A Strategic Analysis of Continental Airlines - Case Study Example

Running Head: A STRATEGIC ANALYSIS OF CONTINENTAL AIRLINES A Strategic Analysis of Continental Airlines In APA Style By Name University Mission Statement The mission statement of Continental Airlines (CAL) is capitulated by its four-pronged strategy better known in the airline industry as the Go Forward Plan. The success of the business organization is often attributed to the Go Forward Plan which was established during 1995. The components of this strategy are "fly to win, fund the future, make reliability a reality, and working together" (Continental Airlines Company Profile 2008). Fly to win emphasizes the financial goals of CAL by focusing on the objective to "achieve top-quartile industry margins" (Continental Airlines Company Profile 2008) by looking at the particular market segments where there are better profit prospects. This also means strengthening the airline's alliances and enhancing efficiency through the elimination of non-value adding processes in the value chain. Fund the future, on the other hand, encompasses the company's quest in ensuring its future growth by the reduction of interest expense, improving fleet plan, and developing hub real estate (Continental Airlines Company Profile 2008). The third component of the Go Forward Plan emphasizes the importance of customer satisfaction in CAL's success. Thus, in intends to position itself as a top player in terms of four DOT measurements namely, "on-time arrivals, baggage handling, complaints, and involuntary denied boardings" (Continental Airlines Company Profile 2008). This also means continue to project a responsible company image and improving its core product. Lastly, working together looks at CAL's relationship with its employees. Recognizing the importance of its staff in the realization of its strategic goals, the company's management spearheads in creating a fun environment to work, offer fair remuneration, and treat staff with dignity and respect. Organizational Structure CAL is organized according to the different functional areas in the business organization. These divisions include marketing programs and distribution, human resource and labor relations, government affairs, international and state affairs, customer experience, finance and treasury, and airport services. All of these business units are led by senior vice presidents who oversee operations and provide the much needed guidance and leadership. Recognizing the international operation of the CAL, it also opted to divide its operation according to geographic location. Thus, it also assigned vice presidents who take charge in the Newark, Houston, Cleveland, Asia Pacific, and Europe hubs. In order to facilitate efficiency in decision making, the headquarter assigns a certain level of autonomy to the leaders in these regions yet CAL can still be referred to as a highly centralized business organization noting the dependence of its satellite offices to the main office (Continental Airlines Company Profile 2008). Organizational Culture With the Go Forward Plan as its blueprint for success, CAL communicates its culture of excellence through its commitment in taking care of its financial health, future growth, employee relations, and customer satisfaction. These are the core values that the company utilizes in order to become successful in its operation. In addition, CAL also highlights its culture of environmentalism, community service, and diversity. The company promotes its corporate social responsibility through programs which enhances sustainable development through its carbon offset program, use of electric powered rather than fossil fueled ground equipment, and designing more environmental friendly infrastructure to support its operation. Though it limits its donation on in kind basis, CAL is seen to contribute to the community service. Lastly, the company honors diversity noting that individual differences in workforce should be honored. Management Style and Philosophy The management style and philosophy applied by CAL largely mirror a modern business organization which sets aside the typical way of thinking to make room for more efficient ones. Through its long years in the airline industry, the company's management has been strongly driven by the changes in its external environment. CAL has been keen in taking advantage of emerging opportunities through the introduction of innovation in the industry. For instance, it introduced turboprop services in medium routes during the 1960s. Recently, it has also become recognized in its effort of introducing a paperless boarding pass. In addition, it can also be seen that the company's main philosophy is the utilization of the rapid technological advancement in order to boost its operational efficiency. The company has been seen to upgrade its aircraft as well as other facilities with state of the art technology (Continental Airlines Company Profile 2008). Accomplishments Since its establishment, CAL has reaped numerous awards highlighting its accomplishments in the airline industry. Recently, the company has been named by Business Traveler magazine as the Best Airline for North American Travel in order to recognize its commitment in providing excellent customer service through its modern facilities and value-added services. In addition to this, CAL has always been awarded for its exceptional performance in best meeting the travelling needs of businessmen not only in the North America but in Mexico, Europe, and Asia Pacific. Fortune magazine also named the company Number 1 World's Most Admired Airline for four consecutive years (Continental Airlines Company Profile 2008). CAL's emphasis in customer satisfaction makes it the two year awardee for JD Power and Associates 2007 & 2006 Airline Satisfaction SM's Highest Customer Satisfaction among Carriers in North America. Among its other accomplishment in terms of customer service is Pax International Readership Award's Outstanding Food Services by a Carrier in Americas and Best Airport Lounges (Continental Airlines Company Profile 2008). What is also notable about CAL is its resilience. During its span of operation, the company has meet two bankruptcies but is able to recover through its ardent desire to continue serving the travelling public. Amidst these financial problems, the company is able to rise and become profitable again. Alliances The global scope of CAL's operations requires it to form strategic alliances with other players in the airline and hospitality industries. The company boasts of its membership in the Sky Team Alliance which allows each customer to book and choose among the 15,000 daily flights and 790 destinations offered by all the members. Aside from this, CAL also widens its network by partnering with other airlines which are outside the circle of Sky Team Alliance (Continental Airlines Company Profile 2008). The company also recognizes the importance of forming alliances with players in the hospitality industry such as hotels, resorts, and car services. Thus, in its OnePass frequent flyer benefit CAL also offers value added services such as land transportation and lodging (Continental Airlines Company Profile 2008). Stakeholder Analysis Three important stakeholders are identified which hugely influences the performance and operation of CAL. The primary stakeholder of CAL is its stockholders which hold a sizeable portion of the company's assets. Since the owners are often responsible in financing the different strategies pursued by a business organization, this puts pressure on CAL to improve its financial performance and choose strategic directions which will maximize shareholder wealth. It also becomes essential noting that when stockholders learn that the company is facing financial problems, they can easily sell their ownership making the value of CAL's stocks depreciate. Customers are the second primary stakeholders. The evolution of a more hypercompetitive business environment where customers have a higher bargaining power pressures CAL to make customer satisfaction a primary consideration. Losing customers to more discerning competitors means lower revenues and losses for CAL. Lastly, CAL needs to build its strength through its workforce. The company should recognize that its human resource serves as strategic partners which propel the organization into its intended destination. Since CAL's staff is its contact point with customers, it is important that they are aligned with the company's commitment in extending excellent customer service. References Continental Airlines Annual Report, 2008. Continental Airlines Website. Retrieved 31 March 2008, from https://www.continental.com/web/en-us/content/company/investor/docs/continental_10k_2007.pdf Continental Airlines Company Profile, 2008. Continental Airlines Website. Retrieved 31 March 2008, from https://www.continental.com/web/en-US/content/company/profile/continentalFacts2008q1.pdf Bibliography De Wit, B. and Meyer, R. (2004) Strategy: Process, Content and Context, 3rd edition, Thomson, chapter, 5. Grant, R.M. (2005) Contemporary Strategy Analysis, 5th edition, Blackwell, chapters 3, 4, 5. Hitt, M.A, Ireland R.D, Hoskisson R. E. (2005) Strategic Management: Competitiveness & Globalisation, 6th Edition, Thomson, chapters 2, 3, 4. Thompson, A. Jr. and A.J. Strickland (2002).Strategic Management. 3rd ed. New York McGraw-Hill. Read More