Case Study

CASE STUDY: CONTINENTAL AIRLINESINC-2007 |1 BACKGROUND OF THE COMPANY

Continental Airlines, found by Walter Varney and Louis Mueller, began flying from El Paso, Texas to Pueblo, Colorado in 1934 and the CEO of Continental Airlines Inc. is Gordon Bethune. Continental Airlines is the world's fifth largest airline. The headquarters moved from El Paso to Denver in 1937 and then to Houston in 1982 following a merger with Texas International. Continental, together with Continental Express and Continental Connection, has more than 2,750 daily departures throughout the Americas, Europe and Asia, serving 133 domestic and 132 international destinations. More than 750 additional points are served through our alliance partners. With more than 43,000 employees, Continental has hubs serving New York, Houston, Cleveland and Guam, and together with its regional partners, carries approximately 67 million passengers per year.

•

Goals of Continental Airlines

To use technology to improve the flow of information between aviation manufacturers and Continental, and between Continental’s engineers and its 3,500 technicians in the field. The ultimate goal was to improve efficiency of maintenance and repair processes, reduce error rates and reduce and/or eliminate document management costs.

CASE STUDY: CONTINENTAL AIRLINESINC-2007 |2 VISION AND MISSION OF CONTINENTAL AIRLINES

 Vision Continental Airlines Inc. seeks to lead its industry in superior customer service, innovative technology, employee satisfaction, and environmental advances, at home and abroad.  Mission At Continental Airlines Inc., we strive to obtain excellent customer service and satisfaction through technological advances in on-line bookings and e-ticket purchases. We have strict security measures to ensure our customer’s safety. Our international flights cater to our customer’s cultures, with language, food choices, and movies. We have committed to making the lives of our customers, employees, vendors and as efficient as possible, through environmental advances we are dedicated to reducing fuel waste by cost effective innovation of smaller jet fleets. The use of high quality products and services will create a decline in cost to us, therefore we will be able to pass the

CASE STUDY: CONTINENTAL AIRLINESINC-2007 |3

•

Proposed Vision and Mission Statement

 Proposed Vision “Is to be the world's favorite airlines”.  Proposed Mission Statement “To be recognized as the best airline in the industry by the customers, employees and shareholders”. However the mission statement illustrates the role of this plan as the premier guiding principle, “The Go Forward Plan” at Continental. Their Go Forward Plan has four cornerstonesI.

Fly to Win (Market Plan) •

Achieve above-average profits in a changed industry environment.

•

Grow the airline to where it can make money and keep improving the business/leisure mix.

•

Maximize distribution channels while reducing distribution costs and eliminating non-value added costs.

II.

Fund the Future (Financial Plan) •

Manage company assets to maximize stockholders value and build for the future.

•

Reduce costs with technology.

CASE STUDY: CONTINENTAL AIRLINESINC-2007 |4 •

Generate positive cash flow and improve financial flexibility by increasing its cash balance.

III.

Make Reliability a Reality (Product Plan) • •

Deliver an industry-leading product the airline is proud to sell. Rank among the top of the industry in the key DOT measurements: on-time arrivals, baggage handling, complaints, and involuntary denied boarding.

• IV.

Keep improving the product.

Working Together (Employees) •

Help well-trained employees build careers they enjoy every day, Treat each other with dignity and respect.

•

Focus on safety, make employee programs easy to use, and keep improving communication.

•

Keep pay and benefits competitive in a changed industry environment.

However, the overall mission statement of the organization is better because the mission statement have more than four components Mission Statement Components: A. Customer B. Product and services C. Market D. Concern for survival growth and profitability E. Concern for public image- The Continental is committed to reducing greenhouse

emissions. F. Employees

CASE STUDY: CONTINENTAL AIRLINESINC-2007 |5

SITUATIONAL ANALYSIS •

THE EXTERNAL FACTOR  PEST ANALYSIS

A PEST analysis is an analysis of the external macro-environment that affects all firms. P.E.S.T. is an acronym for the Political, Economic, Social, and Technological factors of the external macro-environment. Such external factors usually are beyond the firm's control and sometimes present themselves as threats. The PEST Analysis that Continental Airlines Faced was:

I.

Political Segment

CASE STUDY: CONTINENTAL AIRLINESINC-2007 |6 Terrorism fear and political instability •

Fear of further attacks caused lower demand both domestic and international

•

Airspace closed for 4 days because in fear of the terrorism attack.

•

So the discussion about the relationship between the airlines and terrorism are the airlines don’t have control over the size of the market and security cost burden.

