1.Continental Airlines, like other companies in the airline industry, is a volatile organization. However, Continental has many strengths that have allowed it to prevail through tough times and avoid complete ruin. The CEO of Continental Airlines played an important role in reviving the company.
His “Go Forward Plan” vocalized the strategy of the company and focused on every aspect of the organization. Continental has a well-defined target market, providing services to upper-class and business travelers. The company has also been able to operate in the face of adversity (such as 9/11) due to effective decision-making.
2.The weaknesses that have plagued Continental Airlines include low morale which prohibited workers from accepting the new company strategy. The company also experienced financial difficulties with large amounts of debts and regularly operating at a loss.
Continental has also limited its customer base by offering only more pricey flights, even in times of low demand. Finally, Continental faces high operating costs as a result of in-flight meals and other amenities.3.Fortunately, there are several opportunities in the airline industry of which companies will be able to take advantage. First, the airline industry is reviving and passenger levels are now returning to pre-9/11 status. Companies can offer high degrees of service and reduce costs through the use of the Internet, such as online ticket sales, flight seating charts, and plane information for passengers.
Several organizations were required to down-size or exited the industry as a result of huge demand decreased for airline flights, which allows other airlines to take market share. The airline industry has also experienced a shift in consumer preferences to low-cost, point-to-point flights.4.Although the industry is making a comeback, there are several threats to airlines that could affect their long term success.
Even though it is one of the opportunities in the market, changing customer preferences are also a threat to some upper-class airlines. Consumers are demanding fewer frills, less costs, and fewer connecting flights. Financing is becoming more difficult to achieve in the industry due to the fact that so many companies are failing to turn profits and are filing for bankruptcy.
Those organizations that have survived the recent down-turn in the industry are gaining the ability to acquire other companies through mergers and acquisitions. The industry is also threatened by increased technology, such as video conferencing, that has decreased the demand for business travelers.5.The critical issue for Continental Airlines is to remain competitive in a struggling environment in spite of discount airlines.
6.One alternative for Continental is to continue operating as they have done in the past. This would enable Continental to continue to use their current business plan and strategy. Their employees and customers are now accepting of the strategy and policy that took so long to instill in the organizations.
Continental could also avoid the costs of revamping their planes and flight routes. However, this strategy does not allow them to directly to compete with discount airlines. This strategy would also threaten the existence of the organization due to changing consumer preferences.Another option for Continental Airlines would be to surrender their current strategy and adopt the strategy of discount airlines – low cost, no frills, and direct flights. This allows Continental to compete directly with airlines such as Southwest.
This will allow them to decrease costs and maintain their competitive stance in the market. However, the company will have to incur high costs to revamp their planes and flight paths. The company will also have to re-teach the corporate culture that took so long to take hold initially. This will create low employee moral and make current customers skeptical of their new motives.
The best alternative for Continental would be to continue to cater to high-class and first-class travelers, while increasing the number of coach (no-frills) seats. Continental can more directly compete with Southwest while maintaining part of their identity as an upper-class airline. The company will open itself to new customers and be able to retain those few who still demand high costs.
One disadvantage to this is that Continental may still have higher costs than other companies to maintain their business and travel class status. The company will also incur some costs to convert their planes from their current style to having two distinct seating sections that experience different amenities.7.Expanding the number of coach seats while maintaining their identity as a high-class airline would be the best option for Continental to compete with discount airlines. With this strategy, Continental can experience the best of both worlds. They will maintain their current business-class travelers while gaining passengers concerned about low fares. There is not high enough demand for high-priced flights, regardless of the service included, for Continental to continue their current strategy.
However, the customers that they would lose and the operation troubles they would face are too great for the company to venture into a solely discount strategy. The organization will have to incur little costs to decrease the number of business-class seats and replacing them with coach seats, but the benefit derived from entering a new niche in the market would greatly outweigh these costs and allow them to remain competitive in the industry.