United Continental I Agree That the First

United Continental

I agree that the first two are good.

For the third, the weakness would be that United Continental has cost control problems, which is the same as #2.

A weakness the company has is its customer satisfaction scores. This is a weakness for two reasons. One is that it makes it more difficult for the company to earn new business when it has a bad reputation. The other reason is that a poor customer satisfaction score reflects a lot of smaller issues at the company. Carey (2011) notes that Continental's customer satisfaction score is 64, a drop of ten points from the previous year. United held a score of just 61. These scores compare poorly to those of the company's nearest competitor, Southwest, which scored an 81. Issues that contribute to poor customer satisfaction can include understaffing, a poor organizational culture, operational issues like baggage handling, high fees and booking issues. No one issue is to blame for the poor scores, but the organization must improve in a lot of different areas to increase its customer satisfaction score and start to compete with Southwest.

Martin (2012) notes that there are some remaining weaknesses that relate to the merger, and the fact that it is still continuing. There were some significant glitches in integrating the reservation systems and eliminating the Continental name. The company's on-time rating dipped to 69%, including 53% at the key O'Hare hub. Such issues create a number of problems for the company. Obviously, if the problem is so bad it gets media coverage, this results in negative publicity. Also, high rates of late flights are a major issue for an airline that operates a hub-and-spoke system, because of the high number of passengers who have connecting flights. There are considerable challenges associated with merging airlines (Patel & Moreno, 2010), so when this decision is undertaken the leadership of the firm knows that the company will be in a weakened position under the full integration of the two airlines is complete. At that point, this will cease to be a weakness for the company, but for now, there are still issues relating to the merger and the company is still operating from a position of weakness as a result.

A fifth weakness for the company lies in the revenue streams. The core business of flying has very tight margins, especially in the United States. In addition, there is little cost certainty with respect to jet fuel, and as a result the profitability of most airlines is subject to a high level of volatility. Raising fees generally is negative for airlines, because although it provides additional revenue, it also reduces customer satisfaction. For United Continental to succeed, it needs to derive new revenue streams. Right now there is very little creativity in the industry and in this company specifically with respect to developing new revenue streams. There are going to be some ideas coming up soon (Peterson, 2012), but these still involve capturing additional revenue from existing passengers. This points to the difficulty that airlines have in diversifying their revenue streams. Airlines think of themselves as only being in one business, without considering what else they might be able to do to earn money. This myopia is a weakness, because it leads to inferior resource allocation and stunted creativity.