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CONTINENTAL AIRLINE INC, 2007

TABLE OF CONTENT

1.0 Company Background 2.0 SITUATIONAL ANALYSIS 2.1 VISION AND MISSION OF CONTINENTAL AIRLINES 2.2 THE EXTERNAL FACTOR 2.2.1 PEST ANALYSIS 7 8 9

2.3 PORTER 5 FORCES 2.4 COMPETITIVE PROFILE MATRIX (CPM) 2.5 EXTERNAL FACTORS EVALUATION 2.5.1

EXTERNAL FACTORS EVALUATION (EFE) MATRIX

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3.0 INTERNAL ANALYSISI 3.1 Performance analysis (financial ratio) 3.2 INTERNAL FACTOR EVALUATION 3.3 IFE MATRIX

12 12 14 16

4.0 MAJOR ISSUE 5.0 SPACE MATRIX 6.0 TOWS Matrix 7.0 RECOMMENDATION 8.0 CONCLUSION

18 19 21 22 25

CONTINENTAL AIRLINE INC, 2007


1.0 BACKGROUND OF THE COMPANY

Continental Airlines, found by Walter Varney and Louis Mueller, began flying from El Paso,Texas to Pueblo, Colorado in 1934 and the CEO of Continental Airlines Inc. is Gordon Bethune. Continental Airlines is the world's fifth largest airline. The headquarters moved from El Paso to Denver in 1937 and then to Houston in 1982 following a merger with Texas International. Continental, together with Continental Express and Continental Connection, has more than 2,750daily departures throughout the Americas, Europe and Asia, serving 133 domestic and 132 international destinations. More than 750 additional points

are served through our alliance partners. With more than 43,000 employees, Continental has hubs serving New York, Houston, Cleveland and Guam, and together with its regional partners, carries approximately 67 million passengers per year.

Goals of Continental Airlines

To use technology to improve the flow of information between aviation manufacturers and Continental, and between Continentals engineers and its 3,500 technicians in the field. The ultimate goal was to improve efficiency of maintenance and repair processes, reduce error rate sand reduce and/or eliminate document management costs.

CONTINENTAL AIRLINE INC, 2007


2.0 SITUATIONAL ANALYSIS

2.1 VISION AND MISSION OF CONTINENTAL AIRLINES Vision Continental Airlines Inc. seeks to lead its industry in superior customer service,innovative technology, employee satisfaction, and environmental advances, at home and abroad. Mission At Continental Airlines Inc., we strive to obtain excellent customer service andsatisfaction through technological advances in on-line bookings and e-ticket purchases. We have strict security measures to ensure our customers safety. Our international flights cater to our customers cultures, with language, food choices, and movies. We have

committed to making the lives of our customers, employees, vendors and as efficient as possible, through environmental advances we are dedicated to reducing fuel waste by cost effective innovation of smaller jet fleets. The use of high quality products and services will create a decline in cost to us, therefore we will be able to pass the mission

Proposed Vision and Mission Statement

Proposed Vision Is to be the world's favorite airlines.

Proposed Mission Statement To be recognized as the best airline in the industry by the customers, employees and shareholders. However the mission statement illustrates the role of this plan as the premier guiding principle, The Go Forward Plan at Continental. Their Go Forward Plan has four cornerstones-

CONTINENTAL AIRLINE INC, 2007

i.

Fly to Win (Market Plan) Achieve above-average profits in a changed industry environment. Grow the airline to where it can make money mix. Maximize distribution channels while reducing distribution costs andeliminating value added costs. nonand keep improving the business/leisure

ii.

Fund the Future (Financial Plan) Manage company assets to maximize stockholders value and build for the future. Reduce costs with technology Generate positive cash flow and improve financial flexibility by increasing itscash balance.

iii.

Make Reliability a Reality (Product Plan) Deliver an industry-leading product the airline is proud to sell. Rank among the top of the industry in the key DOT measurements: on-timearrivals, baggage handling, complaints, and involuntary denied boarding. Keep improving the product.

iv.

Working Together (Employees) Help well-trained employees build careers they enjoy every day, Treat eachother with dignity and respect. Focus on safety, make employee programs easy to use, and keep improving communication. Keep pay and benefits competitive in a changed industry environment.

