Continental Airlines

exercise Study Continental Airline? s Tech dodging Takes Off Continental Airlines Tech Strategy Takes Off Amrita Ranchhod 152109103 Amrita Ranchhod Pagina 1 Case Study Continental Airline? s Tech Strategy Takes Off Company profile Continental Airlines is the worlds fifth largest air hose. Continental, together with Continental Express and Continental Connection, has more(prenominal) than 2,750 daily departures throughout the Americas, Europe and Asia, serving 133 domestic and 132 inter state of matteral destinations. more than 750 additional headings are served via current alliance partners. Continental has hubs serving New York, Houston, Cleveland and Guam, and together with its regional partners, carries approximately 63 million passengers per year. Based in Houston, Texas, the respiratory tract must provide an IT infrastructure to support its global reach. Its IT department delivers dishs for internal operations as well as for its node service and immaterial Web applicati ons. 0. Make a small description of the case pointing out the main direction issues.This case study demonstrates how Continental Airlines adopted new strategies and how they got lucky when most of the U. S. based airlines were in risk of bankruptcy after the 9/11. The company wasnt very highly regarded beca work of its organizational culture and its IT and plot. Strategy werent aligned. Continental slowly reinvented itself by using new strategies, Worst to First which made them one of the most admired global airline in the world. They used IT as a service centre and aligned Biz. with IT. 1.Describe the external environment and Continentals strategic goals After the 9/11, the nations airline fabrication struggled to regain altitude, because of the going of billion of dollars since a smaller number of sight wanted to fly which made thousands of people gentle their jobs. But it is believe that the U. S. airlines were already struggling before the attack due to broader economic and private-enterprise(a) issues. Also, economics problems in the U. S. and Japan and the weakening of the dollar has non helped for the recovery of the airline industry. See appendix 1) The legacy carriers American Airlines, Delta Air Lines, United, Continental Northwest and US Airways had to face new lower-cost competitors entering their Amrita Ranchhod Pagina 2 Case Study Continental Airline? s Tech Strategy Takes Off markets, and all airlines had to face soaring fuel prices over the last years. harmonize to Phil Baggaley, the superior airlines credit analyst for rating agency Standard & Poors, The legacy carriers were forced to pull back their capacity and that opened a vacuum that the low-cost carriers could fill.I think 9/11 made a material difference in that way -it accelerated a trend that was already occurring. (www. money. cnn. com). This preface to an unused aircraft, demand for new planes went down which didnt help the manufacturers and their suppliers. To understa nd better Continental Airlines external environment I go away use SWOT analysis Strenghts ? Revenue Revenues increased of 17. 1% from 2005 to 2006 ? Profits run Profit during fiscal year 2006 operating profit was $468 million, compared to operating loss of $39 in 2005.Net Profit during fiscal year 2006, net profit was $343 million, compared to net loss of $68 in 2005. ? CEO The CEO of Continental Airlines played and important role in stimulating the company. The Go Forward Plan made possible to focus on every aspect of the organization. ? crisscross Market Having a well-defined target market, Continental provides services to upper-class and business travelers. ? IT Integration ? Clear Vision Amrita Ranchhod Pagina 3 Case Study Continental Airline? s Tech Strategy Takes OffWeaknesses ? Financial Difficulties The company had some financial problems with great amount of debts and operating at loss. ? High Operating Costs Continental had a high operating cost because they decided to attract consumers by pass in-flight meals preventing them from going to other airlines. Opportunities ? Reestablishing Customer Base The airline industry is becoming normal as in returning to pre-9/11 status. ? Align new marketing dodging, more consumer oriented, with low cost strategies. Threats ?September eleventh The public lost faith in the airline industry after the September 11th and for many companies this meant bankruptcy. Even after this, the majority of the airline industry had lower profits. ? Oil prices were getting high ? Increasing Rivalry As stated in the case study, Continental Airlines was ranked at the very foundation of the list of airlines and regularly received low marks for customer service. Its external environmental was very instable and each carrier was trying very hard to hold open the company from bankruptcy.The company had 45 different CRM systems and the carrier had no way to verify who the most important customers were. The companys strategy was ma inly to mark and increase the loyalty of continentals most important customer and also to find new customers even outside the U. S. keeping prices stable and increase routes. The way they implemented this strategy was basically creating and IT department which would improve customer services and operations. Bethunes Worst to First business strategy made organise the Amrita Ranchhod Pagina 4 Case Study Continental Airline? Tech Strategy Takes Off companys structure by launching new service routes. But according in Tera data (www. teradata. com), Bethunes Worst to First business strategy relied little on technology. Bethune began by reshaping the company with his Go Forward Plan, which motionlessness guides the business today. The Go Forward Plan has four interrelated parts, dealing with the airlines product, finances, market and people ? Fly to Win Understand what products customers want and what they are willing to pay for. ? Fund the Future Manage costs and cash flow so the airl ine can continue to operate. Make reliability a Reality Get customers to their destination safely, on time and with their luggage. ? Work Together Create a culture where people want to come to work. The endorse phase of Bethunes strategy, First to Favorite, the IT team decided to transform the airlines CRM systems into one which made possible to save around $6 million costs in operating costs. 