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Case Review

Business Turnaround Strategy

Strategy Map & BSC

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Case Review

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Nine different CEOs Sine 1983

Groups and Departmental Conflicts

Employees hate Continental

On the way to 3rd bankruptcy

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Last among the 10 largest U.S. commercial airlines in on-time arrivals

Highest number of mishandled baggage reports

Highest number of complaints

Culture: backbiting, mistrust, fear, and loathing.

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The Market Plan: Fly to Win

The Financial Plan: Fund the Future

The Product Plan: Make Reliability to Reality

The People Plan: Working Together

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Cost Cutting through:

1. Eliminating loss generating routes

2. Cutbacks in the flight schedule for Continental Lite.

3. Eliminating Airbus 300 from the fleet

4. Launching a concerted marketing campaign

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Renegotiation of aircraft lease payment

Refinancing some of debts at lower interest rates

Postponing some debt repayments

Raising fares on certain routes

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Improvement in on-time performance

Improvement in baggage handling

Improvement in overall flying experience

Rewarding employee(based on achieved on-time performance)

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Encouraging Teamwork

Building Trust

Radical Change in Corporate Culture

Measure and Reward Cooperation

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Unconvinced board members

“Go Forward Plan” accepted doubtfully

Appoint Bethune as CEO

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Closing Los Angeles maintenance operations

Open houses and open door policy

Burning the manuals

Painting airplane

Spreading the “Go Forward Plan”

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Working with travel agencies closely

From backpack-and-flip-flop crowd to coat-and-tie crowd.

Sending letters to corporate CEO’s and apologizing and inviting

Root expansion

Bethune’s Row 5 test.

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Renegotiating aircraft lease payments

Refinance some debts at lower interest

Postponing some debt repayment

Refund the Boeing deposit

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Selling the excess parts in inventories

Code-sharing agreements with other airlines

New CFO, Larry Kellner, and installing much stronger financial systems

Insurance policy against unexpected increase in fuel costs

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On-time percentage(incentives and bonuses)

Revising roots of flight

Improving baggage handling

In-flight services

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Replaced manual with general guideline Profit sharing Create checklist Importance of teamwork Toll-free voice-mail numberCompany Development

Company intranet and email

Company publication

Bulletin board

Employee meeting

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Turnaround Strategy

&

Change Management

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Turnaround Strategy, what is it?

McDonald , 2000-2003, Jack Greenberg

Kraft Foods , 2004-2007, Irene Rosenfeld

IRIS, 1379-1384, Mr. Afkhami

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3. Communicate the Change Vision

4. Create the guiding Coalition

5. Generate the short term Wins

6. Empower Employees for broad-

based action

7. Anchor new approaches in

culture

2. Develop the Change Vision and Strategy

1. Establish a Sense of Shared Need and Urgency

8. Consolidate gains an

produce more change

Unfreezing

Moving

Refreezing

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1. Review and Assess the Present Situation

2. Develop Plans and Business Strategy

3. Communicate With Key Employees

4. Communicate With Other Employees

5. Meet the Bank

6. Meet Customers

7. Meet Suppliers

8. Cash Conservation

9. Implement New/Update Systems and Procedures

10. Monitor, Measure and Take Action

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In a business turnaround it is important to understand fully the starting position.

Bethune had 10 days before his Go Forward plan

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It will be necessary to develop robust plans and strategy that will achieve success.

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It will be necessary to meet with managers and key personnel

Members of this group will critical to the success of the business turnaround.

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It will be necessary at the earliest opportunity to meet with all employees or their union representatives, particularly if job losses are planned.

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The bank and other parties with a financial investment in the business should be advised of the business turnaround plans.

If possible meetings should be arranged to discuss the plans and to seek assurances of continued, and maybe, more support for the business.

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This action should be considered mandatory if the cause of the business demise has been poor customer service, poor quality product or any other matter not meeting the expected customer satisfaction levels.

Begging for a second, third or even fourth chance to ‘get things right' may be embarrassing but remember: no customers -no business.

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Re-establishing trust will be critical.

