Classic_Airlines

Problem Solution: Classic Airlines Within a turbulent, highly competitive marketplace, airlines are finding it increasingly important to respond both quickly and effectively to the changing patterns of customer demand. Who are airlines’ customers and what are their needs and aspirations' If airlines don’t know the profitability by customer, how can airlines be sure that they are serving their best customers and applying value to all their business decisions' If airlines had the means to do both, profits would soar. Not only would airlines become more efficient, but also their shareholders would see an investment in their only real source of revenue, the customer, and the meaningful profits that result. With so few new revenue opportunities, do airlines need more aircraft' Or instead should airlines consider a customer-centric focused strategy that uncovers and maintains shareholder value. Airlines need to know and understand those customers who contribute the most to their bottom line. Classic Airlines is one such airline. Faced with increased competition, shrinking profit margins, and an across-the-board cost reduction, Classic Air is struggling to remain aloft. The airline’s challenge is sustaining and creating profits in the wake of heavier competition and product homogenization. The opportunities for Classic Airlines are in managing customer relationships, controlling costs and applying customer profitability to the entire business. Achieving these objectives will require Classic Airlines to attract customers, manage its fleet, manage its people, and manage its finances. And, the engine that will make all of this fly is Classic Airlines leadership at all levels of the company. It is the latter that will ultimately determine the final success of Classic’s strategic initiatives. Describe the Situation Classic Airlines has been a successful airline for 25 years. It commands a fleet of more than 375 jets that serve 240 cities with more than 2300 daily flights. The airline employs 32,000 people. Last year the airline earned $10 million on 8.7 billion in sales. Classic Airlines has been a very profitable company, but the increasing uncertainty about flying, the company’s stock prices have been affected across the broad and during the past year, the company’s chare price dropped by ten percent. In addition, the airlines Classics Rewards program has measured a 19% decrease in membership and a 21% decrease in flights for the members still participating in the program. Rising labor and fuel costs have also affected the airline’s ability to capture the business of the frequent flyer. In addition, the reversal of the downturn experienced by the industry as a result of 9/11 was overestimated and Classic, like many other airlines, expanded to quickly. The result is that Classic now faces a restrictive cost structure that more recent entrants into the industry have not. In addition, counter any further financial crisis, the airline’s Board has mandated a 15 percent across-the-board cost reduction over the next year and a half. Within this mandate the airline must still find a way to retain and attract more customers by upgrading and enhancing its frequent flyer program with strategic initiatives that will bring a significant return on investment (ROI). There is a distinct possibility that Classic may loose the battle and go bankrupt. Retaining and attracting more customers raises several issues for Classic Airlines. These issues result from the understanding and assessing the company’s present strategic initiatives and business processes as well as the company’s leadership structure. Issue and Opportunity Identification The issues raised and the opportunities each issue presents is summarized below. A more detailed evaluation is given in Table 1. Issue—Classic Airlines needs a customer-centric initiative that is integrated with its marketing strategy and aligned with its corporate strategy. Opportunity—Management at all levels of the company must have a thorough understanding of what drives customer value. Understanding customer value will allow Classic Airlines to anticipate their customers’ needs to enhance customer acquisition, customer development, and customer retention Issue—Classic Airlines needs a relationship marketing strategy that creates customer equity and maximizes shareholder wealth. Opportunity---Classic Airline’s most important marketing resource is its relationship with its customers. Targeted relationship marketing initiatives can raise the company’s credibility with decision-makers, investors, and other stakeholders. Issue---Classic Airlines needs leaders who feel passionate about the airline’s transformation vision and who provide stakeholders at all levels of the company with the energy an commitment to turn vision into reality. Opportunity—Transformational leadership is a process that changes and transforms individuals (Northouse, 2001). Transformational leadership is the ability to get people to want to change, to improve, and to be led. Transformational leadership is a vital role for Classic Airlines executives and managers because leader effectiveness determines the success level of the company. Issue---Classic Airlines needs new ways to generate revenue and control costs that are in line with the Board’s mandated 15% across-the-board cost reduction over the next 18 months. Opportunity—Classic Air has an opportunity to for a profitable strategic alliance with Skyway Airlines. This alliance offers reach of seamless service networks; enhanced traffic feed; cost reduction; service quality improvement; and marketing advantages. Stakeholder Perspectives/Ethical Dilemmas “The relationship between a customer and a firm exists because of mutual expectations built on trust, good faith, and fair dealing in their interaction. In fact, there is an applied covenant of good faith and fair dealing, and performance cannot simply be a matter of the firm’s own discretion” (Ferrell, 2004). The ethical climate of Classic Air can easily be associated with customer loyalty. This idea is further explored in Table 2. Frame the “Right” Problem The overall strategic business initiative of Classic Airlines is to build loyal customer relationships, based on its identification and prioritization of customer needs, resulting in a personalized relationship with customers, built on the customer’s confidence and trust in their dealings with the airline. This strategic initiative will have to be translated into specific products and/or services, ranging from introducing new, diverse distribution channels aligned with customer’s changing lifestyles, to understanding customer value and using this to prioritize the company’s marketing and service resources. As a result, the following problem statement is proposed: Classic Airlines will be a leader in the airline industry by implementing strategic customer acquisition, customer development, and customer retention initiatives. Describe the “End-State” Vision The end-state vision for Classic Airlines is to:  Understand customer value in order to prioritize marketing and service resources.  