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Classic Airlines - Case Study Example

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In order to create the right problem statement to address issues that an organization is facing, the first step is to describe the situation. It is important that the framer of the problem clearly understands the situation, issues, and opportunities that are presented by a situation before trying to identify the problem…
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Classic Airlines
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Download file to see previous pages These decreases have been accompanied by rising operational costs that have forced the company to find ways to cut costs by 15 percent over the next 18 months. These cost cutting measures are necessary in order for them to remain financially sound.
While cutting costs the company must also find a way to attract new customers, produce a higher level of satisfaction for their current flyers, as well as bring their once loyal customers back as frequent flyers with their airline. In the wake of financial crisis any marketing efforts cannot involve airfare price reductions; therefore the company is challenged with finding ways to improve the perceived value of flying with them. The organization's focus must be centered on the needs and wants of their consumer while being conscious of costs.
While there are many issues facing Classic Airlines, the most relevant to this analysis are contained in the communication threads of emails and meeting excerpts. Of these, there were three primary indicators or events that prompted the issues listed in Table 1.
First, the relational dynamic among the members of the management team is unhealthy. The fact that the individuals do not necessarily agree on the processes that will best contribute to the overall success of Classic Airlines is not the issue. The problem lies in the way management is polarizing into an "us vs. them" mentality. As can be seen from the informal meetings and emails, the CEO and CFO have a general lack of respect for the value of marketing to enhance shareholder value, and view it as a necessary expense of operations. Further, the CEO's reference to "Boyle and friends" suggests a suspiciousness of motive. The CFO's personal comments about Mr. Boyle demonstrate an outright hostility. Management of a company that is having profitability issues must resist the tendency to polarize. In fact, the CEO and CFO are presenting a classical example of "push down" responsibility, where "because they are often unfamiliar with entangling details, top management tends to expect successful results without complications." (Pulhamus, 1991, 86) The marketing team, in a similar fashion, is closing ranks and taking an adversarial view of the CEO and CFO. This dynamic must be adjusted to bring balance and respect in the communication of conflicting ideas.
Secondly, the CEO and CFO are focused on a singular model to attain profitability, i.e., cost leadership in the market and operational efficiencies. While cost management is a valid tool, it is not exclusive. The CEO views marketing primarily as an operational expense and not a component of the business model that will add value to the company. The CFO is so focused on the fuel hedging tactic that she has taken a defensive position around it to protect it from encroachment; this territorial view of a single method precludes the introduction of new, and more effective, methods of containing costs and increasing profitability.
Finally, the CEO has specifically stated that the company does not need an alliance. Even a cursory glance at industry ...Download file to see next pagesRead More
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