Problem Solution Classic Airlines

Problem Solution: Classic Airlines

This paper will explore the nine-step problem solving process through an analysis of Classic Airlines. These nine steps begin with step 1; Describe the Situation, which involves identifying key concepts, issues and opportunities, stakeholder perspectives and ethical dilemmas. Step 2, Frame the Right Problem, requires that the right problem be broadly stated so many possibilities can be examined. Describe the End-State Goals is step 3. In this step Classic Airlines will know it has become what it wants to become. Step 4, Identify the Alternatives and Benchmarking Validation, allows Classic Airlines the opportunity to look at other companies and develop techniques that will help it overcome weaknesses and implement best practices for those areas. Step 5, Evaluate the Alternatives, lets Classic examine and judge carefully between two or more possibilities. Once these choices have been made, step 6, Identify and Assess Risks, allows Classic Airlines to look at potential risks and negative consequences so the solution can be eliminated if necessary and mitigation can take place. Step 7, Make the Decision, allows for risks to be identified and explored. The decision that is made is the best based on facts. Step 8, Develop and Implement the Solution, defines the work that is to be done, how it will be done, when, and by whom. The last step, step 9, Evaluate the Results, tells what is the expected outcome, how is the outcome measured, and is the outcome in alignment with Classic's end-state goals. This nine-step concept of problem-based learning is then summed up in a conclusion.

Describe the Situation

Issue and Opportunity Identification

Classic Airlines is the world's fifth largest airline. Its fleet consists of more than 375 jets serving 240 cities with more than 2300 daily flights. Classic has grown to an organization of 32,000 employees in its 25-year inception and last year earned $10 million on $8.7 billion in sales. Classic Airlines has sustained profits even though it has been plagued with numerous problems. Classic has seen a 10% decrease in share prices in the past year. Employee morale is at its lowest because of scrutiny from the investment community, negativity from Wall Street, the media, and the public. Customer confidence is also declining as well as Classic's Rewards program, which measured a 19% decrease in the number of Classic Rewards members, and a 21% decrease in flights per remaining members. Rising fuel and labor cost have hindered Classic's ability to compete for the valued frequent flier miles. The 911 aftermaths have caused Classic to face a restrictive cost structure unlike younger airline companies. And if that is not enough, Classic is facing a 15% across-the-board cost reduction over the next 18 months (Scenario: Classic Airlines, 2007).

Albert Einstein once said that in the middle of difficulty lies opportunity. Some of the best opportunities often originate from problems. Classic Airlines has the ability to turn its problems into opportunities through carefully defining the situation so that the statement reflects the reality of the situation. Classic should target frequent business travelers who expect a higher level of individualized service than they might receive on competing airlines. Catering to these customers would help Classic Airlines increase customer confidence, reduce negative press, and increase profitability. This could be done without incurring additional cost keeping in line with cost reduction and the challenge to do more with less. Happy customers are the best form of advertisement for any organization and the basis for repeat customers.

Classic Airlines should revamp its Classic Rewards Program by partnering with another airline to improve the customers' flight experience. This would increase the frequent flyer mile purchase and partnership opportunities, which in turn would make Classic's frequent flyer program more rewarding for the customer creating value. Since Classic Airlines cannot keep the cost of fuel from increasing it must developed a way to enhance its fuel efficiency. Installing winglets on Classic Airlines' carriers can do this. A winglet is a small extension on the end of an aircraft wing designed to reduce drag and thereby increase fuel efficiency.

Stakeholder Perspectives/Ethical Dilemmas

Classic Airlines' stakeholders are its stockholders, management, employees, union, cities and towns where Classic's terminals reside, and its customers. These stakeholders stand to gain or lose from the success or failure of Classic and their perspectives need to be taken into account. Stakeholders can have positive or negative views regarding a given project, and often do not agree with one another, making it a challenge to reconcile their varied viewpoints.

The stockholders want the decrease in share prices to reverse itself and head toward an incline. An increase in customer confidence would also help to raise stockholders' stock price. Classic's management wants it to succeed as a business and be a viable part of the airline industry. Management wants to increase the stature of the company by making Classic Airlines a corporation that creates opportunities for its employees. Classic's employees want the negative publicity from Wall Street to discontinue. The union must protect the benefits, salaries, jobs, and rights of Classics' employees. The cities and towns where Classic has its terminals want the continued revenue that the airline affords them. Classic's customers want renewed confidence void of scrutiny and negativity.

When stakeholder's perspectives exist, ethical dilemmas also exist. Management must balance the needs of the business with the commitment to Classic Airline's employees or the business will fail. Stockholders must balance what is good for the long-term health of the airlines and its employees with the short-term benefits of quick stock price increases. The union must work to determine the best solution for Classic's employees to prevent a volatile situation from taking place. The cities and towns where Classic has its hubs must continue to provide excellent service to Classic's customers in order for their revenue to continue.

Frame the "Right" Problem

Classic Airlines will maintain its strategic position in the airline industry by creating customer confidence and loyalty, improving profitability, and aligning with it stakeholders. This will enable Classic to become financially secure through growth opportunities, the revamping of its marketing strategy, and meet the needs of its customers both now and in the future.