Continental Airlines Case Study

04 18 2012 Ariel Kramer Summary Frank Lorenzo, in 1986, owned one of the largest airline net cash in ones chipss in the world. From a small investment in Texas International Airlines, after restructuring it and delivery the troupe to profitability, Texas Air bought Continental for $154 million. In direct to reorganize the mint as a more viable enterprise, Lorenzo took Continental into bankruptcy. This process caused a walk egress by many union workers, so Lorenzo replaced strikers with nonunion workers at a good deal lower wages. Low-cost operator and cut-rate prices was Lorenzos way to manage the company.After the flock appeard proscribed of bankruptcy, Lorenzo bought Eastern Airlines. In an environment of laboured losses, he instituted a severe downsizing curriculum. At first Lorenzos move appeargond to be successfully, only if he was wrong and Eastern went out of business. In 1993, Continental tumbled once again into bankruptcy. The court approved a reorganization plan for Continental to emerge from bankruptcy. In the early 90s, a sick airline industry caused heavy losses not upright for Continental but for all the companies. In 1994, Gordon Bethune became chief executive officer of Continental Airlines.He made dramatic changes. Since Continental was by far the worst among the nations 10 biggest according to the Department of Transportation, Bethune regenerate focus on on- cadence flights, lost luggage, and customer complaints. Customers began returning and Bethune transformed the hands in a happy one by giving them benefits through and through achieved goals. The hot companys manager apologized to their customers and asked them how we could be better being serving you. sooner of the companys old focus on cost savings, efforts were directed to putting out a better product.By giving employees bonuses for meeting certain standards, the incentive was created. Competing just on price basis leaves any firm vulnerable because it flock easily be ma tched by competitors. Q If you ran the airline, would you employ possibility X or theory Y? Why? Theory X and Theory Y were identified by Douglas McGregor. There is a conclave of pack who think, smell and therefore act according to the assumptions of what he called Theory X, and an another(prenominal) group moves according to the assumptions of Theory Y. The theories suggest the possibility of managing human productivity in business organizations, as well as view human mien within them.According to Theory X, humans do not generally uniform to work, or want to work as little as possible, as such, most workers apply to be monitored and threatened with punishment to achieve the objectives of the company. Employees empty responsibilities, prefer formal orders whenever possible, show little ambition and put natural rubber above all other factors associated with work. On the Other hand, Theory Y highlights the fact that when a favorable environment, the work fuck be a natural thi ng that gives pleasure. In this environment, an employee, when enticed with a reward, engages more in carrying out his task.In succession, the employee ceases to be just under orders and responsibilities and begins looking for some responsibilities (do not pull a fast one on this theory with too much freedom or lack of obligate it is just a different way of managing human resources within the organizational environment). X and Y theories argon interesting, but we must consider the stopping point of each company and the context that a team is to generate a higher profit. Today, many organizations that succeed show strong traits influenced by the theory Y.Theory Y management style develops an open, dynamic and democratic, through which run becomes a process of creating opportunity, releasing potential, removing obstacles, encouraging individual growth and brook charge on the objectives. His management style is democratic, creating opportunities and providing guidance on the obj ectives to the employee. It is up to administrators to provide conditions for discipline and recognition of characteristics such as motivation, responsibility and potential for development to employees of the company.In this method of administration, workers smoke improve their work through their attitudes and their relationship with other workers giving the firm a better place to meet its goals. We raft say that on the Theory X, it is an inhumane theory that discards the fact that workers are human beings, normal nation, and treat them as machines, as objects, or rather, as the property of the company. An employee who should do no more and no less than the work assigned to him, without making any complaints, criticisms or suggestions.A company that adopts the concepts of theory X, employees presents themselves unmotivated and lazy attitudes and behaviors, on the other hand, if one choose to Theory Y, people bequeath interact and present motivational characteristics. Managing i s not enough. Recognize the inevitably and capabilities of your employees are essential to good business development and administration. Q Evaluate the causes and the consequences of commonplace top executive changes such as Continental experienced in the days of Lorenzo? Any company needs a plan.Lorenzo was an administrator who did not have a way of following up with a plan. He often changed his strategy at the first sign of failure and did not give beat to his top managers try to reverse the situation. Over a layover of 10 years, nine presidents had left Continental. This caused a big hassle for the company since every time he changed his plan, time and money were dog-tired to organize another strategy. Planning and focus are important aspects for a company to acquire the desired success. Each manager thinks differently. New ideas are brought after each change in administration.With several points that can be improved in the company, the focus of each manager will bet a dif ferent problem. Giving time and working conditions to a round member to develop his projects is essential to achieve results and profits for the company. Lorenzo gave no time for his top managers and each exchange, a new mentality was deployed in the company. whizz needs time to put his plans into practice and show results. Usually without time there are no results and consequently, no profit. Inconsistent strategies are vulnerable. A manager should always follow a plan to maintain the self-reliance of investors.The lack of planning is not good for the reputation of the company in addition with relation to customers. Sometimes a strategy needs to be rewrite and modified to achieve new goals however, frequent and drastic changes can produce a big burnout among employees. The exchange of managers in the company may have been one of the causes of the low profitability in which Continental had suffered in the centre of attention 80s. Q It is 1994 and Bethune has just taken over. As his staff adviser he has asked you to prepare a report on improving customer renovation as quickly as possible.He has also asked you to design a program to inform both business and nonbusiness potential passengers of this new commitment. Be as specific as possible in your recommendations. First, the company should let everyone go to bed that there have been changes in the administration. By sending email to our customers could be a good way to do it. After a period in which the company had bad times, letting customers and investors kip down about the changes can bring their confidence back and consequently many customers would start firm with us.Second, we could create a program (perhaps a resound number) where customers can catch up with complaints and propose new ideas. Confidence is everything. We get to get our customers confidence back. Emailing people cost nothing. That is a flash and easy way to get customers to know about the change. Emailing people does not take s o much time either, and, therefore, we got a combination of non-cost and few time spent on this new advertisement. By letting customers know about this new commitment, the company can expect an increase on sales because of the return of many suffering customers who are going to be waiting for a better service.In order to get the expected better service, we get to listen to our customers complaints and suggestions. A phone number where people could leave messages or talk to a congresswoman would be a great way to get it done. It is another cheap program that would get the confidence of our customers back. These two ideas will bring the company more customers since they would be excited with the new managers ideas. This will also cause a higher profit for Continental Airlines in a short period of time without spending a mickle of money.