Professional Documents
Culture Documents
Sl. No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
IBE
FINANCE
MARKETING
SYSTEMS
HRM
OPERATIONS
3 Credits
Course objectives
1. To promote the awareness among students about globalization and the importance of having a global
perspective in todays business world.
2. To sensitize students about the importance of national differences and culture and their impact on global
businesses.
3. To emphasize the importance of ethics in International Business dealings.
4. To introduce successful strategies adopted by global companies.
Performance Objectives
Upon completion of the course, participants will be able to,
1. better appreciate different cultures and cooperate with employees from other cultures.
2. better perform in international negotiations.
3. formulate clear and winning strategies for their respective organizations.
Course Contents
1. Introduction
Nature and characteristics - Forms -International trade Patterns of Globalization - Organizations
facilitating International trade.
2. Cultural & Environmental Impact on Global Trade
Globalization of Business - Economic, Political, Technological, Cultural and Ethical issues of International
business Cross cultural issues
3. Trade Theories
Mercantilism, Absolute advantage theory - Comparative cost theory - Heckseher-Ohlin theory - Product Life
cycle theory - The New trade theory- Porters Diamond.
4. Globalization Models
Features Classification - Role of MNCs in developing countries - Conflicting interests of Developed Vs
Developing world Globalization Models Developing a new Value Curve - Franchising & Licensing
5. Trade Blocks
Types of Regional Groupings - Inter-regional trade among regional groups - FTAs.
6. Global Trade Order
WTO, GATT, GATS - Importance & relevance Antidumping & Safeguard Duties TRIMs & TRIPs
7. Strategies of International Business
The strategy of International Business The organization of International Business Entry Strategy and
Strategic Alliances
8. New wave in Global Environment
Climate Change & its impact Emergence of Africa, Latin America & BRICS Ease of doing business
FDI & FII Role of global funding institutions
Methodology
The course will be handled through a combination of techniques such as class lectures, videos, case studies, small group work, etc..
Evaluation
Participants of this program will be under continuous evaluation for their comprehensive understanding of the
concepts and application in International Business. The assessment will be as under.
1. Final Exam
2. Mid Term
3. Group Project
4. Class Participation
5. Case Study
6. Attendance
: 40%
: 10%
: 20%
: 10%
: 15%
: 5%
References
1. International Business - Competing in the Global Marketplace
Authors : Charles W L Hill & Arun K Jain
Publishers: Tata McGraw Hill
2.
3. International Business
Authors: Michael R Czinkota, Ilkka A Ronkainen & Michael H Moffett
Publishers: Thomson South Western
4. International Business
Authors: Justin Paul
Publishers: PHI Learning
5. International Business
Authors: Rakesh Mohan Joshi
Publishers: Oxford University Press
6. International Business - Text & Cases
Authors: Francis Cherunillam
Publishers: Prentice Hall
Text Book:
International Business by W L Hill, Arun Kumar jain (TMH) latest edition
*****************
*****************
1.1
Area
Unit 1
Introduction to risk, Identification of loss exposures
Classification of loss exposures, and evaluation of loss
exposures
Property and liability loss exposures, Life, Health and
Loss of income exposures.
Risk Management Techniques : Non insurance methods
Insurance as a risk management technique.
Sessions
6
3
1.2
1.3
2.1
2.2
Unit 2
Insurance from a market perspective
1
The
basic economics of insurance and issues, The
concept of Human life value , mathematical basis of insurance
and pricing objectives
General Insurance
Classification
of
insurance,
life,
non
life.
Understanding features of some key
general insurance
policies fire, marine, motor, fidelity guarantee, Liability
insurance product / public / director and others
3.1
Unit 3
Basics of pricing insurance
2
A brief understanding
of probability, mortality stats,
basics of
constructing a mortality table
and
classifications, principle of equivalence and premium
determination
4.1
1
2
3
1
1
1
Total sessions
20
Readings:
Reading material provided.