Use customer information to target promotional offers and cross-selling activities effectively.  Use customer information in the design and development of products and services.  Recognize customers as individuals at all customer-contact points.  Offer personalized or mass-customized service.  Utilize multiple alternate channels for marketing, sales and service transactions in order to improve service and reduce cost.  Increase the “share of customer” through greater penetration of travel-related products and services. Identify the Alternatives and Benchmarking Validation In today’s business environment benchmarking “plays an ever increasing role in the acquisition of business intelligence. Obtaining a “referenceable” benchmark from others performing similar activities can help organizations understand the range of performance levels that are possible. And understanding the underlying attributes or drivers of that performance is equally important. Only then can the information be used to improve performance” (Yaeger, 2004). Benchmarking, then, can be an invaluable form of business intelligence that Classic Airlines can use to improve its performance. Benchmarking is a simple way for a Classic Airlines to measure its way to higher profits. The benchmarking process is a good way to make process improvements that increase profits and make customers happier. Based on benchmarks of a few best practices in the areas of call center management and performance, customer loyalty enhancements and strategic alliances, and using the issues and opportunities previously identified, the following alternative solutions are suggested for Classic Airlines: Issue—Classic Airlines needs a customer-centric initiative that is integrated with its marketing strategy and aligned with its corporate strategy. Opportunity—Management at all levels of the company must have a thorough understanding of what drives customer value. Understanding customer value will allow Classic Airlines to anticipate their customers’ needs to enhance customer acquisition, customer development, and customer retention Alternative-- An effective customer loyalty program will allow Classic Air to better understand its customer mix in order to create a high-performance marketing initiative to build customer loyalty and increase profitability. Improving customer loyalty will also help Classic Air to redesign its customer rewards programs. “In order to be effective, a loyalty program’s structure, reward offerings, and communications must be relevant and specific to a company’s targeted audience, based upon customer attitudes, behaviors, and demographics” (Dunlap, 2007). With this in mind, Classic Air will have to ensure that its loyalty initiative impacts customer behaviors including incremental transactions, higher average ticket size, repeat visits, and extension of the customer life cycle with the services it provides. Issue—Classic Airlines needs a relationship marketing strategy that creates customer equity and maximizes shareholder wealth. Opportunity---Classic Airline’s most important marketing resource is its relationship with its customers. Targeted relationship marketing initiatives can raise the company’s credibility with decision-makers, investors, and other stakeholders. Alternative---Relationship marketing strategies can effectively be achieved through Classic Airline’s call centers. . “It is in the call centers of forward looking companies, where every interaction with a customer—whether conducted in person, over the Web, or through a voice response unit—collects information which, through carefully calibrated analysis, becomes knowledge, driving future interactions, changes in product design or services, and advances in strategy” (The Call Center Becomes a Revenue Generator, 2002). Classic Airlines needs call centers that are customer interaction centers that foster customer development. The benefits that this strategy will provide the airline include:  The potential for revenue enhancement—Using collected customer insight at the point of interaction to provide logical up-sell and cross-sell efforts.  New technologies –Allowing better data mining, segmentation of customers and agents, and multi-channel integration.  A changing role for customer services representatives (CSRs)—CSRs who are more interactive; better trained; more versatile; supported by better customer information; capable of handling a wide range of demands simultaneously; and able to manage the development of customers through a blend of service and appropriate sales interactions.  