Laura Moreno Lage
PRACTICAL CASE # 8 - “EVALUATION AND CONTROL OF THE COMPANY’S REPUTATION” Read the case study attached bellow in order to answer the following questions: * If the initial shareholders of Air Madrid in 2004 had not changed, would it close down? We can’t know if the company would have close down in that case, because we can’t know which strategy they would have done. But I think that the closure is related with the management of the new shareholders of Air Madrid in the company.
The Majorcan group Optursa was dedicated to the building and exploitation of real estate for tourism. For this reason, they changed the company’s strategy. The company became into another kind of business, less related with the flights and more with travel packs and tour operators, taking advantages of their contacts in the building world. The change of the strategy and the excessive diversification turned complicate the development of the company. The diversification has advantages: if a concrete brand is not working properly, you have more brands to equilibrate and continue with the company; it’s very flexible, because the products most of all depends on the fashion, and the fashion changes. Having different kind of products you can adapt your company to the necessities of the moment. But, on the other hand, the diversification has risks. The specialization allows the companies to invest in order to have better and with more quality products. If you are very diversified you can run the risk that your products are not good enough to success. I think that this is the case of the diversification of this company: trying to offer a wide range of services they forget to keep the quality in their products. In the aviation, issues as the punctuality and the customer services are key in the business: if you don’t keep them in a high level, it won’t be a success.
* Did the airline grow too fast?
Yes, the airline grew too fast. In a few years they...
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