Continental air lines was the fifth largest commercial air lines with revenue of $6 Million, it had reported a net loss every year since 1985. Regarding its performance it ranked last among the 10 major U. S. commercial airlines in one-time arrivals. Due to operational, financial, cultural etc. problems the company suffering of loss and financial shortage. More over the company was encircled by major problems and their symptom were such as: Instability of the organizational setting, immediate change of strategy, employee's dissatisfaction and low moral, non-existence of team work sprit and lack of cooperative interdepartmental communication.
In addition highest number of mishandling of baggage's, planes were late, over all customers' dissatisfaction and claim result was worthless. This ranked continental among the worst in the percentage of passengers who were involuntarily denied boarding. On the way struggling for survival the company aware of the future loss and financial crisis. Then as a solution a new president and chief operation officer (Gordon Bethune) joined the company to solve the problem & getting Continental on back. Later he assumes the post of CEO to implement the Go for ward Plan to change the existing condition of the company.
As per the analysis indicated the Go for Ward Plan was able to strengthen its position in the industry until the eve of September 11/2001 attack. Then over all strategic plan is also to be crafted to over come in strengthen the company. Continental Airlines was able to strengthen its position in the industry, but the unprecedented 9/11 attacks added to the already sluggish US and world economy and the subsequent financial crisis (vulnerable financial position) have accentuated the weaknesses. The industry is highly hit by the attack.
The companies especially those in a vulnerable position can't tolerate the crisis unless the US government takes immediate action to subsidise the industry. As can be seen from their website Continental Airlines is still stumbling. The mission statement of the Continental Airlines is to be one of the best service providers in the industry by offering excellent customer care, being loyal to employees, enhancing corporate culture through teamwork and being a cost effective (value for money) market leader in the industry. The Objectives of the Continental Airline is:
* To introduce new methods and structures that can keep the company strategy successful. * To focus on customer and employee satisfaction by rewarding them accordingly. * To be cost efficient. * To increase the sales through differentiating the method of offering service. * To improve quality of service in the industry compared to its rivals. 2. Continental's Problem Analysis Evaluation performance is always incumbent on management to evaluate the organization. It is management's duty to say on top of the company's situation, deciding whether things are going well internally, and monitoring out side developments closely.
Executing the strategy means not be going as well as intended, subparts performance or too little progress shows that there is a problem to be identified in the process of implementation, will require corrective actions and adjustments in a companies long term directions, objectives business models and strategy. Corrective actions such as revising budgets, changing policies, reorganizing, making personnel changes, building new competencies and capabilities, revamping activities and work process, making efforts to change the culture are typical managerial actions for better performance.
Continental's last performance indicated that the company was among the worst but not the last. Signs of worst performance shows $6 million loss in 1994, customers steered to other carriers, low moral of employees, financial inability to settle debt, customer dissatisfaction and unable to use the best idea of the world. Some of the major problems of Continental airline are: Strategic problems A company's strategy consists of the combination of competitive move and business approach that mangers employ to please customers, complete successfully, and achieve organizational objectives.
A strategic vision points an organization in particular direction and charts a strategic path for it to follow. Strategic vision points and organization in a particular direction and charts a strategic path. Here the chief concern is with "were we are going" Strategy is a means to an end. As organization leader or strategy maker with out first drawing soundly reasoned conclusions about the winds of change and then some fundamental choice about which several strategic path to take. Continental lacks this, which leads it to low performance and loss.
This also forced the management to numerous internal reorganizations, strategy shifts, revitalization and turnaround efforts, buzz words and promises. As the mission of Continental's to be the best service provider in the industry by offering excellent customer care, being loyal to employees, enhancing corporate culture through teamwork and being a cost effective (value for money) market leader in the industry. This statement should be deduced to objectives and executed and tailor alternative strategic if need.
But this was one of the Continental's problem no being implemented by the management before 1994. Financial Problems Among the valuable organizational assets for the company strength and resource capabilities a strong balance sheet and credit rating is good at doing or characteristic that gives it enhanced competitiveness. On the other side weak balance sheet; burdened with too much debt and short on financial resources to fund promising strategic initiatives are of those potential resource weaknesses and competitive deficiencies.
In October 1994, Continental was strapped for hash and burdened by debt. It had $2 billion debt from the preceding year in 1993. Its finance was shaky, wages and salaries had been cut, reducing the commission paid to travel agents. All these resulted employees low moral, low performance and alienated travel agents, causing them to steer customers to other carriers. So a well-secured financial plan is anticipated for the future. Cultural problems Corporate culture in a company refers to a company's values, beliefs, business principles, tradition, and way of operating and internal work environment.
Every company has it's own ingrained beliefs, behaviour and thoughts patterns, business practices, and personality that define it's corporate culture. A company culture is manifested in the values and business principles that management preaches and practices in its ethical standards and official policies dealing with employees union, stockholders, vendors, and community in whom it operates. A strong culture is a value asset when it matches's strategy and a dreaded liability when it doesn't. Unhealthy culture can undermine a company's business performance.