Effective use of customer segmentation—Understanding which customers represent the most value will enable the airline to provide differentiated customer treatment strategies, including match customers with the specific agents who can meet their needs. Issue---Classic Airlines needs leaders who feel passionate about the airline’s transformation vision and who provide stakeholders at all levels of the company with the energy an commitment to turn vision into reality. Opportunity—Transformational leadership is a process that changes and transforms individuals (Northouse, 2001). Transformational leadership is the ability to get people to want to change, to improve, and to be led. Transformational leadership is a vital role for Classic Airlines executives and managers because leader effectiveness determines the success level of the company. Alternative—Implementing a Balance Scorecard will be an effective change management strategy and will help improve leadership skills at all levels. “The dynamics of the Balanced Scorecard would be aligned with the overall strategy and progress against it would be measured with metrics grouped into four interconnected perspectives: financial, customer, internal processes, and learning and growth” (MacMillan, 2007). These perspectives will help Classic Airlines to answer fundamental questions about its business performance. For example:  Financial: What must we focus on to meet shareholder expectations'  Customer: How should we deliver value to customers in key market segments'  Internal: At which operational processes must we excel to satisfy shareholders and targeted customers'  Learning and Growth: How will we sustain our ability to change and improve' The Balanced Scorecards will help Classic Airlines to translate strategy into specific, measurable objectives that can be consistently defined, applied, understood, and communicated to everyone. The Balanced Scorecard will illustrate the company's key value drivers and show how they interact to create value and competitive advantage. This will be achieved through the use of a strategy map. A strategy map is a visual tool that will enable Classic Airlines to illustrate the cause-and-effect relationships between its strategic goals and the processes that it uses to achieve them, and the intangible assets that the company needs to leverage effectively. Issue---Classic Airlines needs new ways to generate revenue and control costs that are in line with the Board’s mandated 15% across-the-board cost reduction over the next 18 months. Opportunity—Classic Air has an opportunity to for a profitable strategic alliance with Skyway Airlines. This alliance offers reach of seamless service networks; enhanced traffic feed; cost reduction; service quality improvement; and marketing advantages. Alternative--- One alternative to entering into a strategic alliance is for Classic Airlines to re-evaluate and up-date its existing CRM system. Getting value out its existing system will not only be about choosing or implementing the right technologies. “More fundamentally, it is about understanding how value is created, aligning the organization, selecting the right enablers (structure, process, technologies), and building practical plans that extract value along the way”(Rosenbleeth, Dallas-Feeney, Simmerman, & Casey, 2002). A successful CRM system will allow Classic Airlines to capture value through customer strategy. Evaluate the Alternatives Based on the identified issues and opportunities and the benchmarking analysis, the following alternatives have been identified: Enhanced call center operations – Classic Airlines is struggling to achieve the right balance of cost savings and organic growth—and appears to be failing to do either. The implementation of a more complex products and service bundle will put a strain on sales and service operations if not executed properly. Poorly executed or inappropriate self-service technologies can seriously fragment the customer experience. As a result, Classic Airlines stands to weaken the bond it has worked so hard to forge with its customers. This can equate to a costly proposition for the company. Implement improved customer loyalty initiatives—An improved loyalty program will encourage Classic Airline’s loyal customers to increase their transactions with the airline. “In recent years, this strategy is gradually emerging as an effective marketing tool to promote customer loyalty” (Customer Loyalty Programs—Trends and Experiences, 2005). Re-evaluate and update the existing CRM system— This will allow Classic Airlines to achieve the following objectives:  It will give Classic Airlines a “ 360° view of each customer for consistent and unified contact with that customer whenever anyone anywhere in the enterprise deals with that customer” (What Is CRM', 2007). This knowledge increases the opportunities for sales and the effectiveness of customer service.  It will enable the airline’s customers to have a consistent view of the enterprise, regardless of the way the customer contacts the business. This improves customer satisfaction and customer retention.  It will enable the front office staff to perform sales, service and marketing tasks more efficiently as a team, increasing expertise and reducing costs. Identify and Assess Risks Enhanced call center operations and improved customer loyalty programs can both be achieved if Classic Airlines were to re-evaluate and up-grade its existing CRM system. The potential for achieving the company’s goals and objectives is hidden within this system. “Companies that successfully employ a Customer Relationship Management (CRM) system to effectively unify and manage each stage of a complex sales process are able to become, and enjoy the benefits of being, truly customer-focused organizations” (Bormolini, 2003). If Classic Airlines is able to effectively and implement this up-graded CRM system, it can realize results such as increased margins, lower selling costs, increased hit rates (lead-to-order ratio), significantly reduced time preparing and delivering management reports, and happier customers. Implementing any new business strategy has risks and CRM is no exception. CRM has a dark side. “Companies that know they need to bring together their entire sales organization on one CRM system often do not know the best steps for implementing such a solution. Consequently, the failure rate of first time CRM projects is a staggering 50-70%” (Bormolini, 2003). The causes of failure include improper vendor selection, lack of commitment across the enterprise, a failure to set clear goals and failure to communicate benefits of the system to all users to engender full adoption. Make the Decision The pros and cons of re-evaluating and up-grading the company are existing CRM system are outlined in Table 5. The CRM implementation process will involve defining business objectives, business processes, organization structure, customer hierarchy, and management needs. The senior management team will have to