Classic Airlines

Problem Solution: Classic Airlines

Jim Conway

University of Phoenix

Instructor: Dr. Arnie Witchel

October 15, 2007

Problem Solution: Classic Airlines

Classic Airlines is the world's fifth largest airline. They were established 25 years ago and grown to include a fleet of more than 375 jets that serve 240 cities with more than 2,300 daily flights. Though profitable, Classic Airlines has struggled in recent years due to increase costs and reduced consumer confidence. The airline industry as a whole has decrease in industry share prices, Classic Airlines is no exception, seeing a 10% decrease in the past year. The airline industry has been under a microscope recently. The negative press from Wall Street, consumers and media has resulted in poor employee moral for the Classic Airlines team.

These factors have limited Classic Airlines ability to compete for the valued industry frequent flyers. With rising costs and a competitive marketplace with new and emerging carriers, Classic Airlines is need to developing a Customer Relationship Management (CRM) program to counter any further financial distress. The following is a problem solution analysis to identify the CRM issues and opportunities that they face and must strive to optimize in order to achieve their end-state business goals.

Describe the Situation

Issue and Opportunity Identification

Classic Airlines is faced with many issues and opportunities as they expand their organization and focus on CRM. As consumer confidence has fallen and costs have increased to do business, the need to develop value-added solutions, which meet the consumer demands but also allow for cost reduction policies, has become a primary focus. Long-term planning and business strategies must be put into place to maximize the value of the company and of its shareholders. Classic Airlines must look at the best approach for managing CRM, Reward participants and marketing functions to find a solution to meet the consumer demand, but also allow for cost savings.

A second issue that Classic Airlines must address is how to focus on growing the business, determining consumer needs and by establishing sound policies and procedures related to CRM to maximize profitability. The challenges associated with this opportunity identification could result in additional costs when the team has been charged with a reduction in cost by 15% . Managing this cost of CRM with the incoming cash flow (increased airfare/customers) to ensure shareholder value will be important. Classic Airlines will need to manage the gap between spending and cash flow.

Classic Airlines must understand what is of value to their consumers by doing market research and by collecting feedback Ð'- they must then take this material and create CRM program(s) that add value to their consumers. Failure to do this in recent years has resulted in a poor customer retention plan. This CRM change will allow Classic Airlines to expand their marketing and grow their business and consumer base beyond the $10 million earnings on $8.7 billion in sales they been able to achieve. To achieve this goal, Classic Airlines will have to use CRM and customer retention methods to ensure proper growth.

Classic Airlines will need to watch for signs of any quality control issues. They will do this by reviewing Reward participation rates and by taking a Total Quality Management approach to the business. As Classic Airlines formulate vertical relationships with customers and marketing partners alike, they must ensure continue to grow the business, while establishing sound CRM processes.

Stakeholder Perspectives/Ethical Dilemmas

Classic Airlines is made up of many stakeholders. Each has rights, interests and goals. As they strive to be a leader within the airline industry, they must look at the conflicting interests of all parties and ensure overall objectives are communicated to all and consider each groups individual interests as the company moves forward with the CRM changes.

The first group of stakeholders is the shareholders (customers) of Classic Airlines. The customers of Classic are impacted by the decision to reinvest in CRM efficiencies, so the organization must manage their expectations. As a customer of Classic Airlines, the goals are to see the firm maximize value by offering sound business programs (Rewards), being fiscally responsible and by managing the costs. From Classic Airlines inception, remaining profitable in an ever-changing marketplace was a major factor to the success of the organization. This strategic action by the management of Classic to align the organizational objectives towards customer value creation will help retain shareholders and create future growth and value.

The second group of stakeholders is that of the employees of Classic Airlines. As the business continues to grow, failure to make a dramatic decision on what direction to move the processes of CRM, service and sales could mean failure. To achieve future success, Classic Airlines and their employees are equally responsible for the CRM process changes as the marketing team themselves. By working with customers and by providing feedback will allow for accurate assessments of the programs and ensure quality (consumer value) levels are maintained.

The final group of stakeholders is that of the potential partners of Classic Airlines. These potential alliances hope to grow and expand their businesses as well. They will need to work together to maximize customer fulfillment, process times and any cash flow constraints. This CRM revitalization is an investment Ð'- an investment in the future of Classic Airlines.

Frame the "Right" Problem

Classic Airlines will increase profitability and maximize revenue by ensuring that they effectively manage the CRM programs of the organization and formulate strategic business processes to ensure that the business achieves future business plans.

Describe the "End-State" Vision

Classic Airlines has a vision for the future Ð'- to be the worlds most dynamic and consumer focused airline. They also strive to maximize revenue growth and CRM effectiveness through strong financial management and by adding value to their consumer base.

Identify the Alternatives and Benchmarking Validation

In order for Classic Airlines to be successful with this