Description
This is a presentation about turnaround strategy of continental airlines and kodak.
Turnaround Strategy
Continental Airlines
The Crisis
?
Company had already been through two Chapter 11 proceedings for bankruptcy protection (1983 & 1990)
? ? ? ? ? ?
Ranked last among 10 largest carriers for aircraft arrivals highest number of mishandled baggage / 1000 passengers Highest number of complaints / 100,000 passengers Passengers denied boarding due to overbooking & other problems Low morale & disillusionment among employees. Over a 10 year period 10 new CEOs & constant re-org, strategy shifts etc.
?
Company strapped for cash & burdened by debt (approx $2 bn)
Winds of change??
?
Gordon Bethune joins Continental Airlines in Feb 1994 (as President & COO)
Not so... why?
?
COO was also getting disenchanted - CEO was not supporting his ideas unless they reduced costs too.
The Revival
? ? ?
The Market Plan (To fly more profitable routes) The Financial Plan (To put the company in the black by 1995) The Product Plan (Improve continental's offerings to its customers)
?
The People Plan (To transform company culture)
The Market Plan
? ?
Stop doing things that were loosing it money Concentrate on market strengths (turns out continentals customers preferred to pay full fare for comfortable travel)
? ?
Cut back on Continental Lite Closing hubs that were not profitable & have other hubs service these regions
?
Reduce excess capacity & variation in fleet type (thus also saving on maintenance)
?
Concerted marketing campaign to win back customers (especially business travelers) & get new ones
?
Work in tandem with travel agents & increase their commission
The Financial Plan
? ? ?
Renegotiate aircraft lease payments Refinance some of Continentals debt at lower interest rates Postpone some debt repayments
?
Raise fares on certain profitable routes
The Product Plan
?
Improving the on time arrivals of flights & provide incentive to employees to achieve that target
?
Stricter baggage handling processes in place Improve overall flying experience of customers
?
The People Plan
? ?
A general & conceptual effort rather than specific actions However main areas were
? ? ?
Teamwork Cooperation Trust & Confidence
Executing the Program
?
Made the office of the Chairman & CEO more accessible
?
Did not shy from cost cutting ventures (closing of maintenance ops
in LA)
?
Implemented steps to have he general management staff
approachable
? ?
Display of uniformity with all planes having similar paint scheme Working with travel agencies as partners
?
? ?
Code sharing agreements with other airlines
Improving salary & benefits of employees to industry standards Getting better financial systems in place
Now…
?
Continental Airlines designated Airlines of the year- 1996 and 2001
?
Known for
? ?
employee friendly culture superior passenger service
? ?
Designated as Best Trans-Atlantic Airline by OAG Honored for having the best frequent flyer program
?
?
Fortune Magazine- Second most admired US Airline
2001- Aviation week and space technology gave Continental Airlines highest ratings for "outstanding management".
Kodak Before 1993
? ? ?
Different businesses – financed by debt Very high costs – admin distribution costs Paternalistic and inward looking
?
$10b R&D expenditure – added noting to the earnings
1993 George Fisher (HR)
?
Restructuring & reengineering
?
? ? ? ?
Improving traditional photographic products
Main strategy – downsizing – 20k of 110k Stock options instead of bonus Staff improvement Detailed performance reviews of Sr. Managers
?
Minimum 40 hours of training
Marketing
?
9 autonomous global business units – mktg, sales and product
development staff
? ? ? ? ? ?
CMO - corporate branding, strategic planning and strategic alliances Brand management council – new products, new ads, agencies etc. Sales – off season price discounting 500 photo specialty stores Promotional campaign – new technologies Single use throwaway photos – new product ’96
Finance
?
All this cash was used to pay off long term debt of US $8b to US $1.6b
?
Yet new products – no film cameras and Advantix
Conclusion
? ? ?
HRD incentives Sales push Product market refocusing
?
?
Strategic reorientation
Debt reduction
-$1.5b to $20b
doc_599586110.pptx
This is a presentation about turnaround strategy of continental airlines and kodak.