Suggested additional
reading:
a. Risk Management and Insurance : Trieschmann, Hoyt and Sommer, 12th Edition,
Cengage
Learning
b. Introduction to Risk Management and Insurance : Mark S Dorfman, 9 th Edition,
PHI Learning Pvt Ltd
Evaluation:
Category
Internal
Mid term
Attendance
Class participation
Tracking the insurance sector
Assignment
Continuous assignment
Study of a life and a general insurance company
a. Submission 1 : Life Insurance Products
b. Submission 2 : General Insurance Products
c. Submission 3 : Marketing and underwriting policies - both life and
general insurance
d. Submission 4 : Analysis of financial statements of insurance
companies
External
Weight age
60%
15%
5%
5%
5%
10%
20% (10 +10)
40%
This course provides in-depth coverage of fixed-income securities and bond portfolio
management. The course covers the pricing of bonds and fixed-income derivatives, the
measurement and hedging of interest rate risk, dynamic models of interest rates, and the
management of fixed income portfolio risk.
After this coursework, participants will be able to do the following:
1.
2.
3.
4.
5.
6.
7.
8.
Course content
Features of fixed income securities
Types of bonds
Sinking fund provision
Risks associated with bonds
Types of risks
Measures of risk
Primary and secondary bond markets
US and Indian markets
Auction process
Yield curve and interest rate structure
Forward rates, Convexity bias
Interest rate theories
Bond valuation
No-arbitrage model
Duration and convexity measures
Mortgage market
Agency MBS
CMOs
Miscellaneous structures
Synthetic CDOs
Other ABS
Derivatives
Interest rate futures, swaps and options
Credit derivatives
Bond portfolio management
LDI
Yield curve trading
Text: Fixed Income Markets and their Derivatives by Sundaresan (Elsevier Pub)
Prescribed readings
The Handbook of Fixed-income securities- Edited by Frank J Fabozzi, Seventh Edition
CFA Institute publications
RBI web site
Federal Reserve web site
Bloomberg
Economist
*****************
End-term
- 40 marks
*****************
*****************
Unit I :
Unit II:
Unit III:
Unit IV: Managing the store; Types of layout; Store atmospherics; Category Management; HR in
retailing.
Prescribed Text : Retailing Management Levy Weitz. Tata Mcgraw Hill.
Additional Readings:
1. Retail Management A Strategic Approach by Berman & Evans, 10th edition Pearson Education
2. The Art of Retailing AJ Lamba
*****************
Additional Reference:
1. Marketing Strategy: A Decision-Focused Approach, by Orville C Walker and John Mullins,
McGraw-Hill Higher Education; 8 edition.
*****************
Security
Implementation & Maintenance.
UNIT-6
Protection of Information Assets: Importance of ISM, ITGC, Physical controls, IS
Audits.
Suggested Reading:
Text book:
Basics of ERP
Requirement Gathering workshops for select use cases and real time projects
Presentation of system
Delivery Mechanism
Interactive class room sessions based on real time business cases handles by ERP
professionals from Hitachi Solutions India
Training Materials
Power point presentations explaining business processes and basic concepts of ERP
and CRM Visio based flow diagrams for detailed business process flow and system
interactions
Use Case diagrams as a supplement to enable business process transformation and
requirements gathering sessions
*****************
3. BPO Framework
Operations Management
Productivity & Capacity Management
Cost Management
Relationship Management
Sales and Mobilization
Service Quality
Support services in BPO
PtP, OtC&RtR
Defining SLAs
Controls & Compliance
Cloud computing
GEN NEXT Tools
Text book:
1. Business Process Outsourcing - A Supply Chain of Expertises by Vinod V. Sople - Publisher PHI
Learning Pvt Ltd
2. Lean Principles and Application in BPO by Asoke Das Sarma and Rupesh Lochan - Publisher
Narosa Publishing House
*****************
*****************
2 Credit
Course Objective :
The course aims to:
*Help students understand the factors of change in the political, social environmental and the
economic scenario that has transformed the role of the Human Resources function from
being a support function to a strategic function.