Economical Segment

II. •

Nearly impossible to achieve capacity growth.

•

Demand for air travel is not growing.

•

Business travel budgets were slashed by as much as 20% - 40%.

•

Delay in delivery of new Boeing 787s.

•

Causes the cost-savings in fuel to be delayed. Delay of aircraft delivery damages Continental’s long-term planning.

•

III. •

Increase in federal and airport taxes.

Sociocultural Segment Ageing Population (in developed countries): provisions/services for disabled pax, needing medical care and help at airport.

•

One-day trip as opposed to a two day trip (influences the flight times).

•

Some have time and no money; some have money and not enough time.

•

Change in marketing advertisement.

CASE STUDY: CONTINENTAL AIRLINESINC-2007 |7

IV. •

Technological Segment The usage of the internet such as internet bookings and electronic tickets (etickets).

•

Enables companies to hold conferences and meetings without travel.

•

Due to heightened security measures, i.e., the implementation of full-body scanners.

 PORTER 5 FORCES

The following Porter 5 Forces Model in Continental Airlines is as following:-

CASE STUDY: CONTINENTAL AIRLINESINC-2007 |8 No

Porter 5 Forces Components

High/Low

Discussion

1

Threat of New Entrants :

High

Airport

2

Profit and

government 4

The Entry Barriers in the airline

regulations, High Capital for

industry.

entering market.

Bargaining power of suppliers

High

Few suppliers support the large 4 number of established airlines, High

switching

costs

changing 3

Bargaining Power of Customers

High

in

supplier

Deregulation, Technology and 4 customer loyalty.

4

Threat of Substitute Products

Medium

For short distances, airplanes 3 will

5

be

substitute

with

Competitive Rivalry within an High

automobiles. High exit barrier, Industry is 4

Industry

cyclical

* Notes: Profit Figure 5- Strongest 1- Lowest

CONCLUSION The profit for the barrier to entries shows the strongest point because high regulations in airport and by government and the airlines consume high capital for entering the market. The profit of supplier r is in strongest point as it has high bargaining power. This is because few suppliers support the large number of established airlines and have the high switching cost in

CASE STUDY: CONTINENTAL AIRLINESINC-2007 |9 changing the supplier. Besides that, the bargaining power customers is high and its profits is also in strongest point as the carriers compete on low price the consumer retain some power in the purchase process and business consumers seek for the brand that they are loyal to so they are willing to pay any price.

Meanwhile, the threat of substitute product is medium and in moderate level of profit which not to say high or low. This is because, for short distances, airplanes will be substitute with automobiles or the consumers may use train or marine. Finally, the existing rivalry of Continental Airlines is high with strongest profit as the airline industry is cyclical and high exit barrier.

COMPETITIVE PROFILE MATRIX (CPM)

Critical Success Factors

Weights

CONTINENTAL AIRLINES Rating Weighted

DELTA AIRLINES Rating Weighted

SOUTHWEST AIRLINES Rating Weighted

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Domestic Market Positioning International Market positioning Consumer Loyalty Service Quality Price Competitiveness Product Quality Customer Service Financial Position Management Experience Organizational Structure Fuel and Labor Global expansion Totals

0.0 to 0.1 1 to 4 0.08 2

Score 0.16

1 to 4 2

Score 0.16

1 to 4 3

Score 0.24

0.1

4

0.4

4

0.4

4

0.4

0.09

3

0.27

3

0.27

3

0.27

0.1 0.07

3 4

0.3 0.28

4 3

0.4 0.21

3 3

0.3 0.21

0.07 0.09

3 4

0.21 0.36

3 4

0.21 0.36

4 4

0.28 0.36

0.05 0.1

2 3

0.1 0.3

2 3

0.1 0.3

2 4

0.1 0.4

0.09

2

0.18

3

0.27

4

0.36

0.06 0.1

2 3

0.12 0.3

2 3

0.12 0.3

2 4

0.12 0.4

1

2.98

3.1

3.44

Overall it seems that Southwest Airlines has best product quality, management experience, organizational structure and global expansion compare to Continental and Delta Airlines. Meanwhile, Delta Airlines has best service quality and Continental has best price competitiveness by ratings.  EXTERNAL FACTORS EVALUATION

An External Factor Evaluation (EFE) Matrix allows strategist to summarize and evaluates economic, social, cultural, demographic, environment, political, government, legal, technological, and comparative information.

