You have learned what managers do and how ideas about management have evolved over time. You’ve also considered the fundamentals of planning, strategic management and decision-making. It is now time to apply your insights. You have been asked to provide guidance to the senior management of regional airline NORTHEASTERN. Here’s the scenario: When Frank Molino, COO of NORTHEASTERN, received McKinsey’s latest insights into the aerospace industry, he was delighted to read that “passenger travel demand … is developing more significantly within regions” (p. 5). NORTHEASTERN is a regional airline and therefore likely to benefit from the predicted increase in demand. After 20 successful years, the company is currently celebrating its anniversary and a great return to business after the difficult years during COVID. The COO shared the good new with Maria McDonald, the CEO. But while Molino was highlighting the good news in the report, McDonald was more concerned about the uncertainties the report mentions. The CEO thinks that now is the right time to revisit the vision, mission and values of the company to plan for the next five years. This will then allow the company to develop strategic plans that can address the uncertainties in travel demand that the report is highlighting. Maria McDonald decided that outside help should be sought to plan for the work ahead. She knows that not everyone is convinced that the company needs to spend time evaluating where it is going. Some members of management think that everything seems to be just fine. McDonald wants to organize a two-day offsite meeting for the senior management team to review the current status of the company, discuss and decide the future direction, and make plans for the future. You have been asked to provide guidance as to how the group should spend the two days away from the office. Take some of the concepts that are explained in the textbook regarding strategic planning and that we have discussed in class and apply them to the situation at hand. Using the frameworks and theories, clarify what senior management should focus on. Use the following questions to guide your analysis and report: What is senior management’s job when it comes to the future of the company? What challenges is the company facing? Can a system view help address some of the challenges? If so, how? What framework should the company use to develop its strategic plan for the next five years? As they are meeting and discussing options, how should they go about deciding what to do? Is there anything they should be worried about in their decision-making process? Once the plan has been developed, what are the next steps? How can the senior management team ensure that the plan is implemented successfully? Make assumptions where you think they are needed, and be explicit about them in your text.
NORTHEASTERN Airlines, a well-established regional carrier, is on the cusp of a significant milestone, celebrating its 20th anniversary. The airline has not only weathered the tumultuous challenges presented by the COVID-19 pandemic but is now ready to embrace a new era of opportunities. Frank Molino, the company’s astute Chief Operating Officer (COO), is filled with optimism, buoyed by McKinsey’s latest report that heralds a resurgence in regional travel demand. The report’s insights indicate a promising path forward for NORTHEASTERN, given its regional focus. However, the dynamic leadership of Maria McDonald, the Chief Executive Officer (CEO), provides a valuable counterpoint. Maria McDonald, while acknowledging the encouraging trends, maintains a cautious stance, underlining the report’s uncertainties. She rightly discerns that this juncture marks an opportune moment to reevaluate the fundamental pillars of the company – its vision, mission, and values – with a keen eye on the next five years. In response to this pivotal challenge, this paper embarks on a mission to provide strategic guidance and insights, addressing pivotal questions and offering a roadmap to guide NORTHEASTERN’s senior management in the critical domains of strategic planning and decision-making.
Senior Management’s Role in Shaping the Future
Senior management occupies a pivotal role in shaping the trajectory of an organization. They serve as the compass guiding the company towards its desired destination. A crucial aspect of their role is providing visionary leadership, where they envision the future state of the company and chart a course to reach that vision. By setting clear organizational goals, senior management creates a shared purpose and direction for the entire company, fostering alignment and motivation among employees. Additionally, their responsibility extends to the formulation of effective strategies, which are the blueprints for achieving these goals. For NORTHEASTERN, this entails a dynamic process of redefining the company’s vision, mission, and values to remain attuned to the ever-evolving aerospace industry (Dess, Lumpkin, & Eisner, 2019). By conducting a SWOT analysis, they gain a comprehensive understanding of the company’s internal strengths and weaknesses, coupled with external opportunities and threats. This analysis serves as the foundation upon which strategic decisions are made, ensuring that the company’s goals are not only attainable but also resilient to the industry’s changing dynamics. In essence, senior management is the vanguard, guiding NORTHEASTERN towards a future marked by adaptability, innovation, and sustainable growth.