*Provide an appreciation for the importance of the alignment of the corporate strategy and the HR
strategy of an organization.
*Understand the new strategies organizations are adopting globally to compete and grow - the
subsequent emergence of new forms of organizations and the specific HR challenges faced.
*Give an exposure to the tools and techniques used by organizations to meet these
challenges.
*Give an insight into the emerging trends and the changing competency profile of the HR
manager.
Course Contents:
*HR as a strategic partner: Forces of change-Technology, Globalisation, Cost containment,
Knowledge capital-Changing organizational strategies-emergence of HR as a strategic partner.
*New forms of organizations-Horizontal integration, Vertical
organizational forms.
integration
and networked
*Aligning the HR strategy with organisational strategy-studying best practices through cases.
*Strategic tools and techniques used for
Competency Mapping, concept of Learning
outsourcing strategies.
.2.
-2Recommended text:
Strategic Human Resource management by Tanuja Agarwala (Oxford)
References:
Strategic Human Resource Management-Theory and Practice-A Reader-Edited by Graeme
Salaman, John Storey, and Jon Billsberry-Sage Pub.
Strategic Human Resource Technologies-Keys To Managing People-Ashok Chanda with B.
Sivaramakrishnan and Jie Shen-Response Books.
Strategic Human Resource Leader-Rothwell, Prescott, Taylor-Jaico Pub.
Strategic HRM-Charles Greer-Pearson Education Asia.
Strategic HRM-Michel Amstrong-Kogan Page-New Delhi.
Strategic HRM-Agarwal-Oxford University Press.
Human Resource Management-Dessler-Prentice Hall India.
Recommended Reading :
Human Resource Champions-Dave Ulrich-Harvard Business School Press.
The Boundaryless Organisation-Breaking the chains of Organisational Structure-Todd, Jich, Ulrich,
Kerr, Askenas-Jossey Bas Inc. Pub.
The future of HRM-Edited by Ulrich,Meisinger,Losey-John Wiley Pub.
Roadmap To Strategic HR Turning A Great Idea Into A Business RealityiThe Fifth Discipline-The Art and Practice of Learning Organisations-Peter Senge
*****************
Number of
Credits
Pre-requisite/
Co-requisite/
Forward
linkage
Subject
Objective
Subject
Learning
Outcomes
Subject
Synopsis/
Indicative
Syllabus
Leaders
&
to
Psycho-Socio-Cultural-National
perspective for effective leadership, Heroism &
Harmony, Historical events that proposed unique
models of leadership
*****************
Second, students will develop an appreciation for the nature and breadth of operational
decisions that can be part of a companys strategy.
Third, students will gain some specific insights into how to think about operations strategy,
particularly in situations with competitor uncertainty and demand uncertainty.
Teaching Objectives
The teaching objectives of this course are the following:
1.Develop students' understanding of the strategic impact of operating decisions and the tradeoffs inherent in these choices.
2. Introduce students to the basic components of an operating strategy, including architecture,
systems, and process technology.
3. Provide analytical tools and conceptual frameworks for both assessing and designing
operating strategies that fit with broader competitive goals of the company.
4. Deepen students' understanding of senior managements' role in leading, shaping and
implementing operating strategies over time.
5. Stimulate critical thinking about emerging concepts and ideas in the field of operations
strategy.
6. Plan for operational risks & business continuity
Course Overview & Structure:
The course focuses on operational decisions that are integral to a firms ability to achieve and
sustain economic profitability and competitive edge. The course will consider decisions in which
the question of alignment is central. In other words, is the anticipated choice consistent with
how the firm competes, both now and in the future? For example, the course will consider
operational decisions within three broad categories:
Resource decisions, e.g. capacity investment and entry decisions
Internal activity decisions, e.g. product-process alignment decisions
External activity decisions, e.g. vertical integration and supplier management decisions
The course considers both commitment decisions (e.g., capacity and capability bets) and
hedging decisions (e.g., managing risk with flexible capacity, global sourcing, etc.). The tension
between these two approaches prudent hedging vs. high-risk commitment is explored,
particularly in the context of competition. The role of aligning operational decisions with a firms
strategy is also covered, again with particular emphasis on surviving in a competitive landscape.