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OPPURTUNITIES:

1. Online booking ticket up to 24% 2. Major competitor recently ceased operation 3. Purchase plan for new fuel-efficient 78 4. Emerging market and expansion abroad 5. raise money thought debt up 6.89% in 2006 6. moving aircraft from the gate 7. using ground equipments rather than aircraft engines 8. electronic ticket save time and reduce cost of airline ticket counter

THREATS:

C A S E S T U D Y : C O N T I N E N T A L A I R L I N E S I N C - 2 0 0 7 | 12 1. Rival merger from bankruptcy 2. Increasing fuel cost to 29.4% 3. Economic slow down between 2001-2005 4. Rival operating under bankruptcy protection 5. Increasing labour cost up to 24.5%

Assign each of factors a weight that range from 0.0 (not important) to 1.0 (very important). The weight indicates the relatives’ importance of the factor to being success in the firm’s industry. Opportunities often receive higher weight than threats, but threats can receive high weight if there are especially severe of threatening.

Assign a 1-4 to each key external factor to how effectively the firm’s current strategies respond to the factor, where 4 = the response is superior, 3 = the response is above average, 2 = the response is average and 1 = the response is poor. Ratings are based on effectiveness of the firm’s strategies. Ratings are thus company-based, whereas the weights in step 2 are industry-based.

Regardless of how many factors are included in an EFE Matrix, the total weighted score can range from a low of 1.0 to a high of 4.0, with the average score being 2.5. Total weighted score well below 2.5 characterize organizations that are weak internally, whereas scores significantly above 2.5 indicate a strong external position

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EFE Matrix Key external factor

Weight

Rating

Weighted score

Opportunities 1. Online booking ticket up to 24% 2. Major competitor recently ceased

0.12 0.08

4 3

0.48 0.24

fuel-

0.07

2

0.14

efficient 787 4. Emerging market and expansion

0.09

4

0.36

abroad 5. raise money thought debt up

0.09

3

0.27

0.08

2

0.16

0.12

2

0.24

operation 3. Purchase plan

6.

for

new

6.89% in 2006 moving aircraft from the gate using ground equipments rather than aircraft engines 7. electronic ticket save time and reduce cost of airline ticket counter

0.65 Threats 1. Rival merger from bankruptcy 2. Increasing fuel cost to 29.4% 3. Economic slow down between

1.89

0.08 0.08 0.07

1 3 2

0.08 0.24 0.14

2001-2005 4. Rival operating under bankruptcy

0.06

4

0.24

Protection 5. Increasing labour cost up to

0.06

3

0.18

24.5% Total

0.35 1.00

0.88 2.67

 In general, we can say that Continental Airlines Inc is effective because more than 2.5 that is 2.67.

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 TWSO (total weight score for opportunities)

1.89 =

TWO (total weight opportunities)

0.65 =

 TWST (total weight score for threats)

2.91

0.88 =

TWT (total weight threats)

0.35

=

2.51

 Further analysis, it seem that Continental Airlines Inc is more effective in addressing opportunities but not effective in addressing threats.

C A S E S T U D Y : C O N T I N E N T A L A I R L I N E S I N C - 2 0 0 7 | 15 •

INTERNAL FACTOR  FINANCIAL ANALYSIS

Period Ending Assets Current Assets Cash and Equivalents Short-Term Investments Net Receivables Inventory Other Current Assets Total Current Assets Long-Term Investments Property, Plant and Equipment Goodwill Intangible Assets Accumulated Amortization Others Assets Deferred Long-Term Asset Charges Total Assets Liabilities Current Liabilities Accounts Payable Short/ Current Long-Term Debt Other Current Liabilities Total Current Liabilities Long-Term Debt Other Current Liabilities Deferred Long-term Liability Charges Minority Interest Negative Goodwill Total Liabilities Stockholders' Equity Misc Stocks Options Warrants Redeemable Preferred Stock Preferred Stock Common Stock Retained Earnings Treasury Stock Capital Surplus Others Stockholders' Equity Total Stockholders' Equity Total Liabilities and SE

Changing in (%)

2007

2008

21.12 3.19 6.61 1.92 3.68 36.52 0.72 55.39 5.34 2.04 100

2,892,000 373,000 796,000 221,000 431,000 4,713,000 81,600 6,310,000 636,000 236,000 11,976,000

3,503,000 390,000 847,000 225,000 447,000 5,412,000 82,200 6,360,000 670,000 241,000 12,765,000