2. What are the new management capabilities and business processes? Are they information-intensive? How they work? Continentals success was due to the use of innovative technologies to improve internal operations and customer service.The real-time data warehouse provided data from 25 internal operational systems and two external data sources loaded into the data warehouse. The source systems included schedules, inventory, employee and crew payroll, airline tickets, customer care, and others and it was applied to areas much(prenominal) as revenue management, customer relationship management, flight management dashboard and fraud detection. The CVM provided by Continentals database, allowed them to Amrita Ranchhod Pagina 5 Case Study Continental Airline? s Tech Strategy Takes Off k instanter the most profitable customers which helped the marketing department in customer segmentation.Management understood that good quality information was critical. According to Jane Beeby, Continentals elderberry bush Director, as part of its strategy to optimize service, Continental maintains unique 800 numbers for various types of customers. For example, international fliers dial a different number than do customers schedule domestic flights. Rewards Program members break their own toll-free line. To even more precisely identify individual customer needs, callers may also respond to a series of network-level prompts before being connected to an agent. (www. cisco. com).The new capabilities and business processes attained by the company made possible to know more about(predicate) t heir customers which hunt to more profit and consequently to a better customer service. 3. Does IT necessitate a strategic role at Continental? (Apply Porters 5 forces model) As an early adopter of new technology, Continental Airlines uses the latest information technology allowing the company to progress. I believe that IT was a brilliant opportunity to expend in the future providing real-time business intelligence which made possible to save $500 million in costs and revenues produced a ROI (Return on Investment) of more than 1. 00% (See Appendix 2). One thing worth mentioning is that one of the key resources at Continental were the employees. More productive employees lead to better margins. The ability to deal with problems efficiently, in turn, created job satisfaction, as employee see their efforts give way results. According to Porters analysis, The Five Forces determine the competitive intensity and therefore the attractiveness of a market. Amrita Ranchhod Pagina 6 Case S tudy Continental Airline? s Tech Strategy Takes Off Threat of New Entrants Continental is implementing a unique strategy making hard for new companies to enter the market and uncrease barriers. Therefore, there is a low threat of new entrants because the service they are offering is difficult to repeat ? Bargaining Power of Suppliers The negotiate power of suppliers will decrease because as Continental is controlling more information about customers therefore they are offering exactly what costumers need which makes possible to build brand awareness the bargaining power of the company increases. Threat of Substitutes The IS strategy gives to Continental Airline a competitive advantage because they control customers information therefore they are able to capture loyalty of them and minimize substitutes. ? Bargaining Power of Buyers Since there is a new IS the company is increasing barriers for customers switching costs. The buyers are becoming more loyal and establishing a bound t o the company services which makes difficult for them to change. Therefore the bargaining power of buyers is decreasing.Conclusion The information systems at Continental have a strategic partake in because they have a major positive impact in ? Increasing Industry Rivalry ? Lowering Customer Bargain Power 4. Regarding their business value analyse the IT systems mentioned positioning them in McFarlanss Matrix. According to the McFarlans Matrix listed bellow, for example CRM (Customer Relationship Management) plays a strategic role in Continentals Airline, because the existing and future expansion is vital to the inviolables success. CRM made possible the Amrita Ranchhod Pagina 7 Case Study Continental Airline? s Tech Strategy Takes Off lose relationship amongst the companys customers and each employee, giving these last ones better information about specific needs of their customers. Loyalty is very important for them, so by using the data warehouse with real time information ch eck offd higher customer retention. The CRM system also facilitated crossselling (offering customers complimentary products based on their previous purchases) and