work together to plan, design, configure, implement, and support the revitalized CRM solution. Develop and Implement the Solution It is important for Classic Airlines’ senior executives, its board, and senior managers to understand that a successful CRM project evolves as the business grows. Planning for change is essential for success. Successful implementation usually involves the following stages ( Microsoft CRM Implementation: A Proven Process, 2005). Sales stage This important stage builds the foundation for a successful CRM implementation. During this discovery stage CRM project team will gather high level information about Classic Airline’s business processes and document key business objectives. This stage concludes with a formal presentation to the business and executive sponsors. Objectives: • Document high level business processes and requirements • Conduct a CRM readiness assessment • Create a vision scope document • Create a CRM project proposal • Present a CRM project proposal • Gain consensus to move forward Envisioning stage Following the acceptance of the proposed up-grade of the existing CRM system, the project team will focus on creating a statement of work (SOW) document that will detail the project scope. The SOW will be presented to the project team and executive sponsor for a formal approval. Objectives: • Define roles and responsibilities of the CRM project team • Provide software and hardware requirements • Create a SOW document • Gain approval of the SOW Planning and design stage After the SOW has been approved, a detailed analysis of business processes will begin. Business processes are thoroughly documented and then presented to the CRM project team. Once approved these findings are mapped to the CRM user interface design guide. This CRM design guide will be used to install and configure the CRM application. Objectives: • Create a detailed project plan • Analyze and document business processes • Conduct onsite hardware and software assessment • Install CRM software in a development environment • Meet all key business users to determine roles in the project • Conduct GAP analysis between business requirements and existing processes • Define user interface • Document any custom development and integration requirements • Plan for data migration Configuration and development stage After the planning and design stage has been completed, the project team will begin implementing the up-grades to the exiting CRM system. During this stage the project team will configure CRM based on the information documented in the CRM design guide. The initial data migration process will occur providing a production ready CRM database for the business unit representatives to review and approve. All integration and customization procedures will occur during this stage. Objectives: • Installation of up-grades to existing CRM infrastructure • Configure up-grades to existing CRM system • Data migration • Integration and customizations as needed • Application testing • Gain acceptance of the final CRM configuration Deployment stage After gaining approval of the configurations and customizations made to the upgraded CRM system, the project team will move the application to production. CRM users will be trained on the documented business processes and learn how to use the new system to support their job functions. This stage concludes with a quality review questionnaire provided to the business and executive sponsors. Objectives: • Final data migration • CRM training • CRM application goes live • Conduct quality review questionnaire Support stage After a CRM implementation has gone live, it is important that that ongoing support and training take place. A successful CRM implementation evolves, as business needs change. The project team will map out an ongoing support structure to support the overall business objectives. Objectives: • Create an ongoing communication and support plan • Coordinate monthly “Lunch ‘n’ Learn” sessions Evaluate the Results Many companies select a Customer Relationship Management (CRM) system based on its ability to meet their needs today and for the foreseeable future. The goal for Classic Airlines is to select a system that will improve the way it does business, to drive profits and to reduce risk, while minimizing IT resource requirements. An up-grade of its existing CRM system will give Classic Airlines a customer-centric system that focus on the following elements (Seven Questions Most CRM Vendors are Afraid to Ask, 2007):  Single View of the Customer  Customer Process Improvement  Executive Value  Employee Value  Minimal IT Resource Requirements  Platform for Business Growth & Change  Risk Mitigation To succeed in each of these areas requires that Classic Airlines implement a flexible, scalable CRM solution. It requires an industry-standard architecture that will leverage the airline’s existing infrastructure and upgrades easily to keep total cost of ownership low. Above all, the right solution will have a combination of CRM and Business Process Management (BPM) that fits Classic Airline’s business processes today -- and in the unforeseeable future. Conclusion As Classic Airlines struggle to gain market share and sustain profitability in today’s fiercely competitive and economically demanding environment, they must develop new ways to manage their customer relationships to optimize customer loyalty and revenues. Classic Airlines’ immediate focus is on cost reductions in driving to more efficient operations. Up grading and learning to use its existing CRM system will give Classic Airlines an invaluable tool for managing customer relationships. For the new up-grade to succeed where the present system has failed requires the company to recognize CRM as a holistic strategy, instead viewing it as synonymous with its frequent flyer programs. In order to manage the customer more effectively across all lines of service, Classic Airlines must change their approach to CRM in a number of ways • Customer segmentation—Classic Airlines need to recognize that mileage-based segmentation is inadequate, whereas value-based and needs-based approaches can help guide investment decisions and drive greater insight into the needs of high-value