Hong Kong Dragon Airlines Limited A Determining The Cost Of Capital Case Study Solution


Home >> Harvard >> Hong Kong Dragon Airlines Limited A Determining The Cost Of Capital >>

Hong Kong Dragon Airlines Limited A Determining The Cost Of Capital Case Study Solution

Background and Facts

Hong Kong Dragon Airlines Limited A Determining The Cost Of Capital a workplace supplies merchant for tiny and also medium sized organisations has actually recently been involved in preparing for a merger with its rival Residence Deport, which has actually impacted efficiency levels in departmentswith the senior supervisor associated with legal problems put forth by the federal Profession Commission. With the Marketing Head advancing the news of his departure from the firm in one year, Jeannie Lewis, the current head of operations has actually been asked to take the duty in the near future. With difficulties in the form of a possible cultural modification and also reduced employee morale, the company wants a full reengineering effort at the marketing department.

Issue Statement
Porter's 5 Forces Analysis
The prospective cultural change at the advertising and marketing department of Hong Kong Dragon Airlines Limited A Determining The Cost Of Capital is raising uncertainty in the working environment bring about different obstacles for the Jeannie Lewis who would certainly be changing the head of the department in one year. nalysis

PEST analysis

Political Factors: Political factors play a major function in impacting strategic decisions because Stapes Inc. had to desert its plans of combining with Workplace Deport after the Federal Trade Compensation's treatment while doing so. Offered the fact that the store has a global visibility with branches in UK, UNITED STATES, Canada and also Germany, political consider each of these countries might have the ability to affect performance or calculated goals. Federal Profession Commission's antitrust match versus the merger took up beneficial time of the organization's senior management suggesting that 'political' factors can have major effects for a worldwide company.

Economic Factors: Financial factors such as the introduction of small businesses in the worldwide circumstance recommend that Hong Kong Dragon Airlines Limited A Determining The Cost Of Capital is growing in a setting where there is possible growth of organisations. Truth that store consumers are mostly looking for workplace supplies for residence offices recommends that the market has a rising pattern of entrepreneurs and also house based companies.

Social factors: Social trends in the economic situation reveal that customers are looking for convenience in addition to attractive rates. Marketing research demonstrates how the client for Hong Kong Dragon Airlines Limited A Determining The Cost Of Capital does not have understanding concerning finding services which can use a mix of benefit and inexpensive.

Technical factors: Technology plays a crucial duty in Hong Kong Dragon Airlines Limited A Determining The Cost Of Capital's business strategy particularly as the organization is piloting Innovation facilities which would certainly provide technology sales and assistance in the form of memory upgrades, outer setups. (Recap of BUG in appendix 2).

OB Issues and also Effects.

A number of underlying Organizational Habits concerns can be seen in Hong Kong Dragon Airlines Limited A Determining The Cost Of Capital's case as highlighted in this section.

Worries about social adjustment: There is apprehension about a cultural change that would happen when Todd Krasnow leaves from his setting as the Executive Vice President of Advertising with a lot of the employee already revealing unhappiness over this possible relocation. This anticipated adjustment has created stress and anxiety in the workplace which has been paired with the previous anxiety of preparing the company for a prospective merging with House Deport.
Pest Analysis
Stressful Work Atmosphere for Newcomers: There is shortage of workers that can match the difficult atmosphere of a hectic company. Not just does this lead to trouble in discovering the best individuals, it puts stress on new hires as can not withstand the speed and also stress that the organization expects them to bear.

Double Reporting Lines: Newcomers locate this business society difficult and challenging to cope with specifically as dotted line partnerships are indicated to be weaker generally as well as unbiased setting and also efficiency examination is still done by the strong line manager. This implies that newcomers can shed clearness about their respective duties and objectives especially as dotted line reporting does not keep them in direct communication with the solid line managers.

Resentment From Cross Departmental Hiring: Krasnow's choice to make Lewis his follower instead of Bridget Coles despite the fact that it had been hypothesized that the latter would take Krasnow's position came as an impact to her morale. Lewis may have been capable as well as proper for the job however the reality that Kransnow's departure would make Coles a straight report to Lewis might have been the reason for Coles' resignation from services.

