1) When Air Canada Struggled to Survive
You would not know it by their current status, but many years ago, Air Canada was
struggling to just survive. By the end of 2001 things looked grim for Air Canada and its
chief executive, Robert Milton. The 2001 world trade centre attack had temporarily
changed world opinion about airline travel. Milton laid off roughly a quarter of his staff
and analysts were suggesting that Air Canada would very soon run out of cash. In 2002 a
further blow was dealt to the airline industry when a ‘new’ disease “SARS” hit news
headlines. Toronto was identified as a major area of concern and so flights between
Canada and other popular destinations were cancelled. At the time it seemed that matters
couldn’t get any worse.
Air Canada had already been struggling before all this. When Milton also took over the
then well-known Canadian Airlines, he burdened himself with having to manage two
groups of employees who had previously known only competition with one another.
Many of the original Air Canada employees resented the fact that Canadian Airline
workers came in with more seniority and thus greater job security. Levels of motivation
dropped to an all time low. There was a great deal of ill feeling during and after the
merger of the two airlines.
Another seemingly ill-suited strategy was Air Canada’s attempt to oust West Jet by
launching a separate low-fare airline in Western Canada. Another ineffective strategy had
been to change the brand image of Air Canada. By comparison West Jet maintained a
much higher level of productivity and motivation among its staff. West Jet had a highly
efficient, nonunion workforce. Job descriptions at West Jet weren’t “written in stone”. By
comparison, Air Canada had a rigid corporate structure.
Identify and explain the external and internal forces which might have influenced the
difficulties at Air Canada.
Answer:
Consider the impact of both internal and external forces in this situation with any
assumptions as necessary.
External forces - should be identified as part of the context within which AC operates -
particularly able students should note that the specific external forces are connected to the
kind of industry the organization is in, i.e. different external force for different kinds of
organizations. In this instance - should focus on economic forces after 911, political
forces of restrictions and security issues, competitive forces - expansion of the airline
industry including opening of discount airlines (link here with deregulation of airline
industry in Canada), societal forces - link to 911 and also social influences here of SARS,
DVT and related public fears. Global forces may wish to relate to events in other
countries, e.g. 911, SARS in Asia and link with Canadian cases.
Test Bank for Karakowsky and Guriel, The Context of Business, 1e
Copyright © 2015 Pearson Canada Inc. 1
You would not know it by their current status, but many years ago, Air Canada was
struggling to just survive. By the end of 2001 things looked grim for Air Canada and its
chief executive, Robert Milton. The 2001 world trade centre attack had temporarily
changed world opinion about airline travel. Milton laid off roughly a quarter of his staff
and analysts were suggesting that Air Canada would very soon run out of cash. In 2002 a
further blow was dealt to the airline industry when a ‘new’ disease “SARS” hit news
headlines. Toronto was identified as a major area of concern and so flights between
Canada and other popular destinations were cancelled. At the time it seemed that matters
couldn’t get any worse.
Air Canada had already been struggling before all this. When Milton also took over the
then well-known Canadian Airlines, he burdened himself with having to manage two
groups of employees who had previously known only competition with one another.
Many of the original Air Canada employees resented the fact that Canadian Airline
workers came in with more seniority and thus greater job security. Levels of motivation
dropped to an all time low. There was a great deal of ill feeling during and after the
merger of the two airlines.
Another seemingly ill-suited strategy was Air Canada’s attempt to oust West Jet by
launching a separate low-fare airline in Western Canada. Another ineffective strategy had
been to change the brand image of Air Canada. By comparison West Jet maintained a
much higher level of productivity and motivation among its staff. West Jet had a highly
efficient, nonunion workforce. Job descriptions at West Jet weren’t “written in stone”. By
comparison, Air Canada had a rigid corporate structure.
Identify and explain the external and internal forces which might have influenced the
difficulties at Air Canada.
Answer:
Consider the impact of both internal and external forces in this situation with any
assumptions as necessary.
External forces - should be identified as part of the context within which AC operates -
particularly able students should note that the specific external forces are connected to the
kind of industry the organization is in, i.e. different external force for different kinds of
organizations. In this instance - should focus on economic forces after 911, political
forces of restrictions and security issues, competitive forces - expansion of the airline
industry including opening of discount airlines (link here with deregulation of airline
industry in Canada), societal forces - link to 911 and also social influences here of SARS,
DVT and related public fears. Global forces may wish to relate to events in other
countries, e.g. 911, SARS in Asia and link with Canadian cases.
Test Bank for Karakowsky and Guriel, The Context of Business, 1e
Copyright © 2015 Pearson Canada Inc. 1