Themes in Operations Strategy:
1. System Integrality and consistency as core to operations excellence.
e.g., Toyota, McDonalds, Southwest, Zara
2. Fit Business, Operations and functional strategies
e.g., Auto industry, Southwest, BYD
3. Operations Innovation as source of Advantage
SWA, Toyota, Dell, McDonalds, BYD
4. Strategy is the pattern of operations decisions
Boeing, ITT, CVS, Genentech, Applichem, Amazon, Toyota, Dell
5. Processes embody distinctive and core capabilities
Any process is better than no process. --M. Hammer
6. Operations Strategies are the selection of competitive dimensions and require design
tradeoffs
BMW, Delamere, New Balance Athletic Shoe, Housing
7. You are never done --continuous improvement/innovation is mandatory
McD, Toyota, BYD
The course is case intensive, but there are specific assignments with quantitative analyses.
Analytical concepts, including the basic economics behind modern strategy theory, are
introduced as needed. 19
Unit I: Basic Concepts of Operations Strategy: In the first part, we will examine general
concepts such as competitive leverage using manufacturing and operations, the fit of the
various elements of manufacturing and operations, the impact of the competitive environment,
and the structure of the value chain. We will explore how industry dynamics affect strategy and
discuss concepts of industry clock-speed. The strategic Roles of Operations; Performance
Objectives; Operations Risk Management (BCP, DR, Enterprise Risk Management, Information
Security etc.). Management of Overlaps (and cost) for example Systems Migration, Phase wise
roll outs.
Unit II: Key Elements and Decision Categories in an Operations Strategy: In the second
part, we will examine the key elements and decision categories in an operations strategy. These
include facilities and capacities, technology, logistics, and the other decision categories noted
above. In each of these areas, we will examine how different choices affect the business
competitively and how to make decisions in each of these. Top-Down Vs. Bottom-Up; Institutional
Theory Vs. Resource Based Views; Market-driven Vs. Market-Driving Approaches.
Unit III: Capabilities and Different Approaches to Operations Strategy: In the third part
of the course, we will examine different integrated strategic approaches, each of which places
requirements on operations but allow different means for companies to compete. These
approaches include competing on cost and productivity; quality; availability; features,
innovativeness and new products; and environmental performance. We will compare these
different approaches and the tradeoffs among them.
Unit IV: Globalization, Outsourcing and Other Critical Issues in Operations Strategy
and Policy in the 21st Century: Finally, in the fourth part we will examine some issues in
operations policy and strategy that are particularly relevant today. These issues revolve around
outsourcing and globalization. For example, how much should a company outsource? Can a
company give up all of its manufacturing? We will also explore globalization. Should an economy
such as the U.S. be concerned about the flight of jobs overseas to China and India? Such
themes, while a focus in part 4, will also appear in other parts of the course. Part 4 will also
explore the future of operations and manufacturing.
Models for Operation Strategy: Prof. Terry Hills Framework of Operations Strategy
Formulation; Operations Capability and Maturity Model - Hayes and Wheelwright's Four Stages
Framework; Line of Fit, Operations Strategy Matrix; Platt's-Gregory Procedure; Process
Technology Strategy Framework Scale, Automation & Coupling; Relevance of different models
for different industries, by vintage / maturity of the organization.
