The Italian airline, Alitalia is losing $60 000 an hour. An agreement with trade unions should allow the airline to access $400 million of European and government loans. After a year-long struggle between the Alitalia management and the trade unions over a series of cost-cutting measures, several senior managers departed. The trade unions said they will continue to protect members’ interests. Employee opposition to change reflects the culture found in many Italian firms. However, faced with financial disaster, even the trade union admits that Alitalia needs reform. Like other airlines, Alitalia was hit hard by the impact of the 9/11 terrorist attack and by the growth of low cost airlines. Domestic travelers fell by 11 % and increasing fuel costs has added to its problems. Alitalia, facing a cash flow crisis, negotiated with trade unions to cut one quarter of its workforce and to sell loss-making service operations such as maintenance and bookings. However, critics argue Alitalia has not addressed problems as effectively as other airlines, which restructured and reduced their workforces earlier. It failed to update its fleet with more economical and faster planes. The Italian government, with more than 50 % ownership of the airline deliberately slowed management reform. [Source: adapted from The Economist 11-17 September 2004 and The Guardian 7 September 2004]
(a) Using a PEST framework, analyze the external [8 marks]
factors that led to crisis at Alitalia.
Case Study 2: Wide Water plc
Wide Water plc is a global conglomerate with interests in products including household electrical goods, plastics and airplane engines. In 1999 Bob Monkville took over as chairman and chief executive officer at Wide Water plc. Bob immediately decided that Wide Water plc had to make significant changes if the organization was to survive and grow in the twenty first century. After lengthy discussions with his regional directors Bob explained that Wide Water plc would: . focus on those markets where it currently had a leading market position and an excellent reputation . research markets with considerable growth potential . close down or reform areas of the business that were under performing . reduce the workforce by approximately 20 000 . flatten the organizational structure to face the challenges presented by globalization . draft ethical objectives . move into new and expanding markets such as insurance and finance . relocate the production of household electrical appliances . replace many of its middle managers that lacked the dynamism and energy to implement radical changes.
(a) With reference to Wide Water plc, distinguish [4 marks]
between their objectives, strategies and tactics and describe how these interrelate.
(b) Assess the current position at Wide Water plc [6 marks]
using SWOT analysis.
(c) Explain three likely effects of globalization on [6 marks]
Wide Water plc.
(d) Explain two potential advantages for Wide Water [4 marks]
Complete Download Baby Read Aloud Basics Fun and Interactive Ways to Help Your Little One Discover the World of Words 1st Edition Caroline J. Blakemore PDF All Chapters
Complete Download Baby Read Aloud Basics Fun and Interactive Ways to Help Your Little One Discover the World of Words 1st Edition Caroline J. Blakemore PDF All Chapters
