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    People Express Briefing Notes

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    Goeedang Journal
    The document describes the People Express Management Flight Simulator, which allows users to simulate running People Express Airlines. The simulator has three main parts: the microworld simulation model, an information system, and simulator controls. Users can make strategic and operational decisions each quarter, such as acquiring aircraft, hiring employees, setting fares and marketing budgets. Reports and graphs provide feedback on the company's performance and the airline industry. The document provides a base case strategy and instructions for developing your own strategy to pilot the simulated airline.

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    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd

    People Express Briefing Notes

    Uploaded by

    Goeedang Journal
    257 views6 pages
    The document describes the People Express Management Flight Simulator, which allows users to simulate running People Express Airlines. The simulator has three main parts: the microworld simulation model, an information system, and simulator controls. Users can make strategic and operational decisions each quarter, such as acquiring aircraft, hiring employees, setting fares and marketing budgets. Reports and graphs provide feedback on the company's performance and the airline industry. The document provides a base case strategy and instructions for developing your own strategy to pilot the simulated airline.

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    The document describes the People Express Management Flight Simulator, which allows users to simulate running People Express Airlines. The simulator has three main parts: the microworld simulation model, an information system, and simulator controls. Users can make strategic and operational decisions each quarter, such as acquiring aircraft, hiring employees, setting fares and marketing budgets. Reports and graphs provide feedback on the company's performance and the airline industry. The document provides a base case strategy and instructions for developing your own strategy to pilot the simulated airline.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    257 views6 pages

    People Express Briefing Notes

    Uploaded by

    Goeedang Journal
    The document describes the People Express Management Flight Simulator, which allows users to simulate running People Express Airlines. The simulator has three main parts: the microworld simulation model, an information system, and simulator controls. Users can make strategic and operational decisions each quarter, such as acquiring aircraft, hiring employees, setting fares and marketing budgets. Reports and graphs provide feedback on the company's performance and the airline industry. The document provides a base case strategy and instructions for developing your own strategy to pilot the simulated airline.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
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    The document describes a management flight simulator developed by MIT to simulate running an airline business. The simulator allows the player to make strategic and operational decisions each quarter and receive feedback on the outcomes.

    The simulator was developed based on the true story of People Express Airlines. It consists of a simulation model (microworld), an information system, and simulator controls. The microworld models competitors, customers, and the financial and operational aspects of the airline. The information system provides reports on these aspects.

    Each quarter the player can make decisions on aircraft acquisition, hiring, marketing spending, fares to charge, and the target scope of service to offer.

    People Express Management Flight Simulator

    - Developed by Prof John Sterman, MIT using STELLA


    based on the true story of People Express Airlines

    - It functions like aircraft simulator

    - It allows player to take command of firm and pilot it from


    startup to success

    - Player can make strategic and operational decisions and


    receive feedback at each simulated time period.

    - It is comprised of 3 parts : Microworld (simulation


    model), Information System and Simulator Control.
    Microworld

    Competitors Customers

    • Competitor Fares - Demand and Market Share


    • Competitor Service - Perception of Service
    Scope and Quality
    • Competitor Quality - Reaction to Relative Fares
    - Response to Marketing

    People Express

    Financial
    • Fares
    • Balance Sheet
    • Income Statement
    • Cash Flow, External
    Financing
    • Stock Price

    Fleet Service
    • Aircraft Acquisition - Hiring
    • Capacity - Employees, Turnover
    • Passengers Flown - Productivity of CSM
    • Load Factor - Quality of Service
    • Fleet Operating - Cost of Service
    Costs
    Information System

    - Reports

    • Breakeven Analysis - Breakeven revenues, load


    factor, passengers

    • Capacity and Load - Fleet size and operating costs,


    load information

    • Employment - Employees, turnover, productivity

    • Financial Statements - Balance sheet, income


    statement, cash flow

    • Market Research - Demand, competitor information

    • Stock Price and Earning Reports - Stock price,


    earnings per share, cumulative profits

    • Summary Report - Overview of firm, market and


    competitors

    - Graphs
    Simulator Controls

    • Each game lasts up to 10 years. Five decisions for each quarter :

    1. Aircraft How many aircraft to add Eg 0 means 0 aircraft for next quarter.
    Acquisition to the fleet Negative value is for selling

    2. Hiring How many people to hire Eg 9 means 9 person to be hired for


    next quarter.

    3. Marketing What fraction of Eg 0.1 means 10% of revenues allocated


    revenues for marketing for marketing for next quarter.

    4. Fares What average fare to Eg 0.09 means $0.09/seat-mile.


    charge Competitors’ ave fare = $0.16/seat-mile.

    5. Target Scope What services to offer Eg 0.6 means no frills service. Value of
    of Service 1.0 is full service.

    • Click “Step” after decisions are entered.


    • Click any report or graph to view status
    • Click “Explore, Go Back Once” if change to previous decision is to be made. “Go
    Back Once” as many periods as you wish. Click “Explore, Restart” if new game is
    to be played.
    • Click “File, Save Exploration” if game results are to be saved.
    Base Case Strategy

    1. Lease 3 little aircraft for a few years until enough money is made to buy a plane
    of its own.

    2. This means

    • no addition to the fleet

    • no addition to staff but just to replace turnover to maintain staff level of 165

    • low prices

    • moderately aggressive marketing

    3. Continue with this strategy till 4th quarter of 1983.

    4. Review the base case strategy using the Graphs feature by clicking on the name
    of the graph
    DEVELOPING YOUR OWN STRATEGY

    1. Select a strategy before playing.

    2. Play several explorations quickly rather than one slow exploration.

    3. Stick to your strategy in each exploration.

    4. Vary one aspect of your strategy in the next exploration.

    5. First exploration :

    • Keep prices low = $0.09/seat-mile


    • Target scope of service = 0.6
    • Expand fleet = aggressively at 100%/year
    • Hiring people = at comparable rate
    • Market = aggressively at 12% then
    10%

    6. Next exploration : Vary one of the factors.

    7. Evaluate the role of factor you varied to understand the dynamics of firm and
    market.

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