Anxiety & Job Insecurity: Anxiety and also insecurity can be determined as 2 significant problems that Lewis would certainly be dealing with especially as the merging has actually now be terminated as well as 2 elderly execs of the advertising division would be leaving. The whole duty of the department would certainly be dropping on Lewis's shoulders who would certainly not simply supervise of brining regarding a cultural adjustment but would certainly likewise need to verify herself in her brand-new function.

Inappropriate Administration Style of Leader: Lewis's management style as well as its conflict with the advertising division's role can likewise be viewed as an OB challenge particularly as she has been used to dealing with problems in the operations department where workers are shown to focus on processes and also obtain them right. The marketing division on the various other hand can be viewed as a team of people who are used to being nurtured by Krasnow who focused extra on output than processes.

Interdepartmental Arguments: Interdepartmental disputes in between 3 divisions, advertising and marketing, merchandizing and operations specifically over the allotment of the advertising mix can be identified as an additional OB problem. The advertising department does not share the same vision as the other 2 divisions concerning the aloocation of the advertising mix twoards promotions as well as advertsing, the merchandizing and operations divisions do not concur over the advertising and marketing mix allotment amongst one an additional either.

Fragmentation in Advertising Department: Fragmentation in between the marketing and advertising divisions can be determined as one more OB issue which can need further interest. The fact that the advertising and marketing sections in the advertising department are disconnected is protecting against both departments from acquiring from each other's experience as well as experience. Integration of marketing with merchandising and also procedures would certainly become more difficult if the marketing division itself is broken down which can be an additional possible OB problem.

Hong Kong Dragon Airlines Limited A Determining The Cost Of Capital Analysis

Numerous concepts have been utilized to describe the scenarios to get further quality concerning the circumstance handy.
Swot Analysis
McGregor's Concept X & Y: According to Douglas McGregor's Theory X, most managers believe that staffs are easy as well as lazy, have little aspiration and also stand up to adjustment. The circumstance at Hong Kong Dragon Airlines Limited A Determining The Cost Of Capital is not entirely adhering to Concept X, it can be seen that brand-new hires are finding this setting instead stressful which might at some point lead to a greater inclination of the monitoring in the direction of Concept X. Also while analyzing Lewis's monitoring design, concept X may have been ideal in the operations division to some degree however the Marketing division would certainly require dependence on Concept Y in order to obtain the imagination and originality from the teams.

Tuckman's Synergy Concept: As far as Lewis's concern regarding bringing harmony between the marketing and marketing division is concerned, this would at first lead to contrast as reviewed by Bruce Tuckman in his 'Team effort Theory'. By integrating the advertising and advertising and marketing department's work, there may be the exact same preliminary separate which could lead to the 2nd stage of 'storming' where the teams test one another.

When individuals are presented with modification, they enter stage one as well as so there may be feelings like sadness, uncertainty, aggravation, anger, anxiety, denial and also disorientation.The scenario at the advertising department of Hong Kong Dragon Airlines Limited A Determining The Cost Of Capital is similar so Lewis can get comfortable with the suggestion that it is not amazing actions. It is throughout this stage that Lewis will certainly have to offer assistance to the division so that they can discover a feeling of instructions. It can be seen exactly how Krasnow has currently made this change simpler by making Lewis obtain included in the department a year prior to his real departure.
Vrio Analysis
Maslow's Requirement hierarchy: The OB concern pertaining to instability at the office has actually been set off first of all by the change in monitoring and also secondly by the truth that the merging will no more be initiated. Abraham Maslow in his Concept of 'Requirements Power structure' (appendix 5) has talks about the significance of 'safety and security needs as being a reduced degree need of a human for triggering motivation. As seen in the pyramid cooperated appendix 3, we can see just how 'the demand to really feel safe and secure and untouched' goes to the 2nd degree of needs. Before a worker can be made to establish emotionally, he requires to have his 'Physical 'as well as 'Security' needs met. This indicates that unless the workers are made to really feel safe and secure about their present work status in Hong Kong Dragon Airlines Limited A Determining The Cost Of Capital they might not reach 'Self-Fulfillment'. (King, 2009).