CONTINENTAL AIRLINE INC, 2007

However, the overall mission statement of the organization is better because the missionstatemen t have more than four components Mission Statement Components: a) Customer b) Product and services c) Market d) Concern for survival growth and profitability e) Concern for public image- The Continental is committed to reducing green house emissions. f) Employees

2.2 THE EXTERNAL FACTOR

2.2.1

PEST ANALYSIS

A PEST analysis is an analysis of the external macro-environment that affects all firms.P.E.S.T. is an acronym for the Political, Economic, Social, and Technological factors of theexternal macro-environment. Such external factors usually are beyond the firm's control andsometimes present themselves as threats. The PEST Analysis that Continental Airlines Facedwas: I. Political Segment

Terrorism fear and political instability Fear of further attacks caused lower demand both domestic and international Airspace closed for 4 days because in fear of the terrorism attack. So the discussion about the relationship between the airlines and terrorism are theairlines dont have control over the size of the market and security cost burden.

CONTINENTAL AIRLINE INC, 2007

II.

Economical Segment Nearly impossible to achieve capacity growth. Demand for air travel is not growing. Business travel budgets were slashed by as much as 20% - 40%. Delay in delivery of new Boeing 787s. Causes the cost-savings in fuel to be delayed. Delay of aircraft delivery damagesContinentals long-term planning. Increase in federal and airport taxes

. III. Socio cultural Segment Ageing Population (in developed countries): provisions/services for disabled pax, needing medical care and help at airport. One-day trip as opposed to a two day trip (influences the flight times). Some have time and no money; some have money and not enough time. Change in marketing advertisement

IV.

Technological Segment The usage of the internet such as internet bookings and electronic tickets (e-tickets). Enables companies to hold conferences and meetings without travel. Due to heightened security measures, i.e., the implementation of full-bodyscanners.

CONTINENTAL AIRLINE INC, 2007


2.3 PORTER 5 FORCES

The following Porter 5 Forces Model in Continental Airlines is as following:No Porter 5 Forces Components Threat of New Entrants : 1 The Entry Barriers in the airline industry. High High/Low Discussion Airport and government regulations, High Capital for entering market. Few suppliers support the large 2 Bargaining power of suppliers High number of established airlines, High switching costs in changing supplier 3 Bargaining Power of Customers High Deregulation, Technology and customer loyalty. For short distances, airplanes will be substitute with automobiles. High exit barrier, Industry iscyclical 4 4 4 Profit

Threat of Substitute Products Competitive Rivalry within an Industry

Medium

High

* Notes: Profit Figure 5- Strongest & 1-Lowest The profit for the barrier to entries shows the strongest point because high regulations in airport and by government and the airlines consume high capital for entering the market. The profit of supplier r is in strongest point as it has high bargaining power. This is because few suppliers support the large number of established airlines and have the high switching cost in changing the supplier. Besides that, the bargaining power customers is high and its profits is also in strongest point as the carriers compete on low price the consumer retain some power in the purchase process and business consumers seek for the brand that they are loyal to so they are willing to pay any price. Meanwhile, the threat of substitute product is medium and in moderate level of profit which not to say high or low. This is because, for short distances, airplanes will be

CONTINENTAL AIRLINE INC, 2007

substitute with automobiles or the consumers may use train or marine. Finally, the existing rivalry of Continental Airlines is high with strongest profit as the airline industry is cyclical and high exit barrier.

2.4 COMPETITIVE PROFILE MATRIX (CPM)

CONTINENT ALAIRLINES Critical Success Factors


Weights Rating Weighted

DELTA AIRLINES
Rating Weighted

SOUTHWEST AIRLINES
Rating Weighted

0.0 - 0.1 1 to 4 Score Domestic Market Positioning International Market positioning Consumer Loyalty Service Quality Price Competitiveness Product Quality Customer Service Financial Position Management Experience Organizational Structure Fuel and Labor Global expansion 0.08 0.1 0.09 0.1 0.07 0.07 0.09 0.05 0.1 0.09 0.06 0.1 2 4 3 3 4 3 4 2 3 2 2 3 0.16 0.4 0.27 0.3 0.28 0.21 0.36 0.1 0.3 0.18 0.12 0.3

