Ourplane Harvard Case Solution & Analysis

Introduction

OurPLANE was founded in early 1999, by Graham Casson. Casson is an MBA graduate and has always dreamt of being a pilot since his childhood. Soon after his graduation he started a charter plane business named OurPlane. He came up with a new idea of FRACTIONAL OWNERSHIP, since, the charter planes are heavily expensive, and he gave its customers an option of becoming one of the owners of the plane by simply purchasing the shares of the planes.

He started distributing the shares of a single plane to at least 4 people, in a five years contract. The deal is such that the partners have to pay monthly or annual installments and they have been allocated with their respective flying hours as per the terms of the contract. The company offers fractional ownership at 4 different ownership level namely, Gold, Platinum, Silver and Bronze, among these 4 schemes, Platinum is the most expensive scheme as well as Platinum provides the customer with major shareholding as well as major flying hours.

Moreover, besides fractional ownership, the company also offers leasing and VLJ managed services to its customers. In the leasing service, the company offers its customers with a lease and buy back agreement, in which annual lease rentals are paid to the company. Whereas, in the VLJ managed services, the company provides the fleet management services to the customers which includes, cleaning, fueling and other maintenance. In addition to this, the company also provides pilot to the customers without licence to fly.

Problem Analysis

The company is facing serious issues due to recession in the US economic market in 2008 as well as the profitability of the company has been adversely effected by such recession. Moreover, the business of the company has also suffered due to Green Environmental movement.

Furthermore, the major problem the company is facing is that the company is unable to enlarge its customer base as well as the company is unable to make a perfect marketing strategy. In addition to this, the company is unable to figure out the optimal price that should be charged to its customers as well as the company is also unable to determine the profitability in the three segments of the company.

Company Analysis

OurPlane is a fleet company, that offers various kinds of planes to its customers as well as the company provides 3 main services, the fractional ownership, the leasing service as well as the VLJ managed services. The company does not offers heavy planes and luxurious care services to its customers but the company offers light planes as well as comparatively low prices.

The company mainly focuses on the price to the customers, rather than luxuries offered to its customers. The company mainly operates in two markets namely the Canadian market as well as the American market. In the American market the company has a wider scope of increasing its profitability and revenues as there are many opportunities in that market for expansion, due to the nature of that market. Therefore, the company has focused more on US market rather than Canadian market.

The company offers its products and services to companies as well as it also offers its products and its services to individuals. But the major revenue of the company is generated from the corporate customers .i.e. companies. Since, the company has focused more on the price its products rather than offering the luxuries to its customers, the company has a target market of upper-middle class and upper class customers.

The major portion of the revenue of the company is generated by the fractional ownership scheme, in which the company majorly earns from initial fees and the annual fees. In addition to this the company also earns from markups applied to hourly fuel and labor costs charged to shareholders.

Furthermore, currently, the company has a massive potential to expand its business, because many companies has filed for bankruptcy because of recession in the US economic market, but fortunately, the company is still surviving, which gives an opportunity to the company to grab the customers of those companies and thereby expanding its business.

Furthermore, the company had relied on equity financing rather than debt financing which also provides an opportunity to the company to expand its business by using debt financing as using the debt would still maintain the leverage ratio of the company to an acceptable level..........................

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