Topic 3A: GQ1: Read the following business context and use the rational decision-

making process model (the 6 step-model) to analyze the business situation of

Vietnam Airline due to the Covid-19 pandemic: Vietnam Airlines has reported
losses of VND10.7 trillion ($464 million) in January-September 2020, hit hard by
Covid-19. During this period, the carrier transported 10.2 million passengers, down
41.2 percent from a year ago.
The airline has blamed its loss on the pandemic's impacts on the aviation industry.
It said it has cut sales, financial and management expenses, reduced salaries of pilots
and flight attendants as well as increased the operation of repatriation flights as
part of efforts to reduce costs and boost incomes. The second outbreak forced
Vietnam Airlines to cancel 22 new domestic routes during the peak period. So far, it
has resumed 11 of these and is considering the viability of resuming the rest in the
fourth quarter, always a low travel period.

1. Problems definition
Due to COVID 19 pandemic, Vietnam Airlines has reported losses of VND10.7
trillion ($464 million) in January-September 2020.
The carrier transported: 10.2 million passengers, down 41.2 % from a year ago.
Cancel 22 new domestic routes during the second outbreak, 11 of these have
resumed and the rest is considered in the fourth quarter
2. Identify Decision Criteria
In this step, the decision maker needs to determine what is relevant in making the decision. This
step will bring the decision maker’s, and any other stakeholders’, interests, values and
preferences into the process.
(1) Keep business running : This is an important factor and is the number one
priority for VNA enterprises during the covid pandemic, keep running
business will maintain capital, human resources and production activities.
(2) Increase revenue: When the business is kept running, it will promote the
business to generate revenue. Because revenue is also an important factor
creating the success of a business
(3) Break-even: Because in this situation VNA is suffering a loss, so once
revenue has been generated, the business needs to break even in time to
continue growing.
(4) Raise up capital: In order to promote business development, the company's
financial resources also need to be promoted, which is a necessary factor to
promote the potential of the business.
 (5) Preserve service quality: As the first national airline in Vietnam and the
presence of many other competing airlines, VNA should improve its service
quality.
In order to maintain a business like VNA to attract potential customers as well as loyal
customers, businesses need to protect the quality of service well, because in the aviation
industry service quality is an important factor determining the quality of service number
of business

3. Weight the Criteria

Because the criteria identified will seldom be equally important, you will need to weight the
criteria to create the correct priority in the decision.
In the context of the epidemic, keeping business running is the most important thing. From there,
VNA's revenue growth will grow, and after a while, it will be able to reach breakeven. The
higher goal after breaking even is to increase capital mobilization. This will help businesses
develop strongly, accordingly, service quality will be guaranteed and improved. That’s why….

Keep business running (the highest priority) 5

Increase revenue 4
Break-even 3

Raise up capital 2
Preserve service quality 1

4. Generate the Alternatives

Criteria Alternatives

Keep business running 1. Cutting sales, financial and management

expenses
2. Reduce staff salary
3. Layoff employees
4. Try to open/operate domestic routes

Increase revenue 5. Increase repatriation flights operation

6. Promotions activities

Break-even 5. Increase repatriation flights operation

6. Promotions activities
 5. Evaluate the Alternatives

Action Possible Consequences Effectiveness

outcomes
1. Cutting sales, Reduce costs Potential conflict 6
financial and
management
expenses
2. Reduce staff salary Labor costs Reduce employee 5
will be satisfaction
decreased

3. Layoff employees Reducing Employees 1

budget satisfaction will be
spending reduced
Harder to recruit and train
new employees after the
crisis
4. Try to Boots Revenue Risk from COVID-19 2
open/operate pandemic: It can be a
domestic routes source of spread new
covid variant and any
mistake in controlling it
may affect staff and other
flights.
These flights may have to
serve a low number of
passengers and bring
lower profit

5. Increase Boots Revenue Risk from COVID-19 3

repatriation flights pandemic: It can be a
operation source of spread new
covid variant and any
mistake in controlling it
may affect staff and other
flights.
The implementation
 process is more difficult
6. Promotions Increase Lower profit level 4
activities revenue It may still not be very
effective because of the
pandemic

6. Select the Optimal Solution

1. Cutting sales, financial and management 5x6=30

expenses

2. Reduce staff salary 5x5=25

3. Layoff employees 5x1=5

4. Try to open/operate domestic routes 5x2=10

5. Increase repatriation flights operation 4x3+3x3=21

6. Promotions activities 4x4+3x4=28

Optimal Solution:
(1) Cutting sales, financial and management expenses - 30
(2) Reduce staff salary - 25
(3) Promotions activities - 28