customers. • CRM initiative development—In order to differentiate itself from the competition, Classic must abandon a “fast follower” approach to CRM initiative development, in favor of investing in initiatives with a high return, which respond to the needs and desires of its own customers. • Organizational design and management—Classic Airlines needs to instill a service mentality in its employees, empowering them with a complete view of the customer and clearly articulating the employee’s role in the CRM strategy. By taking steps to implement a truly consumer-centric approach to relationship management, Classic Airlines will be better positioned to acquire, develop and retain high-value customers. References A blueprint for customer relationship management in the travel industry (2001, June). Retrieved on March 9, 2006 from www.ibm.com. Accenture customer contact services (2007). Retrieved on March 23, 2007 from http://www.accenture.com/Global/Services/By_Subject/Business_Process_Outsourcing/CustomerContactServices.htm. Bormolini, D. (2003). A practical guide for selecting and implementing customer relationship management solutions. Retrieved on March 21, 2007 from http://www.selltis.com/crmroadmap.html. The Call Center Becomes a Revenue Generator (2002). Retrieved on March 14, 2007 from www.spherion.com/outsourcing. Chang, R. (2006). Being an effective transformational leader. Chief Learning Officer, 5(8), 17-17. Retrieved on March 10, 2007 from the Business Source Complete database. 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Misplaced expectations make for marketing missteps. Healthcare Financial Management, 59(1). Retrieved on March 10, 2007 from the Business Source Complete database. What is CRM' (2007). Retrieved on March 21, 2007 from http://www.wintouch.com/crm.htm. Yaeger, C. (2004). The value of benchmarking. Retrieved on March 23, 2007 from http://www.benchmarkinternational.com/Articles/Value%20of%20Benchmarking.pdf. Zarbock, W. (2006, March 1). CRM failures: Are they real'. Retrieved on March 20, 2007 from http://www.destinationcrm.com/articles/default.asp'ArticleID=5865. Table 1 Issues and Opportunities Identification Concept Application of Concept in Scenario or Simulation Reference to Specific Course Concept (Include citation) Personal Experience at your Organization Classic Airlines needs a customer-centric initiative that is integrated with its marketing strategy and aligned with its corporate strategy. In order to be successful, Classic Airlines must retain its customers by building loyalty and consistently providing an experience in line with its brand promise. This means that management at levels of the company must have a thorough understanding of what drives customer value. Understanding customer value means analyzing customer needs, behaviors and trends; analyzing industry/competitive trends; leveraging customer feedback; identifying and understanding key drivers of customer value; establishing long-term customer acquisition and retention objectives; performing customer segmentation analysis; and evaluating customer/segment profitability metrics. Successful customer-centric initiatives focus on achieving the three goals of “….customer acquisition, customer development, and customer retention….The means of achieving these goals include:  Understanding customer value and lifecycle to prioritize marketing and service resources  Using customer information to target promotional offers and cross-selling activities effectively  Using customer information in the design and development of products and services  Recognizing customers as individuals at all customer-contact points  Offering personalized or mass-customized service  Utilizing multiple alternate channels for marketing, sales and service transactions in order to improve service and reduce cost  Increasing the “share of customer” through greater penetration of travel-related products” (A Blueprint for Customer Relationship Management in the Travel Industry, 2001). Understanding customer value is paramount in the childcare industry. At the child development center where I work, whether we are trying to attract new customers or retain the parents we already have, we have found that consistent communication is the key to customer satisfaction. How well we communicate - and what we communicate - have a direct impact on our program’s bottom line. Our marketing message centers on the unique aspects of our program, and we have to back this up with actions and in regular communications to our parents. We have discovered that a happy parent will stay with our program and recommend us to others. Classic Air needs a relationship marketing strategy that creates customer equity and maximizes shareholder wealth. Amid the survival frenzy of dealing with the Board’s mandated 15% across-the-board cost reduction over the next 18 months, relationship marketing can be a one of the most important strategic initiatives for Classic Air. Classic Air’s most important marketing resource is its relationships with its customers. Building constructive relationships with selected target audiences is important to Classic Air’s long-term marketing success. Targeted relationship marketing initiatives can raise Classic Air’s credibility with decision-makers, investors, and other stakeholders. Relationship Marketing will allow Classic Air’s management to link and align various groups of stakeholders and initiatives inside the company in order to bond more intensely with customers and create new value with them. “The hallmark of developing and maintaining effective customer relationships is…relationship marketing, linking the organization to its individual customers, employees, suppliers, and other partners for their mutual long-term benefits” (Kerin, Hartley, Berkowitz, & Rudelius, 2006, p. 16). Relationship marketing begins the moment we secure the enrollment of a child. After parents have made the emotional decision to place their child in our care, they need to feel confident that it was the right choice. They need to be able to trust that we will truly deliver the quality education and loving care and family services we said we would. They need peace of mind. So its mandated and expected of all staff that