SWOT Analysis for Hong Kong Dragon Airlines Limited A Determining The Cost Of Capital Case Study

Effects of Analysis.

The OB analysis has checked out numerous concepts to understand exactly how to handle the current circumstance at hand. The adhering to three options have been proposed to aid Lewis handle the organizational difficulties in the advertising and marketing department. Each of these options has been suggested for relieving the change needed to bring the marketing department in line with the needs of the market and for making the cultural modification that would comply with once the present leader leaves.

Combination of marketing and advertising functions. Dividing Adverting and also Production functions. Assimilation of Advertising with Operations.

Assessment of Alternatives.

Integration of Marketing & Advertising Functions: The in-house advertising and marketing agency of Hong Kong Dragon Airlines Limited A Determining The Cost Of Capital is already toughness for the organization in terms of saving up on overheads connected to advertising and marketing and promotion. Given that no brand-new recruitment has been done after Bridget Cole's separation with the coverage line being directly appointed to Krasnow for the marketing function, this is a beneficial chance for incorporating the marketing and advertising features. Judith Shapiro that has actually earlier been interviewed by Lewis during the earlier merging days has know-how in business-to-business advertising along with firm as well as retail advertising experience. When Krasnow leaves, Lewis can hire Shapiro as an EVP for advertising and marketing to deal with both marketing and advertising features.

The benefit of this technique is that it will incorporate both functions while minimizing the need for working with an extra source for marketing. Along with this, Lewis would be heading the advertising department as well as regardless her substitute would certainly be needed for the existing duty that she is executing. The negative aspect of this option is that exterior hiring might cause resentment from interior employees that might be looking at the setting of EVP after Lewis takes over Krasnow's position.

Dividing Adverting and Production: Given the affordable stress and also excellent quality job needed from the advertising agency, it is advised that Lewis should enable the production unit to be a different function from the marketing system. Because the majority of ad agency had these 2 functions as different systems, it makes more feeling to adhere to the standard. Both functions may be able to concentrate on their core triggers much more efficiently. However, the negative aspect of this method would be that added prices would need to be birthed for establishing separate manufacturing features. A production head may have to be worked with which might raise expenses for the company.

Combination of Marketing with Operations: Given that Lewis is currently caring for the marketing as well as procedures departments at the same time; it makes good sense to incorporate the two features given that she has actually been successfully dealing with both ends. The fact that both divisions already have major differences over allowance of resources suggests that this integration may have the ability to bring about harmony especially as Lewis would certainly be heading both ends.However there are various disadvantages of this relocation specifically as it would place excessive concern over Lewis's shoulders. The fact that Lewis needs to adapt her management design for the advertising division suggests that these 2 departments would certainly be culturally varied. Lewis might not be able to apply one type of leadership style to both departments which could result in inefficiency in either one of the two features.


An evaluation of the three alternatives shows that assimilation of advertising and marketing and also procedures would not be a possible relocation because of the substantial differences between the two divisions although that currently Lewis is handling both. While splitting up of the manufacturing feature may have been a beneficial relocation for the advertising department, the reality that it would certainly imply putting a 3rd function under Lewis's wing indicates this need to be prevented too. The integration of the advertising department is the best option in terms of obtaining the optimal arise from the department. An activity prepare for this option is discussed below.

Activity Strategy.
Lewis will certainly take control of the role of EVP Marketing after Krasnow leaves.

Marketing and advertising features would certainly be combined.

Judith Shapiro will certainly be employed to take Lewis's place as SVP of marketing and advertising.

Manufacturing feature will certainly stay part of advertising under advertising function.

Lewis will certainly separate herself from operations.

A democratic leadership style with staff member empowerment will be utilized in advertising department.

Open door policy and focus on cross departmental communication will certainly be targeted at removing disharmony.

Backup plan.

If the combination does not exercise as planned, a contingency plan would certainly comply with which would divide the production feature from the marketing function to decrease the lots on the SVP of advertising and marketing. In case Judith Shapiro does not get hired, Lewis will be heading the advertising division without an SVP. Because case the production function will absolutely be divided by putting it under an SVP manufacturing.