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Review of Continental Airlines organizational structure Essay

1.Does the organizational design of this corporation help or hinder it in achieving its organizational goals?

Continental Airlines utilizes a divisional structure relative to the management of its various entities. This structural design is due to the complex nature of the aviation industry as well as the autonomy required in operating a twenty-four hour a day, seven day per week worldwide business. In my opinion, the structural design of this organization with the exception of Continental Express and Continental Micronesia can really not be structured in any other way, and therefore should be considered helpful. The airline business is an incredibly tough business as it is. The costs of operations in relation to profit per passenger mile are very low. This airline and its management team have emerged from bankruptcy and now fly the newest fleet of aircraft in the sky today. Chairman and CEO Gordon Bethune with his years of experience in the aviation industry have afforded the opportunity for Continental to receive more awards for customer satisfaction than any other airline.

Obviously, this is a far cry from the pre-bankruptcy days of this airline which now proudly stands as an industry leader. (No, I do not work, nor have I ever worked in the airline industry). The organizational structures leadership includes various notables that have grown up within the industry filling various leadership positions for other airlines. It seems as though Mr. Bethune has installed an incredibly capable team to steer this company into the future. I carved out Continental Express and Micronesia since they are basically licensed businesses that fly under the Continental flag. Their existence within the Continental family does provide routes to smaller and far-eastern destinations but are independently managed and therefore not considered (by me) as anything more than a profit center on the organizational chart.

2.If you were to change this organization, what issues would you need to consider and why? What would be the advantages and disadvantages of organizational change?

If I had the ability and experience to effect change for this organization, the first issue I would consider would be consolidation of the airlines inĀ general. I address this issue because I do not necessarily feel that consolidation is all that it’s cracked up to be. Bigger airlines mean bigger bureaucracy and smaller profit potential. Both of these translate to decreased customer satisfaction as well as the potential for employee dissatisfaction. Mr. Bethune prides himself in being “one of the people”, he is often seen walking in the terminal, shaking hands and recognizing employees for doing an outstanding job. As a rated company pilot, he is also seen on the flight deck of the occasional 757 or 777. It is hard to imagine how the current structure could be improved beyond what it already is. He is leading by example as a leader should. Should airline consolidation continue, the main advantage would be for the traveling public.

The customer could potentially book a trip around the world simply by calling the Continental reservation line. Until that customer shows up for the trip to commence, he may not even realize that he’s not even on a Continental flight. That’s the beauty of “being big”. The trip might be made up of legs flown by Northwest connecting to Varig connecting to Delta connecting to Qantas, etc. This “seamless” travel experience for the customer should be considered as an upside to consolidation. The main disadvantage might possibly be that the customer has no idea who to call when things go wrong. He might be stranded in a foreign land after his connection with China Airlines cancelled and he’s not sure of whom to contact to get back on track.

The second issue I might consider would be mandatory retirement of pilots once they reach their sixtieth birthday. Organizationally, this federally mandated policy weakens the organization. My best and most experienced pilots are being forced out of my company. If this policy is unchangeable, I must find a way to keep this incredible resource happy and employed in some form or fashion that augments my existing infrastructure. This disadvantage to my organization structure is a hurdle that is out of my control but directly affects the bottom line relative to people and organizational power.

Reference:

www.continental.com/company/investor.governance.asp


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