Challenges Faced by NORTHEASTERN
NORTHEASTERN Airlines confronts a multitude of challenges in its pursuit of sustainable growth and competitive success. Foremost among these is the pronounced uncertainty surrounding passenger travel demand. As indicated in the recent McKinsey report, these uncertainties are deeply rooted in economic oscillations, evolving environmental concerns, and ever-shifting consumer preferences. In tandem with the capricious nature of demand, NORTHEASTERN also grapples with the relentless competition characteristic of the regional airline industry. The threat of new market entrants looms large, and established competitors present formidable obstacles to overcome. To fortify its market position, NORTHEASTERN must craft a strategic positioning plan that safeguards and potentially augments its market share. Furthermore, the airline must navigate the intricate landscape of environmental regulations that continue to grow in stringency and significance within the aviation sector. Compliance with these regulations and a proactive approach to sustainability objectives are non-negotiable. In addition, the swift pace of technological advancements within the aerospace industry is another challenge that demands attention. To maintain operational efficiency and deliver an exceptional customer experience, NORTHEASTERN must vigilantly keep pace with the latest innovations.
System View Approach
A system view approach offers a comprehensive lens through which NORTHEASTERN can effectively confront the multifaceted challenges it encounters. At its core, systems thinking is a methodology that necessitates viewing the organization as an integrated whole, acknowledging the intricate interconnections among various facets, and discerning how adjustments in one facet can ripple across the entire system (Meadows, 2008). This approach proves especially valuable when addressing intricate, interrelated issues prevalent in the ever-evolving aviation industry. In the case of NORTHEASTERN, applying systems thinking involves a holistic evaluation of the organization, taking into account how fluctuations in travel demand can trigger a cascade of repercussions in different aspects of the company, including pricing strategies, route planning, and workforce management. By adopting a system view approach, NORTHEASTERN can attain a more profound comprehension of the dynamic interactions within the organization and, in turn, develop more informed and effective strategies to adapt to the uncertainties of the aerospace industry.
Strategic Planning Framework
For the development of a robust strategic plan spanning the next five years, NORTHEASTERN Airlines should strongly consider adopting the Balanced Scorecard framework, as proposed by Kaplan and Norton in 2018. This framework, renowned for its effectiveness, provides a multifaceted approach to evaluating and improving organizational performance by concentrating on four fundamental perspectives: financial, customer, internal processes, and learning and growth (Robbins & Coulter, 2018). By closely aligning their strategic objectives with these distinct perspectives, NORTHEASTERN has the opportunity to create a well-rounded plan that encompasses crucial aspects of their business operations. This approach ensures not only the financial sustainability of the company but also places a significant emphasis on enhancing customer satisfaction, streamlining internal processes for operational excellence, and fostering the development of employees within the organization. Such a balanced approach allows NORTHEASTERN to address multifaceted challenges effectively and capitalize on opportunities while maintaining a holistic view of its mission and values.
In the decision-making process, senior management should adopt a structured approach that encompasses several key steps. Firstly, they must identify and thoroughly explore various strategic alternatives for the company’s future, taking into account potential scenarios related to shifting travel demand, competitive forces, and evolving regulatory landscapes. Subsequently, these alternatives should be subjected to rigorous evaluation using essential decision-making tools such as cost-benefit analysis and SWOT analysis, enabling the team to assess the feasibility and potential impact of each option. Following this evaluation, it becomes imperative to prioritize strategic objectives by ranking them based on their significance and alignment with the organization’s mission and values. Once these objectives are clear, the senior management team can proceed to select the most suitable strategy that not only addresses the company’s current challenges but also leverages its existing strengths. Finally, to transform their chosen strategy into actionable steps, the team should collaborate in developing a comprehensive action plan. This plan should outline specific initiatives, assign responsibilities, and establish timelines to ensure the effective execution of the chosen strategy (Hitt, Ireland, & Hoskisson, 2017).
