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The business trajectory of Continental Airlines - Essay Example

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Continental Airlines was once a proud company that had strong earnings, superior customer service, and strong brand value. The firm was extremely successful due to the leadership of its CEO Robert Foreman. …
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The business trajectory of Continental Airlines
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Download file to see previous pages The organization had major problems starting by the fact that the employees were unmotivated and dissatisfied in their workplace. A lack of motivation and enthusiasm are two reasons why business enterprises fail (Sasson, 2012). The employees considered Continental Airlines a crummy place to work. The firm suffered from customer dissatisfaction. A Forbes study revealed that the company ranked tied for last within the industry in profits-sales-assets per employee (Nohria, et al., 2010). In a separate study by the U.S. Department of Transportation the firm ranked last in the industry in on-time percentage, baggage report, and complaints of poor service. There was a lack of teamwork among the employees of the company. Teamwork in the workplace is critical to accomplish the organization’s goals (Cross, 2012). The company was in desperate need of an overhaul and reorganization. The person that came to the rescue of the company was Gordon Bethune. Gordon Bethune was elevated to the position of Chief Executive Officer in 1994. Bethune was a former lieutenant in the U.S. Navy.
In 1978 Jimmy Carter passed the Airline Deregulation Act. The law was designed to give commercial airlines the latitude to set fare prices and it enable airlines the ability to enter or exit a plane route. The deregulation movement presented a tremendous opportunity for the industry. A firm that was able to capitalize on deregulation was Southwest Airlines. On the other hand Continental Airlines did not implement any effective strategies to capitalize on deregulation. The main root of the problem was the lack of leadership from the executive management of the company.
Another problem was that there was also a power struggle for ownership of the company which deterred attention from implementing operational strategies to be able to capitalize on deregulation. Mr. Bethune was able to lead the turnaround at Continental by implementing sound business strategies. Four strategies that Bethune implemented at the firm were: Fly to Win, Fund the Future, Make Reliability Reality, and Working Together. The Fly to Win Strategy was a product service plan. The company removed air capacity of unprofitable routes. The firm eliminated 18% of its flights in an effort to reduce costs by eliminating unprofitable flight routes. A lot of the flights that were eliminated were from the CAL Lite program. One of the new emphases of the company was in becoming a customer friendly airline. The firm concentrated in offering flights to places people wanted to go. The Fund the Future strategy emphasized finding capital to fund the operations of the company. The organization restructured its plane fleet. It reduced its fleet type from 13 to 4 (Nohria, et al., 2010). The company matched airplane size with the size of customer markets. It also eliminated above market leases on planes. For instance Continental eliminated all 21 of its Airbus A300 and the 4,000 employees that served them. Despite the company’s initiatives the firm faced risk of bankruptcy once again in December of 1994 due to the fact that the ...Download file to see next pagesRead More
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