29.90 5.08 -

4,392,000 603,160 4,995,160 3,880,209 2,329,450 167,410 11,372,229

5,705,208 633,801 6,339,009 2,645,956 2,737,803 169,854 11,892,622

1000 (10,989) 1,536,000 (922,240) 603,771 11,976,000

1000 (10,978) 1,722,163 (839,607) 872,578 12,765,000

42.97 17.53 1.46 -

1000 (0.10) 12.12 (8.96) 100

C A S E S T U D Y : C O N T I N E N T A L A I R L I N E S I N C - 2 0 0 7 | 16 Budgeted Balance Sheet for Continental Airlines

Pro Forma Income Statement for Continental Airlines Period Ending

2007

2008

Total Revenue

15,376,826

18,010,876

Cost of Revenue

7,456,703

6,491,319

Gross Profit

7,920,123

11,519,558

Operating Expenses

-

-

Research Development

-

-

6,236,000

8,796,000

Non-Recurring

26,600

26,2000

Others

393,000

395,000

-

-

1,264,523

2,066,558

Total Other Income / Expenses Net

199,000

114,000

Earnings Before Interest and Taxes

1,463,523

2,180,558

368,000

353,000

1,095,523

1,827,558

Income Tax Expense

-

-

Minority Interest

-

-

1,095,523

1,827,558

Non-Recurring Events

-

-

Discontinued Operations

-

-

Extraordinary Items

-

-

(26000)

(26000)

Other Items

-

-

Net Income

1,121,523

1,853,558

-

-

1,121,523

1,853,558

Selling General and Administrative

Total Operating Expenses Operating Income or Loss Income from Continuing Operations

Interest Expense Income Before Tax

Net Income from Continuing Operations

Effect of Accounting Changes

Preferred Stock and Other Adjustments Net Income Applicable to Common Shares

C A S E S T U D Y : C O N T I N E N T A L A I R L I N E S I N C - 2 0 0 7 | 17

Financial Ratio Analysis

A. LIQUIDITY RATIO

2005

2006

Working Capital

Current asset (– ) 3,427,000 - 3,399,000 = Current liabilities 28,000

Current Ratio

Current asset / 3,427,000 / 3,399,000 = 1.01 4,129,000/ 3,955,00 Current liabilities times = 1.04 times

Quick Ratio

Current asset 3,427,000-201,000/3,399,000 4,129,000 – 217,000 / 3,955,000 = (-)Inventory / = 0.95 times 0.99 times Current liabilities

B.

4,129,000 – 3,955,000 = 174,000

LEVERAGE RATIO

2005 Debt to Total Assets Ratio

Total Debt / Total Assets

Long term Debt to Equity Ratio

Long-term debt / Total 5,057,000 / 226,000 = Shareholders’ Equity 22.38

Times Interest Earned

EBIT / Total Interest

2006

10,303,000 / 10,529,000 = 10,961,000 / 11,308,000 = 0.98 0.97 4,859,000 / 347,000 = 14.00

330,000 / 398,000 = 0.829 752,000 / 383,000 = 1.963

C A S E S T U D Y : C O N T I N E N T A L A I R L I N E S I N C - 2 0 0 7 | 18 Ratio

charges

C. ACTIVITY RATIO

2005

2006

Inventory Turnover

Sales / Inv. of times good

11,208,000 / 201,000 = 55.76 13,128,000 / 217,000 = 60.50

Fixed Asset Turnover

Sales / Fixed Asset

11,208,000 / 6,086,000 =1.84 13,128,000 / 6,263,000 = 2.10

Total Asset Turnover

Sales / Total Asset

11,208,000 / 10,529,000 = 1.06

Acc. Receivable Turnover

Annual credit sales / Acc. Receivables

11,208,000 / 687,000 = 16.31 13,128,000 / 747,000 = 17.57

Average Collection Period

Acc. Receivable / Total 687,000/ 11,208,000 /365 = credit sales / 365 22.37 day

13,128,000 / 11,308,000 = 1.16

747,000 / 13, 128,000 / 365 = 20.68 day

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D. PROFITABILITY RATIO

2005

2006

Gross Profit Margin

Gross profit / Sales 1,533,000 / 1,208,000 = 13.678%

4,562,000 / 13,128,000 = 34.75%

Operating Profit Margin

EBIT / Sales

Net Profit Margin

Net Income / Sales (68,000) / 11,208,000 = (0.607%)

343,000 / 13,128,000 = 2.61%

Return on Total Asset Net Income / Total (68,000) / 10,529,000 = (ROA) Assets (0.646%)

343,000 / 11,308,000 = 3.03%

Return on Stockholders’ Equity (ROE)