Negotiating new or even the continuation of existing, payment terms from a weak position will be difficult, however, all promises made should be honored or if failure is imminent inform the vendor in advance of how any debt will be discharged.

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If possible negotiate extended payment terms to suppliers; examine thoroughly all unused assets of the business and liquidate if necessary.

selling unused buildings, renting out spare office space, selling unused plant and office equipment, disposing of excess or redundant stocks, factor sales debt and if unavoidable make excess employees redundant.

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a continuation of old practices will almost certainly result in the same old results.

Positive and profitable change may be required and this should be communicated to employees, so that they understand their roles in the new business environment.

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results should be regularly measured against plan and corrective actions taken if required.

Key performance indicators (KPI) should be determined that will give a snapshot of the business performance and be available on a daily, weekly or monthly basis.

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1. It is a top-down reflection of the company’s mission and strategy

2. It is forward-looking

3. It integrates external and internal measures.

4. It helps you focus

Linking measurements to strategy is the heart of a successful scorecard development process

Robert S. Kaplan and David P. Norton, Putting the Balanced Scorecard to Work,1994

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1. If we succeed with our vision and strategy, how will we look different

to our shareholders and customers?

in terms of our internal processes?

in terms of our ability to innovate and grow?

2. What are the critical success factors in each of the four scorecard perspectives?

3. What are the key measurements that will tell us whether we’re addressing those success factors as planned?

Robert S. Kaplan and David P. Norton, Putting the Balanced Scorecard to Work,1994

37 Robert S. Kaplan and David P. Norton, Putting the Balanced Scorecard to Work,1994

38Robert S. Kaplan and David P. Norton, Putting the Balanced Scorecard to Work,1994

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کاهش

هزینه ها

بستن مرکز

تعمیرات لس

آنجلسبستن

continental Lite

خارج کردن

Airbus 300

Code-sharing

اثربخش ی

عملیاتی

بیشتر

هماهنگی و

همکاری

بیشتر

کارکنان

عدم

استخدام

نیروی جدید

درآمد

زایی

گسترش

مسیرهای

هوایی تخفیف برای

پرسفرها

افزایش

قیمت برای

برخی مسیرها

تالش برای

بازگرداندن

مشتریان

قدیمیافزایش

رضایت

مشتریان

جذب

مشتریان

جدید

افزایش مدت

بازپرداخت

وام ها

refinancing

Profitability

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افزایش

رضایت

مشتریان

عذرخواهی از

مشتریان

سابقسیستم

پاسخگویی

تلفنی

تلفن داخل

هواپیما

ایجاد سایت

رزرو بلیط

بهبودامنیت

غذاهای بار

جدید

پروازهای به

موقع

یافتن

مطلوبات

مشتریان و

ارایه آن ها

زمان بندی

پرواز مناسب

ایجاد تجربه

پرواز

خوشایند

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Operational Effectiveness

ایجاد هماهنگی

بین واحدها و

کارگروهی آموزش

کارکنان

Alliance

سیستم

ارزیابی

کارکنان

انگیزش

تخصیص (پاداش)

هواپیماها به

مسیرهای پر سود و

حذف مسیرهای کم

مسافر

کاهش هزینه

های عملیاتی

بررس ی

مجدد

مسیرهای

پرواز

بهبود حمل و

نقل بار

چک لیست

های عملیاتی

Code sharing

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ایجاد رضایت،

هد انگیزش و تع

در کارکنان

چشم انداز

مشترککار گروهی

آتش زدن رویه

ها و آزادی

عمل

جلسات

متعدد

جشن ها و

مهمانی ها

اطالع رسانی

و روزنامه و نشریهگسترده

LEDبولتین و

در سالن های

شلوغ

یم تلفن مستق

به مدیر عامل

اینترانت

تشویق به

حضور کامل

خط آزاد و تیم

ع حرفه ای برای رف

مشکالت

فرهنگ

احترام

Profit-sharing

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Employee involvement

Employee

Satisfaction & motivation

Reliability

More customers

Service improvement

Operational excellence

New roots & services

Cost reduction

Increased revenue

survive

Debt reduction

G&

LP

rocess

Cu

sto

mer

Fin

an

cia

l

4401/06/2005