1 to 4 Score 2 4 3 4 3 3 4 2 3 3 2 3 0.16 0.4 0.27 0.4 0.21 0.21 0.36 0.1 0.3 0.27 0.12 0.3

1 to 4 Score 3 4 3 3 3 4 4 2 4 4 2 4 0.24 0.4 0.27 0.3 0.21 0.28 0.36 0.1 0.4 0.36 0.12 0.4

Totals

2.98

3.1

3.44

Overall it seems that Southwest Airlines has best product quality, management experience, organizational structure and global expansion compare to Continental and Delta

CONTINENTAL AIRLINE INC, 2007

Airlines. Meanwhile, Delta Airlines has best service quality and Continental has best price competitiveness by ratings.

2.5 EXTERNAL FACTORS EVALUATION

An External Factor Evaluation (EFE) Matrix allows strategist to summarize and evaluates economic, social, cultural, demographic, environment, political, government, legal,

technological, and comparative information.

OPPURTUNITIES:

1. Online booking ticket up to 24% 2. Major competitor recently ceased operation 3. Purchase plan for new fuel-efficient 787 4. Emerging market and expansion abroad 5. raise money thought debt up 6.89% in 2006 6. moving aircraft from the gates 7. using ground equipments rather than aircraft engines 8. electronic ticket save time and reduce cost of airline ticket counter

THREATS:

1. Rival merger from bankruptcy 2. Increasing fuel cost to 29.4% 3. Economic slowdown between 2001-2005 4. Rival operating under bankruptcy protection 5. Increasing labour cost up to 24.5%

CONTINENTAL AIRLINE INC, 2007


Assign each of factors a weight that range from 0.0 (not important) to 1.0 (very

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important).

The weight indicates the relatives importance of the factor to being success in the firms industry. Opportunities often receive higher weight than threats, but threat scan receive high weight if there are especially severe of threatening. Assign a 1-4 to each key external factor to how effectively the firms current strategies respond to the factor, where 4 = the response is superior, 3 = the response is above average, 2 = the response is average and 1 = the response is poor. Ratings are based on effectiveness of the firms strategies. Ratings are thus companybased, whereas the weights in step 2 are industry-based.

Regardless of how many factors are included in an EFE Matrix, the total weighted score can range from a low of 1.0 to a high of 4.0, with the average score being 2.5.Total weighted score well below 2.5 characterize organizations that are weak internally scores significantly above 2.5 indicate a strong external position where as

2.5.1

EXTERNAL FACTORS EVALUATION (EFE) MATRIX

Key external success factor

Weight Rating Weighted score

OPPURTUNITIES 1. 2. 3. 4. 5. 6. Online booking ticket up to 24% Major competitor recently ceased operation Purchase plan for new fuel-efficient 787 Emerging market and expansion abroad raise money thought debt up 6.89% in 2006 moving aircraft from the gate using ground equipments rather than aircraft engines 7. electronic ticket save time and reduce cost of airline ticket counter TOTAL 0.12 0.08 0.07 0.09 0.09 0.08 4 3 2 4 3 2 0.48 0.24 0.14 0.36 0.27 0.16

0.12 0.65

0.24 1.89

CONTINENTAL AIRLINE INC, 2007


THREATS 8. 9. 10. 11. 12. Rival merger from bankruptcy Increasing fuel cost to 29.4% Economic slowdown between 2001-2005 Rival operating under bankruptcy protection Increasing labour cost up to 24.5% 0.08 0.08 0.07 0.06 0.06 0.35 1 3 2 4 3

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0.08 0.24 0.14 0.24 0.18 0.88

TOTAL

1.00

2.67

In general, we can say that Continental Airlines Inc is effective because more than 2.5 that is total weight score are 2.67. Continental Airline Inc have 0.65 opportunity rather than their threats 0.35. This result tell us Continental Airline Inc dont have many problem effected from airline industry to Continental Airline Inc.

