ECO 500 Case Study CoursePack American Airlines


Note: You may encounter additional companiescase studies within your ECO 500 Case Study CoursePack. However, please disregard them and ONLY focus on the following:

  • American Airlines

These case studies represent a variety of real-world situations. The American Airlines case addresses revenue management. Each company is in a different market structure and, therefore, finds itself facing different challenges with different options to meet those challenges.
Your objective is to analyze the situation with regard to which profit-enhancing tools are being used, what type of demand the company is facing, what its cost structure is, and what constraints and opportunities the market environment poses. Ultimately, these are the questions:

  • What led the company to this situation?
  • What would you recommend the company do as the next step?

In this journal assignment, craft a preliminary problem statement based on these questions. Your response should demonstrate your understanding of the issue at hand and include discussion of various relevant market factors that may have impact on the problem. Selecting the appropriate economic model to use in your analysis will be important in guiding your research.

Overview: The final project for this course asks you to select and analyze a case study that presents an economic problem facing a company that operates within
a particular market structure.
You may encounter additional companiescase studies within your ECO 500 Case Study CoursePack. However, please disregard them and ONLY focus on the
? American Airlines
? Heinz
? Microsoft
The American Airlines case addresses how a company manages revenue, the Microsoft case looks at how a company maintains market power, and the Heinz
case exemplifies how a company deals with competition. All three cases involve a company’s executives and managers looking for ways to increase profits. The
parent companies of Heinz and Beech-Nut entered into a merger agreement, which was blocked by the Federal Trade Commission. American Airlines attempted
to navigate the mind-numbing pricing structure that created the risk of being considered predatory. Microsoft’s anticompetitive actions in the browser market
resulted in legal problems.
For the final project, you will select one of these case studies and counsel the CEO on an alternate strategy. Imagine that the CEO has tasked you, the corporate
economist, with researching the issue and reporting on a possible plan of action. To begin this process, you must clearly understand the problem at hand and be
able to identify the root cause. Selecting the appropriate economic model to drive your analysis will be important in guiding your research.
Journals are private between the student and the instructor. Review this tutorial for information on creating a Blackboard journal entry.
Prompt: Compose a preliminary problem statement in which you identify the company you have selected to research and describe the problem at hand. In this
statement, you should:
? Identify and articulate the problem as presented in the case study, describing any relevant contextual factors that may influence it.
? Use your background knowledge in economics and your critical thinking skills to deduce possible root cause(s) of the problem
? Identify the appropriate economic model(s) that should drive the analysis of this problem. Is this a demand-side problem? Or is it a supply-side problem?
In business scenarios such as this one, problem statements are needed to describe the problem in a concise way. These statements provide a clear and focused
analysis of objectives and offer a method that will be followed to find possible solutions. To help you craft your problem statement, see the following resource:
What Is an Effective Problem Statement?
You may find it useful to gather information about the organization or company’s current initiatives and processes, general policies, and stated goals.
Information can generally be found in the organization’s main website, annual report and mission statement, and articles authored by the company or by
outside analysts. Additionally, you might consider accessing relevant company and market information on the following sites:
? U.S. Bureau of Labor Statistics
This is a good source for costs information (i.e., producer price index [PPI]), labor market conditions (i.e., employment and unemployment by industry),
and prices of various goods (i.e., consumer price index [CPI]).
? Electronic Data Gathering, Analysis, and Retrieval (EDGAR)
This is the database compiled by the U.S. Securities and Exchange Commission (SEC).
? U.S. Census Bureau
This site houses useful business and industry data programs.
Once your journal response is submitted, you will receive instructor feedback that will ensure that you are on the right track and will help guide your research for
the upcoming milestone assessments.
Guidelines for Submission: Your journal response should be submitted as a 3- to 5-page (including title and references pages) Microsoft Word document with
double spacing, 12-point Times New Roman font, and one-inch margins. You should use current APA style guidelines for your citations and reference list. Note
that at least three outside information sources are required for this assignment (these may include both the case study and the company website itself).

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