The Story of Continental Airlines remarkable turnaround in 1994 is Essay

The Story of Continental Airlines remarkable turnaround in 1994 is well known in business policy and strategy classes worldwide - Essay Example Continental Airlines is presently America’s fifth largest airline that carries around 50 million passengers a year across the globe to more than 227 destinations. But a couple of decades back in 1993, it was facing its third and final bankruptcy when the new CEO Gordon Bethune and Consultant, Brenneman created history in the turnaround of Continental Airlines. Their leadership initiatives turned the loss of $613 million in 1994 to $224 million profit in 1995 (Brenneman, 1998). The discontented and highly demotivated workforce became the major enabling elements of success that contributed to its renewal. The turnaround strategy was critical factor that was conceptualized around four simple strategic principles that required strong belief, persistence and constant motivation. The creative approach highlighted leaders’ vision which was used to inspire the workforce for higher productive outcome. Turnaround strategy of Bethune and Brenneman was mainly focused on how the firm’s falling fortunes can be turned around into success. They did not place undue emphasis on cost cutting but rather made judicious plans for building strong team of high performance members who believed in collective actions and shared goals. The leadership of new management was exemplary in their forward looking outlook and expedited the process of recovery with single focus on defined goals and objectives. The strategies that were implemented are as follows: 1. Strategic action plans for recovery Bateman and Snell (2009:132) assert that strategic plans facilitate organizations to be innovative and develop linkages to meet the needs of the markets. Flexibility of approach and well laid out plans provide firms with clear direction for the future (Montgomery, 2008). In Continental case, action plan was made with feedback from the customers and employees, which was communicated across the workforce. The recovery plan was distinct in its simple targets but strict in its timeframe so that recovery could be fast. The necessity of fast action was communicated to workforce so that they could understand and become proactive in making it a success. It worked in Continental case because the high frustration in the workforce was mainly due to unclear and frequently changing strategies of the past. The lack of concise directions and target had led to disillusionment, adversely impacting their motiv ation for higher achievement. The new plans were clearly defined by the management and communicated on regular basis to the workforce that helped to strengthen their confidence and motivated them to work towards the goals with renewed enthusiasm. 2. Leadership initiative and team building Drucker (1999) believes that external and internal environment hugely contributes to business performance and managerial leadership innovatively exploits them for the organization’s advantage. The open communication approach used by Bethune and Brenneman helped in adapting to the strategic changes that were introduced to transform business dynamics. Leadership initiative is critical factor to develop an organizational culture of proactive participation, shared learning and strong teamwork (Shapiro, Slywotzky and Tedlow, 2000). The leaders looked for opportunities and exploited them with a sense of high urgency through a team of motivated