Two key external success factor from opportunity are online booking ticket up to 24%, and electronic ticket save time and reduce cost of airline ticket counter, have big effect to

current airline industry by carry 0.12 each one and this are the high weight in the external factor analysis from the industry. But from the Continental Airline Inc rating for electronic ticket save time and reduce cost of airline ticket counter in lower rate. This is because Continental Airline Inc not fulfill their service in online booking and reservation. The lowers weight in this industry came from Purchase plan for new fuel-efficient 787 and Economic slowdown between 2001-2005 were bring 0.07 weight each one. This is because new airline from Booing 787 take long time to cover the current situation in short time solution. Planning to buying the Booing 787 were bring to long term strategic. Factor on Economic slowdown between 2001-2005 not more give the impact to the airline industry. This is because after 11 Sept all country change their standard procedure to increase their airline safety from the terrorist attack. After four years the airline industry start increase their revenue and profit back.

CONTINENTAL AIRLINE INC, 2007


3.0 INTERNAL ANALYSISI

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3.1 PERFORMANCE ANALYSIS

Financial Ratio Analysis on year 2005 and 2006

A. LIQUIDITY RATIO

2005 Working Capital Current Ratio Current asset () 3,427,000 - 3,399,000 = 28,0004, 3,427,000 / 3,399,000 = 1.01times4, () 3,427,000-201,000/3,399,000 = 0.95 times

2006 129,000 3,955,000 = 174,000 129,000/ 3,955,00 = 1.04 times 4,129,000 217,000 / 3,955,000 =0.99 times

Current liabilities Current asset / Current liabilities

Quick Ratio

[Current asset Inventory] / Current liabilities

B. LEVERAGE RATIO

2005 Debt to Total Assets Total Debt / Ratio Total Assets debt 10,303,000 / 10,529,000 = 0.9810, / 5,057,000 / 226,000

2006 961,000 / 11,308,000 = 0.97 859,000 / 347,000 = 14.00

Long term Debt to Long-term Equity Ratio

Total Shareholders = 22.384, Equity

Times Interest Earned

EBIT / Total Interest

330,000 / 398,000 = 0.829 752,000 / 383,000 = 1.963

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C. ACTIVITYRATIO 2005 Inventory Turnover Fixed Asset Turnover Sales/Inv.Of t i m e s good Sales / Fixed Asset 11,208,000 = 55.76 13, 11,208,000 / 6,086,000 =1.84 13, Total Asset Turnover Sales / Total Asset 11,208,000 / 10,529,000 =1.0613, Acc. Turnover Receivable Annual credit sales 11,208,000 /Acc. Receivables = 16.31 13, 2006 / 201,000 128,000 / 217,000 = 60.50 128,000 / 6,263,000 = 2.10 128,000 / 11,308,000 =1.16 / 687,000 128,000 =17.57 11,208,000 747,000 / 13, 128,000 / 365= 20.68 day / 747,000

Average Collection Acc. Receivable / 687,000/ Period

Total credit sales / /365 =22.37 day 365

D.PROFITABILITY RATIO 2005 Gross Profit Margin Gross profit / Sales 1,533,000 / 1,208,000 =13.678% Operating Margin Net Profit Margin Net Income / Sales Profit EBIT / Sales 330,000 / 11,208,000 = 2.944% (68,000) / 11,208,000 = (0.607%) Return on Total Net Income / Total (68,000) / 10,529,000 343,000 / 11,308,000 =3.03% Assets Stockholders Equity = (0.646%) 343,000 / 347,000 = 98.85% 343,000 / 13,128,000 =2.61% 2006 4,562,000 =34.75% 752,000 / 3,128,000 =5.73% / 13,128,000

Asset(ROA) Return Stockholders Equity(ROE)

on Net Income / Total (68,000) / 226,000 = (30.01%)

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3.2 INTERNAL FACTOR EVALUATION

A summary step in conducting an internal strategic-management audit is to construct an Internal Factor Evaluation (IFE) Matrix. This strategy-formulation tool summarizes and evaluates the major strengths and weakness in the functional areas of business, and it also provides a basis for identifying and evaluating relationships among those areas. Intuitive judgments are required in developing an IFE Matrix, so the appearance of a scientific approach should not be interpret to mean this is an all-powerful technique.