we must and will provide exceptional customer service along with a progressive top notch program if we want to create customers who wouldn't think of taking their children any place else and who refer our center at every opportunity. Relationship marketing is achieved through the following techniques: We ethically deliver—We do what we say we’re going to do. We promote a quality program and we illustrate that quality to our parents through bulletin boards, newsletters, and projects the children bring home. We are open-minded. Flexibility is a password in today's workplace. As parents attempt to balance their lives with flexible work schedules, job sharing, and telecommuting, their early care and education needs will be less traditional or consistent. We make ourselves open to options to retain these good customers (e.g., parents-night out where we stay open extra four hours after closing). The center administrators and board realize that if we can accommodate them, not only will they stay, they will help us market our program by telling others how our services make their lives easier. We practice parent “attention” techniques--We like to say that parent attention causes retention. Parents want to feel welcome, appreciated, special. It's the combination of little things we do to make our parents feel important that adds up to big value to them. Parent attention activities have included a parent appreciation day and small tokens of appreciation given out on Valentine’s Day and Mother’s Day. We communicate! In all training seminars and workshops and in-services, the staff is constantly reminded that how and how often we communicate with our parents is a benchmark of our service in their eyes. For example, they get a daily note about their child's day. Our teachers are consistently reminded to always acknowledge them and their child with a smile and friendly greeting. Problems are handled quickly and in a professional manner. As childcare professionals, my co-workers and I have the unique opportunity to come face to face with our customers every day. How we communicate with our parents is an important element of customer service initiative. It is a marketing discipline that can contribute to increased customer retention, reduced marketing costs, and competitive differentiation. We ask what they think—Monitoring what the customer likes and dislikes is not enough to insure satisfaction. It is also important to make a regular and systematic effort to identify what our parents expect of us. For example, we periodically ask parents to complete a survey. The year we started using a suggestion box. Our PTO meets once every other week. Once parents know we really valued their opinions, they became more serious about making sure we got them. Relationship marketing is a forever undertaking. Our center is committed to a program of ongoing exceptional customer service. This has been a key driver in keeping our center doors open. Classic Air needs leaders who feel passionate about the company’s transformation vision and who provide stakeholders at all levels of the company with the energy and commitment to turn vision into reality. In the face of the Board’s mandated budget cuts, Classic Air is at the crossroads of its business “life.” To stay in business, the company has to develop a strategic business initiative that will help it better serve the needs of its customers and provide new and more innovative programs and services. At the core of this new strategy is the company’s leadership. There is no doubt that the company’s future will require new leadership attitudes and capabilities. The CEO and leaders at all levels of the company need to demonstrate the following:  Visioning –The company’s leadership must have a clear vision of where Classic Air is heading and a solid understanding of how the team they lead aligns with that vision.  Inspiring—Leadership must feel passionate about the company’s transformational vision, which allows them to provide people at all levels of the company with the energy and commitment to turn vision into reality.  Teaming—Teams that produce superior results can help the company transform and realize its vision. To this end, the company’s leaders must understand and embrace the diverse communication styles of others and know how to adjust their own management and behavioral styles to theirs in order to guide them more effectively.  Achieving---Transformational leaders need to know exactly to what extent their teams achieve results and contribute to the attainment of organizational goals. By establishing organizational and performance management metrics, leaders will be able to evaluate what has actually been achieved in terms of aligned performance results. “Peak performance will come from planning and evaluating individual performance in a systematic way—that is, simultaneously strategic and practical” (Chang, 2006).  Leveraging—The Board’s mandated budget cuts over the next 18 months make it perfectly clear that Classic Air will have to “do more with less.” Therefore, integrating strategic goals, business processes and human resource talent will be crucial to leveraging management’s efforts to keep the cost of doing business at an optimal level. This is where the company’s leadership gets the opportunity to develop and apply their personal influence skills. A leader’s ability to plan, inspire and lead innovative cultural change with the support of other key stakeholders in the company will keep the team alive and thriving during times of change. “Change is the only constant in business today, which means organizations need to transform themselves regularly in order to stay ahead of shifting industry conditions and marketplace demands….all senior leaders must role model transformational leadership skills and competence to address their unique opportunities and challenges” (Chang, 2006). Transformational leadership is a vital role for effective managers because leader effectiveness determines the success level of the organization. This is especially true in a service-oriented organization like a child development center. At the child development center where I work, all the training seminars and workshops that staff attends reminds us