Continental Airlines

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Case Study: Continental Airline´s Tech Strategy Takes Off

Continental Airline’s
Tech Strategy Takes Off

Amrita Ranchhod 152109103

Amrita Ranchhod

Página 1

Case Study: Continental Airline´s Tech Strategy Takes Off

Company profile
Continental Airlines is the world’s fifth largest airline. 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 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 airline must provide an IT infrastructure to support its global reach. Its IT department delivers services for internal operations as well as for its customer service and external Web applications.

0. Make a small description of the case pointing out the main management issues.

This case study demonstrates how Continental Airlines adopted new strategies and how they got successful when most of the U.S. based airlines were in risk of bankruptcy after the 9/11. The company wasn’t very highly regarded because of its organizational culture and it’s IT and Biz. Strategy weren’t 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 Continental’s strategic goals After the 9/11, the nation’s airline industry struggled to regain altitude, because of the loss of billion of dollars since a smaller number of people wanted to fly which made thousands of people loose their jobs. But it is believe that the U.S. airlines were already struggling before the attack due to broader economic and competitive issues. Also, economics problems in the U.S. and Japan and the weakening of the dollar has not 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 Página 2

Case Study: Continental Airline´s Tech Strategy Takes Off

markets, and all airlines had to face soaring fuel prices over the last years. According to Phil Baggaley, the senior airlines credit analyst for rating agency Standard & Poor’s, “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 lead to an unused aircraft, demand for new planes went down which didn’t help the manufacturers and their suppliers.

To understand better Continental Airline’s external environment I will use SWOT analysis:

Strenghts  Revenue : Revenues increased of 17.1% from 2005 to 2006  Profits: Operating 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.  Target Market: Having a well-defined target market, Continental provides services to upper-class and business travelers.  IT Integration  Clear Vision

Amrita Ranchhod

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Case Study: Continental Airline´s Tech Strategy Takes Off

Weaknesses  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...
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