Porters Value Chain analysis theory use to determine the key of internal success factor from the primary and secondary activity.

CONTINENTAL AIRLINE INC, 2007


STRENGTHS: 1. Average yield per revenue passenger mile up to 12.29% over last two years 2. Company assets up $ 10,529,000 to $ 11,308,000 3. Poorer on-time performance = (73.4% 2006) compared to (76.9% 2005) 4. Fifth largest airline = serves 148 domestic and 134 international destinations 5. Customer complaint rate reduce from (0.92 in 2005) to (0.88 in 2006) 6. Improved flight over the last 3 years = 77.8% 7. Denied boarding rate reduce from (1.92% in 2005) to (1.74% in 2006)

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WEAKNESSES: 1. low employee morale 2. slow to adopt online booking 3. decrease employee incentive 4. increase mishandled baggage rate per 1,000 passengers = (4.76% in 2006) compared to (4.12% in 2006) 5. losses a net income of $ 343 million in 2006 after 2 previous years 6. low market share

Assign a 1-4 to each factor that indicate whether the factor represents a major weakness(rating=1), a minor weakness (rating=2), a minor strength (rating=3) or major strength (major=4). However, that strength must receive a 3 or 4 rating and weakness must receive a 1 or 2 rating. Ratings are thus company-based, whereas the weights in step2 are industry-based. Regardless of how many factors are included in an IFE Matrix, the total weighted score can range from a low of 1.0 to a high of 4.0, with the average score being 2.5. Total weighted score well below 2.5 characterize organizations that are weak internally, whereas scores significantly above 2.5 indicate a strong internal position

CONTINENTAL AIRLINE INC, 2007


3.3 IFE MATRIX

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Successful key internal factor

Weight Rating Weighted score

STRENGTH 1. Average yield per revenue passenger mile up to 12.29% over last two years 2. 3. Company assets up $ 10,529,000 to $ 11,308,000 Poorer on-time performance = (73.4% 2006) compared to (76.9% 2005) 4. Fifth largest airline = serves 148 domestic and 134 international destinations 5. Customer complaint rate reduce from (0.92 in 2005) to (0.88 in 2006) 6. 7. Improved flight over the last 3 years = 77.8% Denied boarding rate reduce from (1.92% in 2005) to (1.74% in 2006) TOTAL THREATS 8. 9. 10. 11. low employee morale slow to adopt online booking decrease employee incentive increase mishandled baggage rate per 1,000 passengers = (4.76% in 2006) compared to (4.12% in 2006) 12. losses a net income of $ 343 million in 2006 after 2 previous years 13. low market share TOTAL TOTAL 0.05 0.05 0.05 0.15 2 2 2 1 0.10 0.10 0.10 0.15 0.10 0.10 0.10 4 4 4 0.40 0.40 0.40

0.05

0.20

0.05 0.05 0.05 0.50

3 4 3

0.15 0.20 0.15 1.90

0.10 0.10 0.50 1.00

1 1

0.10 0.10 0.65 2.55

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In general, we can say that Continental Airlines Inc is effective because more than 2.5 that is total weight score are 2.55. Continental Airline Inc have same weight 0.50 for opportunity threats. The total weighted score for strength 11.90 higher than factor of threats 0.65. This result tell us Continental Airline Inc must do something to their internal environment. Continental Airline Inc have internal little internal problem that they must control and do improvement to make sure firm can grow without unstable from inside company. Even, the score in strength is high, they must make sure that their employee must continue motivated to do work well.

Continental Airline Inc have seven successful factor from the Strength and six from the Threats. Result from this internal Factor Evaluation Matrix tell the Continental Airline Inc to use their strength to control the threats they have. Human Resource Department must give the motivate their employee by using whatever style and idea to counter back their employee. This is because employee are their human power that help company to grow the profit or make loss. Continental Airline Inc should give back the incentive to their employee after they gain the profit in this year. The high score in weight of internal factor are increase mishandled baggage rate per 1,000 passengers = (4.76% in 2006) compared to (4.12% in 2006). That use 0.15 or 15 percent from all internal success factor in the Continental Airline Inc. this is because, this problem well bring negative effect from customer. Mishandled passenger baggage are the big issue in airline industry where when the airline make mistake, the effect were bring to all of loyalty customer when this issue arrive to the our competitor or electronic media.

