Question

Case Study: The marketing manager of an airline company is looking at travel habits of business travelers. She noticed that business travelers tend to book just few days before flying, unlike economy who book far in advance. In fact, some business travelers may book as late as few minutes before flying. She wants a decision support system based on past bookings that can predict how many business class bookings are likely to happen as these are hard to guess. The idea here is that any leftover bookings could be sold cheaper on the day as ‘upgrades’ for economy customers. This could increase the profits of each flight by 20%. This kind of system is a unique system with an innovative idea that can’t be found in the market. Moreover, the implementation of such system will give the airline company a major advantage against many of its competitors. The marketing manager does not want to share this information with any other business, so she suggests that the system be built by the airline’s information technology department even if they need to employ few more IT people to help them to finish the work on time. She tells the board meeting “We do not have too much time; we need to install this system before summer season starts in five months’ time.”
1) What type of sourcing would you recommend the company to adopt? Why would you recommend this type?

2) What kind of system development method/ approach would you recommend the company to follow? Why would you recommend this method/ approach?


3) List four advantages and four disadvantages of sourcing information system as recommended in question 1?

Answer 1

1) Sourcing through contracting would be the most suitable method for the company. This is because this type of sourcing is generally undertaken for managing and implementing a particular project and the contract terminates once the project is completed. The aim of the marketing manager of the airline company is to install a decision support system and deploy it for managing information. Thus, contract sourcing would be suitable because it would engage the suppliers in implementing the DSS in the company by limiting the complexity and breadth of processes.

2) Agile development methodology can be used for incorporating the new software system in the airline company. This is because here the software can be developed in iterations which help in minimizing the risks at each level by identifying bugs, cost overruns, changing requirements and others. This helps in improving the efficiency and fixing the defects for aligning the system to the expectation.

3) Four advantages of contract outsourcing are getting access to skilled expertise, improving focus on core business activities, better management of risk and increasing the efficiency of in-house employees. Four disadvantages of this method include risk of exposure of confidential information, lack of customer focus, difficulty in coordinating deliverables and loss of managerial control.

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