Organizational Management Essay

2167 Words Apr 5th, 2012 9 Pages
Describe the situation.

Classis Airlines Rewards Program has experienced a 19% decrease in membership and a 21% decrease in flights per remaining member. Their loyal customers are flying on other airlines. Also rising fuel and labor cost have affected their competitive advantage. They are limited in their abilities to compete for frequent flier customers. Because of this crisis, the Board of Directors has mandated a 15% across the board cost reduction over the next 18 months. If they are unable to cut costs, Classic is facing bankruptcy.

Also, according to Renee Epsom, SVP of Customer service, Classis is not meeting the customers’ needs. The customers are telling them what they want but the company has not put the service elements,
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There will be no revisions to the current union agreements in their attempt to reallocate funds to revise their marketing strategies. Also Classic’s main competitions, the younger start-up companies, don’t have the costs to bear as Classic does. Classic also needs to prioritize marketing initiatives over cost-reduction initiatives.

Frame the right problem

Classic’s problem is trying to reconnect with their frequent flier customers by revamping their frequent flier program called Classic Rewards. They must achieve this while working within the confines of the company-wide cost reduction pan, rising operational costs, and financial commitment to union contracts. They must do this by first making sure they clearly understand what their customers want and need and implement this into their rewards program. They also have a problem with their flight routes and schedules. Because of their financial issues, they have limited their flights which cause their loyal customers to choose other airlines that best fit their needs. They must control their operating costs in order to contend with anticipated rising fuel and labor expenses. Also the internal perception of marketing is not overly positive and the CEO and CFO have a negative perspective on partnerships.

Describe the end state goals

To increase

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