Situation Analysis: Classic Airlines Essay

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Situation Analysis: Classic Airlines

Classic Airlines has grown to an organization of 32,000 employees since starting operations. Last year the company recorded $10 million profit on $8.7 billion in sales. While the airline is profitable, the stock prices have decreased by 10% in the past year and employee morale has been at its lowest due to increase scrutiny on the airline industry from all sectors of the economy. (Classic Airlines, 2008) Classic Airline's customer loyalty is on the decline as evidenced by the 19% decrease in the number of Classic rewards members and 21% decrease in flights per remaining member. The company is also facing a restrictive cost restructure due to overly optimistic expansion plans based on anticipated
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Therefore, the methodology used and the operational philosophy of Classic needs to be aligned with such a strategy. These issues have created opportunities for Classic Airlines to address the root cause of the problem. Additionally, the paper will discuss the situation, stakeholder perspectives, ethical dilemmas and the end-state vision for classic airlines.

Describe the Situation
Issue and Opportunity Identification

A main issue for Classic Airlines is the continued declining stock price due to failed customer service programs, which has caused the stock to fall 10 percent from the previous year. Symptoms of this main issue include 19 percent decrease in the number of Classic Rewards members, rising fuel, labor cost, and a mandate for a 15 percent cost reduction over the next 18 months by the Board. Classic Airlines has an opportunity to change these issues in to turn positive outcomes. Classic Airlines has created a Classic Reward team that includes Chief Marketing Officer Kevin Boyle, Vice President (VP) Customer Service Renee Epson, and Senior VP Human Resources John Hartman has been challenged to redesign the rewards program without lowering the price or incurring more cost. The Classic Reward team came to an agreement that the customer service is the main issue at Classic Airlines. Classic
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