profit ($499.64 M in 2010, compared to $115.97 M in 2009), attracting new customers on the mobile market. The successful promotion of E-Trade’s Mobile Pro would increase net income. The income statement is found below.

American Airlines Case Study

American Airlines is currently one of the largest passenger airlines in America. The new yield management system was introduced in the company in the late 1990-s, to ensure that the full capacity of flights is used and the cost of operations is reduced. They also started a training program for managers to learn the newly implemented yield management system. The case study created by Klassen and Menor (2006,  p. 147.) resulted in the surfacing of two different problems: one of them was spoilage, the other one “oversales”. Both the mentioned scenarios have a negative impact on customer satisfaction and revenue.

The financial statements of the company do show a great decline in revenues, and the costs of operation have increased significantly in 2010. Before the study would analyse the figures, it is crucial to review the statistical data. (American Airlines Website, financial chart)

There was a significant decline for sales in 2009, and this was partly recovered by 2010. However, the cost of revenue did decrease in 2009 and increase again in 2010.

Although the reduced demand for domestic flights has affected the company’s sales, the cost of operation has increased because of the wage and fuel impact, tax implications and other factors on the market. To create a competitive advantage, American Airlines needs to reduce the cost of administration by simplifying its booking and sales processes, while creating innovative services to attract more customers.

References

E-Trade financial Statements. (online) http://www.dailyfinance.com/quote/nasdaq/etrade-financial-corporation/etfc/financial-statements?source=esadlfltnal0001

Patton, S. (2006) E-Trade and The Future of Web-Based Banking. (online) http://www.cio.com/article/24977/E_Trade_and_The_Future_of_Web_Based_Banking?page=6&taxonomyId=3044

Klassen, R., Menor, L. (2006) Cases in operations management: building customer value through world-class operations. SAGE

American Airlines Income Statement. (online) http://phx.corporate-ir.net/phoenix.zhtml?c=117098&p=irol-fundincomea