up-selling (offering customers premium products in the same category). Amrita Ranchhod Pagina 8 Case Study Continental Airline? s Tech Strategy Takes Off 5. How the process of Biz and IT alignment should be performed at Continental?Make 3 recommendations. Alignment is always going to be a moving target. Business objectives are in change, while IT tends to move in more stable patterns. From my point of view the key recommendation is to focus on what can the company achieve now and take one step at a time. For them to be aligned there should be a balanced in terms of communication. Business people speak in business linguistic process and IT people in technical terms. To solve this problem, we should put this two together and make them find their own language and this involves communication, process alignment and value demon stration.These people must have the right tools and skills to work together so they can arise the best strategies. In my point of view, creating a new department, in theory is easy but they are always full of obstacles and always busy. For example, employees profiles can be created to gather information about their competencies. Also within the organization make audit objective as ensuring a strong coupling between the business operations and the IT operations and to ensure that both the operations align with the overall business strategy. Amrita Ranchhod Pagina 9 Case Study Continental Airline? Tech Strategy Takes Off References Chris Isidore, (September 8th 2006), Airlines motionlessness in upheaval, 5 years after 9/11 www. money. cnn. com Acessed at 15th November, 2009 Teradata Corporation, Case-Study Data Warehousing www. teradata. com Assessed at 16th November, 2009 Cisco Systems, Inc, Soaring with skilful Contact Management www. cisco. com Assessed at 16th November, 2009 A mrita Ranchhod Pagina 10 Case Study Continental Airline? s Tech Strategy Takes Off Appendix 1 Amrita Ranchhod Pagina 11 Case Study Continental Airline? s Tech Strategy Takes Off Appendix 2 Amrita Ranchhod Pagina 12Continental AirlinesMeagan Young Chapter 10 I believe that Lorenzos confrontation with Continentals unions could have been conducted a different way. They could simply listen to each others point of view and not interrupt with one another is speaking. This way each other can hear their viewpoint and maybe understand one another better. If Lorenzo would have listened to what his employees were trying to say, he may have gotten melodic themes from them and used them for his company. twain these companies experienced commonalities and contrasts.Both Bethunes and Southwest Airlines experienced debt issues. Both companies were puzzled as how to deal with this situation. Both companies however had the similar approaches as how to deal with the debt situations. Bethune definit ely has a better management style than Lorenzos. this is because Bethune was willing to come up with solutions to come out of debt. He also made dramatic changes. In 1995, through a renewed focus on flight schedules and incentive pay, he greatly improved on-time performance, on with lost-baggage claims and customer complaints.Better communications was also a key element in improving employee relationships and the spirit of teamwork. Information was shared with employees through newsletters, updates on bulletin boards, email, voice-mail, and electronic signs over world wide of the mark places. As you can see Bethune really wanted to improve Continental Airlines because he wanted what was best for the company. Bethune proved a master at changing employees attitudes and their sense of pride. Few top executives ever faced such a negative workforce, reflecting the Lorenzo years. But Bethune changed all this, and in such a short time. is open-door policy and open houses to encourage empl oyees to interact with him and other top executives was a simple gesture, but so effective, as was his opening wide the channels of communication about company plans. The incentive plans for improving performance, and the freeing up of employee initiatives by abolishing the rigidity of formal policies, were further positives. He engendered an atmosphere of teamwork and a personal image of an appreciative CEO. This goes to show that Bethune is a trustworthy man and cares much about his company and the employees.The paint issue shouldnt be a big issue. It gave the company a new look I think. Giving employees some diverseness of reward such as a bonus or incentive seems ideal. When they reach a certain goal or percentage and show they are hardworking employees, they could receive one of these. Before doing this I would oversee how they are working to make sure they are doing what they are supposed to. After studying their work ethics I would then determine what kind of reward I would present to them. Lack of communication is one of the biggest issues with not only top executives but anyone in the company.Im sure not all of the upper management had the same ideas for Continental, and because of this some were left behind. This could be a downfall because one of them could have had a really good idea to present to the company. Because workers are not getting paid what they should, you can offer them something else. You can offer them better company benefits. This can help the employee tremendously, especially if they have a family. You could also tell the workers that if they reach a certain percentage that they can receive a raise. All of these ideas can motivate an employee to work harder at their job.