Slow to adopt online booking key show that Continental Airline fail to address new technology. Technology will help firm grow fast parallel rather than competitor. If company activity left behind the new current technology in new current world, Continental Airline were loss their customer and it will reduce their revenue. This is because technology are the main part to compete with the competitor. Continental must invest some among money to develop and full utilize their capability and ability to win the competition or at least gain the profit from the operation activity.

CONTINENTAL AIRLINE INC, 2007


4.0 MAJOR ISSUE

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1. CORPORATE LEVEL i. No vice president specifically oversees internationaloperations given its important at Continental. ii. No young officer in a top management lines. All topmanagement people are 50s and above.

2. BUSINESS LEVEL i. ii. Slow to adopt online booking low market share Low market share

3. FUNCTIONALLEVEL i. ii. Does not make its organizational chart known to others. Continentals AQR score has declined for the last threeyears even though its ranking improved. iii. Continentals on time performance shows that it has notmeet the 80 percent of better standard for arrivals for thelast fours years, of for departures for the last two years iv. Low employee morale

5.0 SPACE MATRIX

The axes of the SPACE Matrix represent two internal dimensions ( financial strength [ FS ] and competitive advantage [CA] and two external dimensions (environmental stability [ ES ] and industry strength [ IS]). These four factors are perhaps the most important determinants of an organizations overall strategic position.

CONTINENTAL AIRLINE INC, 2007


Financial Strengths 1. The Continental Airlines net income of $ 343 million in 2006 after two previous years of losses. 2. 3. The Continental Airlines operating profit of $ 6 million. The Continental Airlines improving the revenues generated per revenue passenger mile flown $ 769 million and $ 6 million innetwork carriers. 4. The Continental Airlines of inventory increase $ 16,000 in2005 to 2006 Total Industry Strengths 1. 2. 3. Grow the airline to where it can make money and keep improving the business or leisure mix. Achieve above-average profit in a change industry environment Continental relies on its regional fleet for its domestic routes. Total Environmental stability 1. 2. Continental reduces cost with technology Continental operating costs are very close to the regional and national carries, but significantly above the cost of the low cost carriers. 3. 4. Facing stronger competitor from carriers operating under bankruptcy. Fuel accurate for 25.7% of total expenses in 2006 at the largest U.S carriers Total Competitive advantage 1. 2. Market share of Continental Airlines 7.7 percent General decline 2005. 3. Continental was slow to adopt online bookings and in service quality in the industry for 2006compared to

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Ratings 1.0 1.0 3.0 4.0 9.0

4.0 5.0 4.0 13.0

-2.0 -4.0 -3.0 -3.0 -12.0

-3.0 -3.0

currentlyhas about 24 percent of its revenues from its web sites,however its use of electronic tickets (e-tickets) that reducedcosts of online or travel agents to issue e-tickets. Total

-3.0

-9.0

CONTINENTAL AIRLINE INC, 2007


ES Average is -12.0 4 = -3.0 IS Average is 13.0 3 =4.33 CA Average is -9.0 3 = -3.0 FS Average is 9.0 4 =2.25 Directional Vector Coordinates: x-axis: -3.0 + (+4.33) = +1.33 y-axis: -3.0 + (+2.25) = -0.750

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(1.33, -0.75)

Coordinate (1.33, -0.75)

CONTINENTAL AIRLINE INC, 2007


6.0 TOWS Matrix

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Strength 1.Average yield per revenue passenger mile up to 12.29% over last two years 2.Company assets up $ 10,529,000 to $ 11,308,000 3.Poorer on-time performance = (73.4% 2006) compared to (76.9% 2005) 4.Fifth largest airline = serves 148 domestic and 134 international destinations 5.Customer complaint rate reduce 6.Improved flight over the last 3 years = 77.8% 7.Denied boarding rate reduce Opportunities 1.Online booking ticket up to 24% 2.Major competitor recently ceased operation 3.Purchase plan for new fuel-efficient 787 4.Emerging market and expansion abroad 5.raise money thought debt up 6.89% in 2006 6.moving aircraft from the gates using ground equipments rather than aircraft engines 7.electronic ticket save time and reduce cost of airline ticket counter SO Strategy -

