Chosen Strategy in bussines
Bethune came up with Change Program called ‘Go Forward Plan’ which touched upon every employee and every part of Continental. The program was to be implemented from 1995 to 2000. (Continental Airlines Website, 2008, and Thompson and Strickland, 2003) The plan consisted of four parts: (1) a market plan to identify and fly profitable routes, (2) a financial plan to arrest losses and make profits, (3) a product plan to improve offerings to the customers, and (4) a people plan to transform the company’s culture.
Simply stated, the intended outcome of the chosen strategy was to earn profits with the motivated employees by offering the best competitive services to the customers; in that process, operating costs would be cut and the most profitable routes would be chosen for flying. A discussion on the chosen strategy is presented in the following. The Market Plan It was about withdrawing from flying on unprofitable routes and operating only on profitable routes, which was called ‘Fly to Win’ Plan.
Bethune diagnosed that the low-fare/no-frills services with 100 smaller Boeing jets, a revenue-eating limb, did not attract the customers since they wanted full services for full charges. He figured out that about one-third of these low-fare services accounted for 70% of the losses and hence it was wound up. Similarly, in another cost-cutting move, Bethune closed the operations on Greensboro hub which was not generating enough traffic, and where the rivals were strong enough to let Continental do a better job.
Besides, some routes, where Continental had many flights with fewer passengers and which were not generating enough revenues, were put on the chopping block. In addition, on certain routes and certain hubs like the route from Newark to the Houston and Cleveland hub, more flights were added to realise the revenue potential available there. Besides, the fares were raised on the routes wherever it was justified and there would be no negative reaction from the customers.
Bethune’s change interventions also covered disposal of large-sized A300 Airbuses whose maintenance was expensive and whose occupancy rate was 50%-60% on many flights. Overall, Continental had concentrated on high traffic routes for higher revenues and economical maintenance. To attract passengers, especially those of Fortune 500 who were lost due to removing the attractive features of ‘Onepass’ frequent flyers programme, Bethune spoke to the travel agents, recast the commission plans and revised the features of loyalty packages. Financial Plan
The change managers rescheduled some components of the debt mostly payable on its aircraft fleet, and in some cases renegotiated the interests rates and lease payments. By cutting certain operations, increasing revenues on profitable routes and renegotiating interest rates and the like, a profit of $45 million was projected for 1995 in the place of $200 millions of loss recorded for 1994. Briefly stated, the financial plan was targeted for generating enough cash for operations and arresting of the continuous losses, which was expected to result in a hopeful outlook among all the members of the organisation.