that organizations that take the time to teach leadership are far ahead of the competition. Specifically, in my workplace, the administrators and the board empower the staff to do what is best for the center. In addition, administrators, supervisors, and senior teaching staff: • listen to all viewpoints to develop a spirit of cooperation; • create a vision, using people in the center; • act as change agents within the center by setting an example of how to initiate and implement change; • help the center by helping others contribute to the center. In a service-oriented business like our child development center, transformational leadership can be applied in one-on-one or group situations. Using this approach, our director ( the leader) and the associates (other administrators, the teaching, staff and the other staff members) are “transformed” to enhance job performance and help our center be more productive and successful. Classic Airlines needs new ways to generate revenue and control costs that in are line with the Board’s 15% across-the-board cost reduction over the next 18 months. Classic Airlines is faced with the challenge of maximizing profitability across-the-board. The proposed alliance with Skyway Airlines may be one way of achieving this goal. This alliance offers the following benefits for Classic Air (Goel, 2003): Reach of Seamless Service Networks: A connection of networks gives the consumers a large choice of destinations to choose from and plan better, connections are eased out and there are increased benefits of Frequent Flyer Programs (they have a broader range of benefits to offer) and lesser possibilities of lost baggage. Also, the alliances’ network comes in handy when operations are to be made in highly competitive, unprofitable and price sensitive market conditions (e.g. pooling in of resources by two airlines to coordinate to overcome otherwise unprofitable routes). By connecting the networks, partners are able to expand their routes beyond their country territories. Enhanced Traffic Feed: With linkage of the airline networks the carriers can increase their load factors with the increased feed. Also, flight frequency can be increased without increasing the size of the fleet. Cost Reduction: The partners in the alliance can have the benefits of attaining the economies of scale (through joint operations of air and ground services) and scope (through increased reach and efficient connections) and increased traffic density (through network expansion and additional traffic feed). Service Quality Improvement: Ease of online connections, frequency and schedule convenience has been marked as the dimensions of an airline’s service quality. By entering into alliances, the schedules can be better-coordinated and waiting time for passengers reduced. Further, the increase in itinerary choices is another benefit that an alliance can offer to passengers. Marketing Advantages: The frequent flyer programs are pooled in an alliance and the passengers thus have a wider choice as well as more chances to accrue points to use later. Then there are many display benefits of Computerized Reservation System for airlines entering into strategic alliances. The visibility on the CRS is increased manifold as all the partners in the alliance show the flight to the same destination as their own. Consequently, the chances that a traveler will fly a particular airline are increased manifold. Increased market share and cooperative pricing that is possible is another reason for Classic Air to consider a strategic alliance with Skyway Airlines. “Strategic alliances are no longer a strategic option but a necessity in many markets and industries. Dynamic markets for both end products and technologies, coupled with the increasing costs of doing business, have resulted in a significant increase in the use of alliances” (Parise & Henderson, 2001). The child development center where I work is presently seeking funding to develop and implement a Family Strengthening Partnership that builds on the natural relationship between feeding and parenting. The majority of the children we serve are in the age range of 0-2 years. The proposed Family Strengthening Partnership will be developed in partnership with the county office of the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC). The purpose of this strategic partnership will be to provide parents with young children enrolled in our center as well as those in the surrounding community and the county with training on nurturing parent/child relationships. The training sessions will be offered at various sites throughout the county, but will be promoted primarily through our child development center. The initiative also includes various levels of prevention and intervention training concerning feeding and parenting issues for our teaching staff. Evidence of high levels of substance abuse has prompted the undertaking of this proposed initiative to add a more intensive parent education component to the services offered by our child development center. Table 2 Stakeholder Perspectives and Ethical Dilemmas Stakeholder Perspectives and Ethical Dilemmas Stakeholder Groups with Competing Values List: Group X versus Group Y The Interests, Rights, and Values of Each Group Course Concept CEO and CFO versus marketing staff The CFO - “In a management environment characterized by a host of difficult financial challenges, today's chief financial officers (CFOs) must fulfill many critical roles. They successfully add real value to their organizations by providing dependable strategic leadership, a consistent financial perspective, and active contribution to critical management decisions” (Kaufman, 2003). Classic Air’s CFO is the company’s chief financial planner, chief allocator of capital, chief of capital structure and debt management, chief accounting officer, chief credit officer, chief of the heavy finance department, and the chief defender of the company’s financial integrity. Share price pressures, competitor restructuring and consolidation means that Classic Air’s CFO is hunting for ways to improve operating performance and reduce costs. She will be measured upon the basis of her ability to identify and implement the opportunities that