Weakness 1.low employee morale 2.slow to adopt online booking 3.decrease employee incentive 4.increase mishandled baggage rate per 1,000 passengers 5.losses a net income of $ 343 million in 2006 after 2 previous years 6.low market share WO Strategy some budget in

expand more business with offer vacation 1. Invest package including the fight ticket.

developing good online web reservation improve & promotion to

hire employee that has skilled in computer or online booking. (S1,S5, O1, O4, O7)

current

e-Ticketing

web. (O1,W1,W2,)

CONTINENTAL AIRLINE INC, 2007


Threats 1. Rival merger from bankruptcy 2. Increasing fuel cost to 29.4% 3. Economic slowdown between 20012005 4. Rival operating under bankruptcy ST Strategy -

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WT Strategy Provide training and Motivate the employee by given some incentive like increase the salary if the sale increase and terminate their job or penalty the employee who are make mistake. Make strong rule and

Reduce the fix cost by reducing the labour and sell some asset like old fight to the third party country company or liquid the asset was not profitable to the company.

(S2,S3,T2,T5)

protection 5. Increasing labour cost up to 24.5%

regulation of SOP. (T2,T5,W1,W3,W4)

CONTINENTAL AIRLINE INC, 2007


7.0 RECOMMENDATION

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SWOT analysis provide as the decision making that we can take from several success factor key from external environment and external environment. From this analysis we can conclude some decision that can help Continental Airline to make decision making for growing their business. Result from the SPACE Matrix show as that Continental Airline sit under the area of COMPETITIVE situation. This tell us about Continental Airline Inc business in the area of high competition in low growing market. Some strategic can use by Continental Airline Inc to help their business grow like, Horizontal, Backward and Forward Integration Strategic, Market Penetration and Development and last Product Development. Im use some of that strategic to answer the problem of Continental Airline Inc. So all of decision making that can use by Continental Airline are show below :SO - expand more business with offer vacation package including the fight ticket. And hire employee that has skilled in computer or online booking.

WO - Invest some budget in developing good online web reservation & promotion to improve current e-Ticketing web

ST - Reduce the fix cost by reducing the labour and sell some asset like old fight to the third party country company or liquid the asset was not profitable to the company.

WT - Provide training and Motivate the employee by given some incentive like increase the salary if the sale increase and terminate their job or penalty the employee who are make mistake. Make strong rule and regulation of SOP

Business strategic can be divide by three level of business. That level is Cooperate Level is the high decision making from top management, Business Level is the middle decision making from the middle class manager or departmental leader, and last is Operational level is the low

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level decision making make by the team leader, supervisor to make sure the running of the operation are in right way follow by the top management strategic from business level and cooperate level.

For business level, from the case study there is a weakness and major issue that company should eliminate in order to smoothen the operation of company. As we can see, the problem for business level is slow to adopt online booking and low market share. The recommendation that we suggest for Continental is hire employee that has skilled in computer or online booking. Functional level is the each department in organization, for example human research department, finance department and others. Major problem for this level is Continentals AQR score has declined for the last three years even though its ranking improved. The recommendation is they must provide training and motivation for employee. For the cooperate level, they must build and develop some new standard of procedure SOP that help their business follow right way to fulfill the Continental Airline Inc Goal.

Hope for this analysis well help the Continental Airline Inc understand their strength, weakness, threat and the opportunity that they have. This analysis also show the ability and capability of Continental Airline Inc and we give the suggestion for improving their business. Thank you.

8.0 CONCLUSION Continental Airline Inc within the rehabilitation from downturns crisis of terrorist attack 11 sept where all airline are effected from that crisis. Continental Airline Inc previously lost the profit and start this year they get back the profit. Whatever happen, Continental Airline Inc must do something to survival their business. Hope this analysis can help Continental Airline Inc make decision making for their growing business future.

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