343,000 / 347,000 =98.85%

330,000 / 11,208,000 = 2.944 752,000 / 13,128,000 = % 5.73%

Net Income / Total (68,000) / 226,000 = Stockholders’ (30.01%) Equity

C A S E S T U D Y : C O N T I N E N T A L A I R L I N E S I N C - 2 0 0 7 | 20



INTERNAL FACTOR EVALUATION

A summary step in conducting an internal strategic-management audit is to construct an Internal Factor Evaluation (IFE) Matrix. This strategy-formulation tool summarizes and evaluates the major strengths and weakness in the functional areas of business, and it also provides a basis for identifying and evaluating relationships among those areas. Intuitive judgments are required in developing an IFE Matrix, so the appearance of a scientific approach should not be interpret to mean this is an all-powerful technique.

STRENGTHS:

1. Average yield per revenue passenger mile up to 12.29% over last two years 2. Company assets up $ 10,529,000 to $ 11,308,000 3. Poorer on-time performance = (73.4% 2006) compared to (76.9% 2005)

C A S E S T U D Y : C O N T I N E N T A L A I R L I N E S I N C - 2 0 0 7 | 21 4. Fifth largest airline = serves 148 domestic and 134 international destinations 5. Customer complaint rate reduce from (0.92 in 2005) to (0.88 in 2006) 6. Improved flight over the last 3 years = 77.8% 7. Denied boarding rate reduce from (1.92% in 2005) to (1.74% in 2006)

WEAKNESSES:

1. low employee morale 2. slow to adopt online booking 3. decrease employee incentive 4. increase mishandled baggage rate per 1,000 passengers = (4.76% in 2006) compared to (4.12% in 2006) 5. losses a net income of $ 343 million in 2006 after 2 previous years 6.

low market share

C A S E S T U D Y : C O N T I N E N T A L A I R L I N E S I N C - 2 0 0 7 | 22 Assign a 1-4 to each factor that indicate whether the factor represents a major weakness (rating=1), a minor weakness (rating=2), a minor strength (rating=3), or major strength (major=4). However, that strength must receive a 3 or 4 rating and weakness must receive a 1 or 2 rating. Ratings are thus company-based, whereas the weights in step 2 are industry-based.

Regardless of how many factors are included in an IFE Matrix, the total weighted score can range from a low of 1.0 to a high of 4.0, with the average score being 2.5. Total weighted score well below 2.5 characterize organizations that are weak internally, whereas scores significantly above 2.5 indicate a strong internal position.

IFE MATRIX

KEY INTERNAL FACTOR STRENGTH Average yield per revenue passenger

WEIGHT

RATING

WS

0.10

4

0.40

11,308,000 Poorer on-time performance =

0.10

4

0.40

(73.4% in 2006) compared to (76.9%

0.10

4

0.40

mile up to 12.29% over last two years. Company assets up $ 10,529,000 to $

C A S E S T U D Y : C O N T I N E N T A L A I R L I N E S I N C - 2 0 0 7 | 23 in 2005) Fifth largest airline = serves 148 domestic and 134 international

0.05

4

0.20

(0.92 in 2005) to (0.88 in 2006) Improved flight over the last 3 years

0.05

3

0.15

= 77.8% Denied boarding rate reduce from

0.05

4

0.20

(1.92% in 2005) to (1.74 in 2006)

0.05

3

0.15

KEY INTERNAL FACTOR WEAKNESES Low employee morale

WEIGHT

RATING

WS

0.05

2

0.10

Slow to adopt online booking

0.05

2

0.10

Decrease employee incentive

0.05

2

0.10

0.15

1

0.15

0.10

1

0.10

0.10

1

0.10

destinations Customer complaint rate reduce from

Increase mishandled baggage rate per 1,000 passengers = (4.76% in 2006) compared to (4.12% in 2006) Losses a net income of $ 343 million in 2006 after 2 previous years Low market share

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TOTAL

1.00

2.55

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C A S E S T U D Y : C O N T I N E N T A L A I R L I N E S I N C - 2 0 0 7 | 26

C A S E S T U D Y : C O N T I N E N T A L A I R L I N E S I N C - 2 0 0 7 | 27

 SPACE MATRIX

The axes of the SPACE Matrix represent two internal dimensions (financial strength [FS] and competitive advantage [CA] and two external dimensions (environmental stability [ES] and industry strength [IS]). These four factors are perhaps the most important determinants of an organization’s overall strategic position.