deliver the most rapid incremental results and the company’s resultant ability to generate operating cash flows. The CEO—The CEO is ultimately focused on the bottom line. Creating a business that will generate long-term sustainable economic growth appears to be the primary objective of Classic Air’s CEO. She is skeptical about innovation and prefers a more traditional approach to doing business. The Marketing Staff – Classic Air’s CEO sees the need for marketing success and like many CEOs identifies market share as the metric that defines marketing success. Classic Air’s CEO expected to see results from the efforts of the marketing staff, but these results did not materialize. Within turbulent, highly competitive marketplace, airlines, like Classic Air, are finding it increasingly important to respond both quickly and effectively to changing patterns of customer demand. Identifying customer demand patterns, then developing strategies to capitalize on these patterns is one of the responsibilities of the company’s marketing staff. Not only will Classic Air become more efficient, but its shareholders would see an investment in their only real source of revenue, the customer, and the meaningful profits that result. Classic Air’s marketing staff needs to know and understand those customers who contribute the most to the company’s bottom line. “Cash and profit' Tight financial markets mean that, where profits growth may have previously sufficed, cash is king again. Cutting costs alone is simply not enough in this discerning environment where cash flow from operations is needed to fund investment in growth-related projects. Investors, fund managers and analysts will be looking for a combination of improved bottom line performance and top line growth through investment. Inevitably, given these tight capital markets, companies are focusing on investments as well as divestments that will deliver fast incremental returns. CFOs play a key role in guiding their teams in the investment choices to be pursued, the risks involved and the financial and non-financial measures that need to be established and monitored in order to ensure the success of any new business initiative” (Paliwal, 2003) The CEO’s skepticism about innovation …”sends mixed messages throughout the organization and sets up the kind of second-guessing and playing politics that can undermine even the best developed business strategies. Unwilling to be measured by their failures, employees are reluctant to take risks that the successful development of new ideas demands and, as a result, even the desire to innovate diminishes” (Kuczmarski, 1996). Marketing strategies are not achieved in isolation. Successful marketing strategies require a cultural change in many companies. For classic air to develop the most effective measures of its marketing efforts the following must be in place (Sturm, Jr., 2005):  Early integration of marketing staff in the strategic planning process.  Availability of financial data at the product/service line level.  A corporate sense of risk.  A marketing infrastructure to identify key consumer segments that are driving the business and a master customer information file that will allow the tracking of the revenue from marketing initiatives and measure the results of these initiatives.  A clear set of measurable objectives agreed upon by the CEO, CFO, and chief marketing officer. The Board of Directors versus Senior Management Senior managers are supposed to set the tone and establish expectations and standards. They are expected to inspire and empower the other managers and staff to embrace new change initiatives. They must be change management agents. Senior executives must use a balanced leadership approach that embraces complexity, diversity, and social responsibility. Management must be cultivated and chosen for their ability to accept responsibility for implementing the corporate mission, vision, and values. Experience shows that strategies that are not effectively and efficiently executed result in loss to shareholders. When shareholder value is threatened senior executives and management often find themselves caught between the proverbial rock and the hard place. Shareholder value comes from the present value of the future. “Senior executives and managers must consistently work to achieve a balance between the pursuit of improved performance and profitability along with the institution and practice of ethical codes of conduct. In other words, shareholder value also means maximizing societal value, simultaneously doing well by the company and doing the right thing. The Board and senior managers must choose to incorporate values and responsibility in succession management rather than emphasize performance at all costs. In addition, they must make sure that an adequate governance policy is in place for managing strategic initiatives across the business” (Furr & Furr, 2005). Board of Directors versus shareholders Corporate governance and accountability versus ROI, and protection of assets are of primary concern to these stakeholder groups. The primary responsibility of the board of directors is to protect the shareholders' assets and ensure they receive a decent return on their investment. Boards of Directors approve new business initiatives and monitor their effect on the company’s health. Shareholders look to the Board to protect their assets and to carefully evaluate all new projects and business initiatives. The Board and shareholders look at time-frames, projected revenues versus actual revenues, and how new products/services initiatives measures up to their original projections. The Board and shareholders expect management to have a proactive approach to new products/services initiatives, for these initiatives to be highly resource intensive, and to be kept abreast of milestones and problems alike. “Profitable growth through seamless execution of strategies is the best way to assure the creation of long-term value for shareholders” (Dinsmore, 2004). To this end, a company’s board of directors must act as facilitators and enforcers of responsible corporate governance. Table 3 Analysis of Alternative Solutions [Click Twice on Table to Change, see instructions on next page]