Concerns in Decision-Making
While making strategic decisions, senior management should remain vigilant regarding potential pitfalls that can undermine the effectiveness of their decision-making process. Cognitive biases, such as confirmation bias and overconfidence, can cloud judgment and lead to suboptimal choices. To counteract these biases, senior management should implement decision-making protocols that require a thorough examination of assumptions and encourage the consideration of alternative viewpoints. Additionally, groupthink, a phenomenon where group members tend to conform to a consensus without critically evaluating options, should be actively avoided. To achieve this, leaders should foster an environment where dissenting opinions are not only tolerated but welcomed, promoting a culture of healthy debate and rigorous analysis. Furthermore, resistance to change is a common obstacle in the implementation of strategic decisions. To mitigate this challenge, senior management should ensure that their decision-making process is transparent and that all stakeholders understand the rationale behind the chosen strategy. They should also prioritize fostering an organizational culture that embraces innovation and adaptability, making employees more receptive to change and facilitating a smoother implementation of strategic plans (Bazerman & Moore, 2019).
The successful implementation of NORTHEASTERN Airlines’ strategic plan hinges on a comprehensive approach that encompasses several vital components. Clear and consistent communication is paramount, ensuring that all employees understand their roles in achieving strategic goals. Adequate resource allocation, including funding and personnel, is essential to fuel the plan’s initiatives. To track progress and make timely adjustments, robust monitoring and feedback mechanisms with defined performance metrics must be in place. Active employee engagement is a linchpin, motivating the workforce to align their efforts with the strategic plan. Lastly, fostering a culture of continuous improvement allows NORTHEASTERN to remain adaptable and responsive to industry changes and evolving customer needs, ensuring the ongoing relevance and effectiveness of the strategic plan (Kaplan & Norton, 2018).
In conclusion, NORTHEASTERN Airlines’ senior management faces the imperative task of proactively addressing the uncertainties in the aerospace industry and strategically planning for the next five years. By adopting a comprehensive “system view” approach and leveraging the Balanced Scorecard framework, they can effectively navigate the challenges and make well-informed decisions that align with the company’s overarching mission and values. However, they must remain vigilant about potential decision-making pitfalls, including cognitive biases and groupthink. To ensure a successful strategic plan, the senior management team should actively encourage diverse perspectives, facilitate rigorous analysis, and foster a corporate culture that values innovation and adaptability. As they transition from planning to implementation, transparent communication, resource allocation, monitoring, and robust employee engagement are crucial for the company’s future success. In embracing change and adapting to the evolving dynamics of the regional airline industry, NORTHEASTERN can position itself for a promising and sustainable future.
Bazerman, M. H., & Moore, D. A. (2019). Judgment in Managerial Decision Making. John Wiley & Sons.
Dess, G. G., Lumpkin, G. T., & Eisner, A. B. (2019). Strategic Management: Text and Cases. McGraw-Hill Education.
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2017). Strategic Management: Concepts and Cases: Competitiveness and Globalization. Cengage Learning.
Kaplan, R. S., & Norton, D. P. (2018). The Balanced Scorecard: Translating Strategy into Action. Harvard Business Review Press.
Meadows, D. H. (2008). Thinking in Systems: A Primer. Chelsea Green Publishing.
Robbins, S. P., & Coulter, M. (2018). Management. Pearson.
Frequently Asked Questions (FAQ)
Q1: What is the role of senior management in shaping the future of NORTHEASTERN Airlines?
A1: Senior management plays a crucial role in providing visionary leadership, setting organizational goals, and formulating strategies to ensure the company’s future success.
Q2: What are the main challenges facing NORTHEASTERN Airlines in the current aerospace industry?
A2: NORTHEASTERN Airlines faces challenges such as uncertainties in travel demand, competition, environmental regulations, and rapid technological advancements in the industry.
Q3: How can a system view approach help NORTHEASTERN Airlines address these challenges?
A3: A system view approach allows the company to consider interdependencies within the organization and understand how changes in one area can impact the entire system, which is crucial in addressing complex challenges.
Q4: What is the recommended strategic planning framework for NORTHEASTERN Airlines’ next five years?
A4: The Balanced Scorecard framework, which focuses on financial, customer, internal processes, and learning and growth perspectives, is recommended for a well-rounded strategic plan.
Q5: How should senior management go about making decisions during the strategic planning process?
A5: Senior management should follow a structured approach, including identifying alternatives, evaluating them, prioritizing objectives, selecting a strategy, and developing an action plan.