Live Project (Operations Strategy Analysis & Improvement for an organisation)
Each student group (2-3 members) should identify an organization whose operations strategy is
analyzed and improved. Based on the field-work & analysis, report should be submitted and
presented to the class along with relevant exhibits. It should describe the organizations current
business strategy and the role of operations in the business strategy, describe why the strategy
makes economic sense, analyze new/changing business environment, recommend a change or
improvement, defend/justify the recommendation, and identify any issues that might occur in
the implementation of recommendation.
Suggested Readings:
The course will be based largely on case studies, with lectures supplementing these. Cases and
exercises will be distributed in advance of the relevant classes. To pursue the topics of this
course more deeply, the following books might be of interest:
1. Beckman, Sara, and Donald Rosenfield. Operations Strategy: Competing in the 21st Century.
McGraw- Hill/Irwin, 2007. ISBN: 9780072500783.
2. Fine, Charles H. Clockspeed: Winning Industry Control in the Age of Temporary Advantage.
Basic Books,
1999. ISBN: 9780738201535.
3. Operations, Strategy, and Technology: Pursuing the Competitive Edge. R. Hayes, G. Pisano, D.
Upton and S. Wheelwright. Wiley, 2005 25
4. Operations Strategy: Principles and Practice. J.A. Van Mieghem. Dynamic Ideas, Charlestown,
MA. 2008
Cases to be discussed (Indicative List):
1. Upton, David M. "McDonald's Corporation (Abridged)." Harvard Business School Case. Harvard
Business School Publishing. Case: 9-603-041, Rev. June 16, 2005. (Innovation and operations
discipline)
2. Fraiman, Nelson M., Medini R. Singh, Carolyn Paris, and Linda Arrington. "Zara." Columbia
Business School Case. Case: 267-279, 2002 (Frameworks for strategy and the decision category
approach)
3. Huckman, Robert S., and Alan D. MacCormack. "BYD Company, Ltd." Harvard Business School
Case. Harvard 20
Business School Publishing. Case: 9-606-139, Rev. July 23, 2007. (Developing an operations
strategy- Application of decision category approach and the capabilities approaches)
4. Heskett, James L., and Early Sasser, Jr. "Southwest Airlines: In a Different World." Harvard
Business School Case. Harvard Business School Publishing. Case: 9-910-419, Rev. June 15, 2010
(Enterprise architecture and operations strategy)
5. Pisano, Gary P., and Sharon Rossi. "ITT Automotive: Global Manufacturing Strategy." Harvard
Business School Case. Harvard Business School Publishing. Case: 9-695-002, Rev. May 21, 2001
(Process technology decisions and multiple plants)
6. Snow, Daniel C., Steven C. Wheelwright, and Alison Berkley Wagonfeld. "Genentech
Capacity Building." Harvard Business School Case. Harvard Business School Publishing. Case: 9606-052, Rev. March 7, 2006. (Capacity strategy: How to make decisions on capacity and
capacity expansion)
7. West, Jonathan. "Delamere Vineyard." Harvard Business School Case. Harvard Business School
Publishing. Case: 9-698-051, Rev. June 8, 2000. (Competing on quality: Sources of quality and
different measures of quality)
8. Bowen, H. Kent, Robert S. Huckman, and Carin-Isabel Knoop. "New Balance Athletic Shoe,
Inc." Harvard Business School Case. Harvard Business School Publishing. Case: 9-606-094, Rev.
June 30, 2008. (Competing on cost versus competing on availability)
9. Pisano, Gary. "BMW: The 7-Series Project (A)." Harvard Business School Case. Harvard
Business School Publishing. Case: 9-692-083, Rev. January 3, 2002. (Competing on cost versus
competing on features and innovativeness)
10. Fine, Charles H. "House-Building Disrupted: Supply Chain Re-Engineering During an Epic
Disaster." MIT Sloan School of Management Case, September 2009. (Competition on cost, quality
and availability)
11. Huckman, Robert S., and Gary P. Pisano. "Flextronics International, Ltd." Harvard Business
School Case. Harvard
Business School Publishing Case: 9-604-063, Rev. May 17, 2004.
