Case Study on "How Continental Was Saved"

Case Study 4 pages (1046 words) Sources: 4

[EXCERPT] . . . .

Continental was saved

Continental Airlines is a tale of two histories. Prior to the now famous corporate restructuring of the company's asset and revenue model, the company was mired in accrued long-term debt, increasing interest expense, high operating costs, and little to no working capital. Such a confluence of financial variables will greatly negatively impact a company to the point of starving profit. Starvation of profit is what leads to bankruptcy, which was almost the case for Continental during the mid-1990s.

Continental did not have an established strategic plan to guide the organization forward. Continental also lacked a strategic vision of the type of airline to be for the consumer. Leadership at Continental was lacking and redundant with failure having changed leadership ten times over ten years (Brenneman, 109). Indeed, the history of Continental did reflect an organization mired in a culture of mismanagement, inefficiency, and a non-commitment to customer service. The one shining star for Continental was the company's safety record. Safety is extremely important and is likely the only reason the company was attracting any customers for its flight services.

Define the Problem

The problem with Continental inherently lay with its lack of leadership. Competent leadership would have identified the lack of a comprehensive strategy for the organization as well as a lack of departmental goals to drive the organization to move forward toward progress at each of its core service components. The operating cost for Continental coupled with its increasing debt load was also a major problem. Restructuring the balance sheet to fre

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e up cash to create short-term liquidity as well as reduce operating cost by reducing low revenue generating assets which are often non-core business assets defines the parameters of the solution to where the major issues resided within Continental.

Additionally, the corporate culture at Continental was not up to par with the notion of improving operations and revenue. The lack of customer service and the inferior product, which includes the airline experience from start to finish, were major faults of Continental to which the DOT had ranked the airline at or near the bottom in all key customer satisfaction areas (Brenneman, 108). The problem with a lack of customer service has driven revenue down yet facilitated a high operating cost. The culture at Continental was indeed mired in inefficiency.

Key Issues

The key issue with Continental is with the leadership. Consultants are often brought in by the executive leadership to provide a recommended course of action for the company. In this case however a consultant sought out the Continental chief executive specifically to restructure the organization as a service for the organization's new owner. A company generally must be in relatively bad shape and ostensibly possesses a rather lucid solution for a consultant to propose a bold remedy. Continental was in such disarray that product quality was notably inferior to its competitors yet had a high operating cost and high debt and maintenance of debt structure.

Additionally, Continental had an expansive marketing campaign to which the campaigns promoted the product as superior to its competitors. The more informed customer and the customer with choices were aware… READ MORE

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Quoted Instructions for "How Continental Was Saved" Assignment:

“

Book: Harvard Business Review on Crisis Management

Authors Augustine, N. R., Thomas, R. J., Hill, L. Smith, N. C., & Quelch, J. A. (2000). Harvard Business Review on crisis management Boston, MA: Harvard Business School Press.

Case Study: Continental Airlines ï¿½*****" How Continental was saved

Chapter: 4

When Greg Brennan started working at Continental Airlines in 1993, it had already been through two bankruptcies and ten presidents in 10 years, the company was burning through money and employee morale was low. Today it ranks in the top five airlines in key indicators. What happened?

Instructions:

Analyze how this crisis occurred and developed

Explore the action plan that was developed

Identify the offense and defense tactics used

Analyze what security was needed

Evaluate the chain of accountability that was used in the crisis.

Write a backgrounder

Define the problem

Explore the key issues and explain how this issue could be best resolved.

Explain how you could avoid the crisis

Prepare to manage the crisis, recognize the crisis, contain the crisis, resolve the crisis, and profit from the crisis.

Conclusion

Outside resources can be used, if necessary

*****

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1. How Continental Was Saved. A1-TermPaper.com. https://www.a1-termpaper.com/topics/essay/continental-saved-airlines/79699. Published 2011. Accessed October 5, 2024.