Turnaround Strategy
Continental Airlines
The Crisis
?
Company had already been through two Chapter 11 proceedings for bankruptcy protection (1983 & 1990)
? ? ? ? ? ?
Ranked last among 10 largest carriers for aircraft arrivals highest number of mishandled baggage / 1000 passengers Highest number of complaints / 100,000 passengers Passengers denied boarding due to overbooking & other problems Low morale & disillusionment among employees. Over a 10 year period 10 new CEOs & constant re-org, strategy shifts etc.
?
Company strapped for cash & burdened by debt (approx $2 bn)
Winds of change??
?
Gordon Bethune joins Continental Airlines in Feb 1994 (as President & COO)
Not so... why?
?
COO was also getting disenchanted - CEO was not supporting his ideas unless they reduced costs too.
The Revival
? ? ?
The Market Plan (To fly more profitable routes) The Financial Plan (To put the company in the black by 1995) The Product Plan (Improve continental's offerings to its customers)
?
The People Plan (To transform company culture)
The Market Plan
? ?
Stop doing things that were loosing it money Concentrate on market strengths (turns out continentals customers preferred to pay full fare for comfortable travel)
? ?
Cut back on Continental Lite Closing hubs that were not profitable & have other hubs service these regions
?
Reduce excess capacity & variation in fleet type (thus also saving on maintenance)
?
Concerted marketing campaign to win back customers (especially business travelers) & get new ones
?
Work in tandem with travel agents & increase their commission
The Financial Plan
? ? ?
Renegotiate aircraft lease payments Refinance some of Continentals debt at lower interest rates Postpone some debt repayments
?
Raise fares on certain profitable routes
The Product Plan
?
Improving the on time arrivals of flights & provide incentive to employees to achieve that target
?
Stricter baggage handling processes in place Improve overall flying experience of customers
?
The People Plan
? ?
A general & conceptual effort rather than specific actions However main areas were
? ? ?
Teamwork Cooperation Trust & Confidence
Executing the Program
?
Made the office of the Chairman & CEO more accessible
?
Did not shy from cost cutting ventures (closing of maintenance ops
in LA)
?
Implemented steps to have he general management staff
approachable
? ?
Display of uniformity with all planes having similar paint scheme Working with travel agencies as partners
?
? ?
Code sharing agreements with other airlines
Improving salary & benefits of employees to industry standards Getting better financial systems in place
Now…
?
Continental Airlines designated Airlines of the year- 1996 and 2001
?
Known for
? ?
employee friendly culture superior passenger service
? ?
Designated as Best Trans-Atlantic Airline by OAG Honored for having the best frequent flyer program
?
?
Fortune Magazine- Second most admired US Airline
2001- Aviation week and space technology gave Continental Airlines highest ratings for "outstanding management".
Kodak Before 1993
? ? ?
Different businesses – financed by debt Very high costs – admin distribution costs Paternalistic and inward looking
?
$10b R&D expenditure – added noting to the earnings
1993 George Fisher (HR)
?
Restructuring & reengineering
?
? ? ? ?
Improving traditional photographic products
Main strategy – downsizing – 20k of 110k Stock options instead of bonus Staff improvement Detailed performance reviews of Sr. Managers
?
Minimum 40 hours of training
Marketing
?
9 autonomous global business units – mktg, sales and product
development staff
? ? ? ? ? ?
CMO - corporate branding, strategic planning and strategic alliances Brand management council – new products, new ads, agencies etc. Sales – off season price discounting 500 photo specialty stores Promotional campaign – new technologies Single use throwaway photos – new product ’96
Finance
?
All this cash was used to pay off long term debt of US $8b to US $1.6b
?
Yet new products – no film cameras and Advantix
Conclusion
? ? ?
HRD incentives Sales push Product market refocusing
?
?
Strategic reorientation
Debt reduction
-$1.5b to $20b
doc_599586110.pptx