12. GMs risk management failures provide lessons for other firms
Course Schedule:
Session 1: The Strategic Role and Objectives of Operations
Session 2 - Innovation and operations discipline
Case: McDonalds Corp, (Abridged)
Session 3: Operations Strategy
Content and process
Top-down Vs. Bottom-up Approach
3 Elements Enterprise Architecture, Coordination, Process Technology
Session 4: Frameworks for Strategy,
Theme: Decision category Approach
Case: Zara
Session 5 -Developing an operations strategy;
Theme: Application of Decision category approach and the Capabilities Approach
Case: BYD Company, Ltd
Session 6 -Value Chain Dynamics & Operations Decisions
Clockspeed, Chapters 1-4
Session 7 - Enterprise Architecture and Operations Strategy
Case: Southwest Airlines: In a Different World
Session 8 -Vertical integration and Outsourcing
Case: Boeing Commercial Airplanes 787 Dreamliner
Session 9: Business Process
Evaluation Plan:
Continuous Assessment (60%):
*****************
Research approaches to RM allow the yield manager to concentrate on making the decisions, rather
than processing the data.
The Revenue Management forecasting system is an on going process, as information is constantly
entering and leaving the system for evaluation. Therefore the optimized solutions has to be dynamic
and changing.
Every firm eventually has to sell its products. Questions that arise in this context are, for example:
What sales channels should the firm use? How should a product be priced in the different
channels? How can the firm prevent cannibalization across channels? How should prices be
adjusted to seasonality?
In this course, we focus on how to set the best prices for the offered products, a decision very often
linked to the profit performance of a process. You will learn to identify and exploit opportunities for
revenue optimization in different business contexts. You will review the main methodologies that are
used in each of these areas, discuss issues associated with different pricing strategies, and survey
current practices in different industries. As the ensuing course outline reveals, most of the topics
covered in the course are either directly or indirectly related to pricing issues faced by firms that
operate in environments where they enjoy some degree of market power.
The Benefits of Revenue Management
Close to company objectives: Get closer to the objectives of the company and ensure you pull the
triggers that bring revenue. The Wall Street Journal identifies revenue management as "the number
one emerging business strategy, a practice poised to explode."
Beat competition: Every business should offer differentiated products or services against its rivals.
Products may be differentiated in terms of packaging, technology, design, and functionality etc.
Gaining advantage on the market share is vital to existence unless a new product is developed. RM
ensures organizations strength and weaknesses are identified and acted accordingly. It supports in
understanding how internal programs affect your competitors and their market share.
Maximize Profits: Firms employing revenue management techniques have seen revenues increase
between 3% and 7% without significant capital expenditures, resulting in a 50% to 100% increase in
profits. Airline companies easily attribute 15% of the incremental revenue to Yield Management.
Maximize ROI: The return on investment is high when RM is effectively applied. RM works on both
cost and revenue hence the impact on the profits is very significant.
Scientific Methods that you can reuse: The scientific methods of RM leave only some room for
gut-feel and subjective decision-making. Companies implementing revenue management basically
employ proven principles of management science and information technology, including historical
data analysis, accurate data modeling, and statistical and mathematical optimization.
Applications:
The course is designed for a wider application and is not limited to the following. These methods are
employed by Technical Staff, Senior and Middle Managers and company executives who take
significant decisions in the organizations.
Airlines & Airports and other Transport sectors
Hotels and Other Service setups
Financial Institutions
Consultancy companies
Manufacturing
Healthcare, Entertainment, Travel & Tourism
Recent Advances in Airline Revenue Management:
A recent trend in Airline business is to move towards a more comprehensive network solution, with
origin and destination control. Rather than looking only at a particular flight, the whole network is
considered. This approach is particularly valuable for airlines with a high percentage of connecting
passengers.
The impact of e-commerce and the surge in internet bookings and different channels of distribution
should ultimately mean more control for the airlines. As the booking process becomes more
automated, all bookings start to flow through the airline's own website or booking engine, removing
the ability of agents to book in one fare class and issue a ticket in another.