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Financial Strengths 1. The Continental Airlines net income of $ 343 million in 2006 after two previous years of losses. 2. The Continental Airlines operating profit of $ 6 million. 3. The Continental Airlines improving the revenues generated per

Ratings 1.0 1.0 3.0

revenue passenger mile flown $ 769 million and $ 6 million in network carriers. 4. The Continental Airlines of inventory increase $ 16,000 in

4.0

2005 to 2006 Total

9.0

Industry Strengths 1. Grow the airline to where it can make money and keep

4.0

improving the business or leisure mix. 2. Achieve above-average profit in

a

change

industry

environment. 3. Continental relies on its regional fleet for its domestic routes. Total Environmental stability 1. Continental reduces cost with technology 2. Continental operating costs are very close to the regional and

5.0 4.0 13.0 -2.0 -4.0

national carries, but significantly above the cost of the low cost carriers. 3. Facing stronger competitor from carriers operating under

-3.0

bankruptcy. 4. Fuel accurate for 25.7% of total expenses in 2006 at the largest

-3.0

U.S carriers Total

-12.0

Competitive advantage 1. Market share of Continental Airlines 7.7 percent 2. General decline in service quality in the industry for 2006

-3.0 -3.0

compared to 2005. 3. Continental was slow to adopt online bookings and currently

-3.0

has about 24 percent of its revenues from its web sites, however its use of electronic tickets (e-tickets) that reduced costs of online or travel agents to issue e-tickets. Total

-9.0

C A S E S T U D Y : C O N T I N E N T A L A I R L I N E S I N C - 2 0 0 7 | 29 Conclusion:ES Average is -12.0 ÷4 = -3.0

IS Average is 13.0 ÷3 =4.33

CA Average is -9.0 ÷ 3 = -3.0

FS Average is 9.0 ÷ 4 =2.25

Directional Vector Coordinates: x-axis: -3.0 + (+4.33) = +1.33 y-axis: -3.0 + (+2.25) = -0.750

The Continental Airlines should pursue Competitive Strategies

FS + 6 + 5 + 4 -1 +-2 3 -3 CA

IS

-4 -6

-5

-4 -3

-5 -6 ES

+1

+ 2 +3 + 4 + 5 +6

(-0.75,

C A S E S T U D Y : C O N T I N E N T A L A I R L I N E S I N C - 2 0 0 7 | 30

 GRAND STRATEGY MATRIX

Rapid Market Growth

Potential Strategies:Backward Integration Forward Integration

Quadrant II (Conservative)

Quadrant I (Aggressive) Horizontal Integration Market Penetration Market Development Slow Market Growth

Product Development

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Weak Competiti ve Position

•

Quadrant III (Defensive)

Quadrant IV (Competitive)

Strong Competitive Position

MAJOR ISSUE

MAJOR ISSUE CORPORATE LEVEL

•

No vice president specifically oversees international operations given its important at Continental.

•

No young officer in a top management lines. All top management people are 50’s and above.

•

Slow to adopt online booking low market share

•

Low market share

BUSINESS LEVEL

C A S E S T U D Y : C O N T I N E N T A L A I R L I N E S I N C - 2 0 0 7 | 32

•

FUNCTIONAL LEVEL

•

•

Does not make its organizational chart known to others.

•

Continental’s AQR score has declined for the last three years even though its ranking improved.

•

Continental’s on time performance shows that it has not meet the 80 percent of better standard for arrivals for the last fours years, of for departures for the last two years

•

Low employee morale

RECOMMENDATION

RECOMMENDATION FOR MAJOR ISSUE

CORPORATE LEVEL

BUSINESS LEVEL

•

Hire employee that has skilled in computer or online booking

•

Provide training for employee

C A S E S T U D Y : C O N T I N E N T A L A I R L I N E S I N C - 2 0 0 7 | 33 FUNCTIONAL LEVEL

Table above show the major issue that happen in Continental Airlines Inc. Major issue can be divided to 3 types, that is corporate level, business level and functional level. For business level, from the case study there is a weakness and major issue that company should eliminate in order to smoothen the operation of company. As we can see on the table, the problem for business level is slow to adopt online booking and low market share. The recommendation that we suggest for Continental is hire employee that has skilled in computer or online booking. Functional level is the each department in organization, for example human research department, finance department and others. Major problem for this level is Continental’s AQR score has declined for the last three years even though its ranking improved. The recommendation is they must provide training for employee

C A S E S T U D Y : C O N T I N E N T A L A I R L I N E S I N C - 2 0 0 7 | 34