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Discussion of Goodwill of United Airlines

United Airlines is one of the largest airline carriers in the world, which nevertheless faces certain problems concerning its reputation. For instance, in 2017, a man was taken by force from an overbooked United Airlines plane for refusing to give up his seat (Zdanowicz & Grinberg, 2018). Thus, the company requires certain changes in its organizational structure to ensure better goodwill, the quantifiable reputation of businesses which is essential for ensuring long-term growth.

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Goodwill is an essential part of every business and it can be measured, despite the fact that it is intangible. Researchers define goodwill as a phenomenon which describes the reputation, brand, image, and prestige of a certain company (Rodell, Sabey, & Rogers, 2020). It is possible to assume that businesses with proper goodwill tend to be more successful since, generally, customers have a better impression of them compared to other enterprises. Essentially, the key to gaining goodwill is being able to deliver excellent-quality services to clients and cultivating a positive image of the company in their minds. Thus, with the help of goodwill, businesses will gain the capacity to satisfy the needs of their clients in a better way.

Moreover, goodwill also positively affects organizations themselves and their operations, thus improving their internal process. For example, recent studies demonstrate that goodwill is associated with an increased value, as well as the financial performance of companies (Satt & Chetioui¸ 2017). Thus, a positive corporate reputation can yield better opportunities for companies and drive their sales up since clients will be more likely to choose their products and services. Goodwill does not have any negative consequences or aspects; therefore, all companies strive to increase it to attain better organizational performance and financial results.

Thus, United States has to achieve a higher level of goodwill by adding certain changes to its organizational structure. Goodwill will ultimately help the company to improve its financial performance by building trust in its relationship with clients and other stakeholders. Thus, goodwill must become a top priority for the company for the next three years since it will provide it with a competitive advantage.

Organizational Structure
Figure 1. Organizational Structure

Applying the four main decisions of organizational structure and design, the company’s degree of specialization will concern dividing all work according to the competencies of employees and their responsibilities. Therefore, the type of departmentation in the organization will remain the same, namely function-based, one which implies creating departments for people with the same obligations. The authority and span of control of United Airlines will remain the same, but the two new departments will be added (Figure 1). As a result, the company will be able to attain better goodwill and increase its financial performance.

Figure 2. Action Plan

Actions Potential Results
Creation of the Public Affairs department Emergence of a body responsible for communication with stakeholders
Creation of an Innovation department Emergence of a department responsible for overseeing improvements
Investment in new plane amenities An increase in customer satisfaction
Staff training An increase in customer satisfaction
Investment in marketing A direct increase in goodwill

United Airlines has to follow five key steps to achieve a high level of goodwill. The creation of the Public Affairs department will focus on communication with clients and working on advertising and marketing projects which have been proven to increase goodwill (Machowska, 2019). The Innovation department will be tasked with introducing new changes to the planes to increase the level of comfort and ensure customer-oriented staff training, which also positively correlates with goodwill (Kliestik, Kovacova, Podhorska, & Kliestikova, 2018). As a result, the creation of the new departments and their activities concerning investments will yield an increase in customer satisfaction by the third year to 7.5 (Figure 3). Most importantly, the goodwill will have to reach 7.1 billion dollars (Figure 4). Thus, the strategic aim of raising goodwill will be achieved.

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Rate of Customer Satisfaction (from 0 to 10)
Figure 3. Rate of Customer Satisfaction (from 0 to 10)
Goodwill in Billion Dollars
Figure 4. Goodwill in Billion Dollars

References

Kliestik, T., Kovacova, M., Podhorska, I., & Kliestikova, J. (2018). Searching for key sources of goodwill creation as new global managerial challenge. Polish Journal of Management Studies, 17(1), 144–154.

Machowska, D. (2019). Delayed effects of cooperative advertising in goodwill dynamics. Operations Research Letters, 47(3), 178–184. Web.

Rodell, J., Sabey, T., & Rogers, K. (2020). “Tapping” into goodwill: Enhancing corporate reputation through customer volunteering. Academy of Management Journal, 63(6), 1–15. Web.

Satt, H., & Chetioui, Y. (2017). Does goodwill improve firm performance? Evidence from the MENA region. Risk Governance & Control: Financial Markets & Institutions, 7(2), 108-115.

Zdanowicz, C., & Grinberg, E. (2018). Passenger dragged off overbooked United flight. CNN. Web.

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