Another trend is to look upon revenue management as an integrated solution making sure the
audit trails are in place, that the agents and everybody else is selling the right categories at the right
prices.
Airlines are increasingly building up huge volumes of data on their customers, in line with the
general business trend of tailoring services to the individual, and revenue management is one area
that greatly benefits from this information. There is no doubt that RMS technology is becoming ever
more complex as airlines seek to create competitive advantage. To date, the more interesting
developments have been in the area of modeling passenger preferences. This is expected to assist
in a number of key areas.
The reliance on major hubs, both domestically in the United States and internationally, is focusing
attention on network solutions, whereby a passenger on a short journey, whether paying a high yield
or not, may be blocking off a seat for a connecting passenger who may be worth considerably more
revenue (even though the yield may be lower). This type of approach will also be helpful in
identifying constraints in the system, whereby passengers with connecting travel plans are denied
boarding due to infrastructural constraints on part of the system. The rapid growth of the alliance
networks, with their heavy reliance on code-sharing, has added to the problems in this area, as
passengers increasingly travel on multiple airline itineraries, booked as a single alliance pattern.
Detailed course outline
Session 01: Introduction to Revenue Management and application in Airline/Car rental/Hotel and
Train.
Revenue Management (RM) is a relatively new field currently receiving much attention of
researchers and practitioners alike. It avails itself of sophisticated demand forecasting and
optimization software that is based on research in many areas such as management science,
economics, mathematics and others. In conjunction with the availability of a vast amount of data
through customer relationship management systems that can be used to calibrate the models, these
techniques had a tremendous impact on the airline, Manufacturing, hotel and transport industry. A
broad introduction which covers all perspectives of RM will be discussed. This module also explains
why Industrial manufacturers are at a competitive disadvantage if sales, marketing, finance,
operations, and management have limited visibility into pocket price and pocket margin, lack a
uniform pricing strategy, practice unscientific ad-hoc pricing, and lack relevant and timely data. The
difficulties faced by the various stakeholders in aligning their objectives towards the revenue
management philosophy and the potential conflicts and hurdles they face in their day-to-day
implementation are also discussed in detail.
Session 02: Review of Price Theory
The most successful Industry-leading distributors improve profitability and generate a high ROI by
addressing complex pricing problems including, lack of visibility, one size fit all, competition and
margins, costs etc. This module reviews and discusses a recap of monopoly price theory that
everyone involved in pricing simply must know. The problem at stake is how to turn customer
surplus into revenue for the firm by means of differentiated pricing and constitutes one of the most
fundamental methodologies in Pricing and Revenue Management.
Many possible ways may be taken to differentiate prices, for example regional pricing (same product
has different price depending in which country one books), time-based (phone calls are cheaper in
the night than during the day), sales channel (hotel usually cheaper if one books over their own web
site), product versioning (some companies create inferior product in order to sell it under a different
brand at a cut price) and others. Selling products in Revenue Management applications requires
consumption of one or more resources. Typically, the amount of resources is constrained so that we
speak in this situation of a capacity constrained pricing problem.
The streamlined fare system:
There cannot be a maddening maze of fares in the market with rates and restrictions and we just
replaced them with just four new fares that provided savings of up to 50% for first-class and nearly
40% for business flyers A CEO who just now implemented a streamlined fare system.
Session 03: Forecasting
Forecasting
The first step to optimizing and managing inventory is to forecast the demand correctly. There are
several reasons why forecast varies and shifts and spikes happen. For example if you expected 50
rooms to be filled on the 15th of a month, then there are several reasons as to why it would fill that
way, these could be technically termed as characteristics of a event or a product or more simply the
qualities associated with the product. An effective revenue maximization strategy involves optimizing
the different product availability based on forecast. Thus quality of forecast is very vital to gaining
the incremental revenue that many times takes or breaks a business. This module discusses in
detail the building block of forecast, with special emphasis to Airline Business, Hospitality,
Healthcare, Entertainment, Financial Institutions, etc. The following elements of forecasting will be
discussed in detail
Data collection
Un-constraining
Outliers
Seasonality and data pooling
Types of forecast
Bayesian Forecasting methods
Regression models
Managing Forecasts
Session 05: Optimizers
The reason why an order is picked in the first place is because it was available. A company requires
300 valves of type A by 1st June. A supplier picks this order because they have the capacity and
technology to manufacture that. Thus availability of technologically sound supplier is the key. The
option before any availability decision is driven by the volume or the value approach. When the
forecast is close to the capacity then a value approach is taken, while excess or abundant capacity
indicates a volume approach. This module explains in detail when the inflection points are reached
and focuses on the significance of optimal points. Optimal points or Optimization is the process of
scientifically aligning a combination of market, customer, product, promotion, and supply-anddemand data to improve business margins by either increasing unit prices or increasing gross
revenues.
Optimization thus forms as basis for decision making on the availability and price. This process
seeks intelligent tradeoffs among various competing objectives consistent with an organization's
business strategy. EMSR (Expected marginal seat revenues), a mathematical technique that
facilitates optimization with customer choice models is described in detail.
Some of the following Airlines, Entertainment, Hotel industry applications would be discussed
Upgrade Optimizers
Gating and Inventory controls
Fare mix optimizers
effective pricing decision and to create a relation between the factors and revenue. This goes
tandem to the saying "If you know why you made your profits, you would know what to do when they
fall".
Session 9: Analyzing Yield
The need to analyze yield can be associated with the frequent business need to identify the causes
of passenger yield variances. The positive and negative trends in yield movements are traced by
using simple price-volume variance combinations. There are multiple factors affecting the price
variance component of the overall revenue variance.
Analyzing yield is normally a joint initiative from several Management departments especially
accounts, Yield management and Pricing to achieve their business objective and establish a
common approach within the company in explaining the reasons for yield variance compared to its
target or with another period. Determining the causes of Passenger Yield Variance is of paramount
importance for an organization in order to make appropriate decisions for optimizing its yield and
consequently maximizing the revenue.
In this module you will be able to look at the analysis results from a component perspective.
Component Analysis will do the analysis on each of the following component level.
Market Mix
ProductRange Mix
Product Mix
Quality Mix
Currency Mix
Impact of Fares
Price variance = change in price * current periods volume
Volume variance = change in volume * Comparison periods price
However, there are other factors that contribute to the Yield Variance. This module focuses on
calculating the Yield Variance by considering all the contributing factors and also derives the root
causes of variance. Some of the Transport industry Yield measures are as follows; these will be
discussed in detail.
RPKM
This is a measure known as RPKM (Revenue Passenger Kilometres) and is calculated at the by
multiplying the number of revenue passengers with the distance in kilometres. This measure is
expressed in kilometres for all transport sectors.
RPKM = Number of revenue passengers * distance.
Yield/RPKM
This measure is known as Yield per RPKM and is computed at any level (Network, Region, Route,
Compartment, Point of sale, O&D), by dividing the revenue value with the RPKM value.
Yield/RPKM = Revenue / RPKM.
Session 10:Financial and Performance Results:
Estimating Strategic and Tactical pricing decision impact, Seat Factors, Variable and Fixed costs,
Surplus/Deficit, Operating Ratios, ASKM, Yield per RPKM, REVPAR, Bid price Ratio.
References and Further reading:
1. Improved Forecast Accuracy in Airline Revenue Management by Unconstraining Demand
Estimates from Censored Data
2. by Richard H. Zeni
3. Introduction to Revenue Management for the Hospitality Industry: Principles and Practices for
the Real World
4. By Kimberly
5. Revenue management with flexible products
6. Michael Muller-Bungart
7. Revenue Management
*****************