Economics Airline Industry - 2595 Words

Part 1 The Characteristics Of The Airline Industry Preface Introduction The Primary Characteristics Competition Within The Airline Industry The Secondary Characteristics – The Tertiary and Quaternary Characteristics – Part 2 PESTEL Of The Airline Industry Conclusion References PART 1 The Characteristics Of The Airline Industry Preface Economics or Managing In The Global Environment, a subject everyone needs to be familiar with and most believe or think that they are, but at the end of the day, very few are competent and understand it’s deep meaning, intricacies and implications. These implications and meanings are for the Government, the people, the economy as well as for the observer ( a person observing the economy or industry in a†¦show more content†¦All airlines offer products and services of similar nature 4. Airlines enjoy substantial as well as major economies of scale 5. There is growth through merger 6. Airlines are mutually dependant on one an other 7. Price rigidity and non – price competition 8. Price Transparency and collusion Having said that, it is now amply clear that airlines, whether full service carriers or low cost, short haul or long haul operate in an oligopoly. Competition Within The Airline Industry A key characteristic of an oligopoly is limited competition, collusion and interdependence within firms. In recent times, we have seen sworn public enemies colluding privately. British Airways and Virgin Atlantic coming together to fix the passenger fee for ‘fuel surcharge’ to the flier. The first to investigate were the Office for Fair Trade and after much investigation, the trial broke down on 10 th May 2010 due to discovery of certain e-mails. Last month it was revealed that Virgin Atlantic and Cathay Pacific might have illegally co-ordinated prices for passenger flights between London Heathrow and Hong Kong’s Chep Lap Kok airport between 2002 and 2006. [3] Airlines compete in severa l other ways as well. Ticket prices fluctuate and the earlier you purchase, the cheaper it is. Frequencies and timings of flights differ over sectors. With regard to timings, British Airways have the BA 26 and the BA 28 leaving Hong Kong for London within 15 minutes of each other. Virgin leaves at the sameShow MoreRelatedAirline Industry and Its Economic Outline2890 Words   |  12 PagesAirline Industry and Its Economic Outline Frank L Mannino Jr. Axia College of University of Phoenix ECO/205 Economic Theory May 09, 2010 Airline Industry and Its Economic Outline The question can be is. How has the economy of the airline industry performed throughout the many decades it has been? In addition, what did the industry do as it has gone through many events that have challenged its survival? In this type of industry, we can say that it has seen their share of success in profitsRead MoreEconomic Profile: Airline Industry2794 Words   |  12 PagesEconomic Profile: Airline Industry Introduction The airline industry provides services for passenger and cargo transport. Over the years the airline industry has faired fairly decent. That is, until the September 11 tragedy in 2001. From 1995 through 2000, the airline industry earned about $23 billion then lost about $35 billion from 2001 through 2005 (McCabe, R., 2008). There are many factors that indicate the economic downfall of the airline industry after the September 11 incident. The purposeRead MoreEconomic Analysis of the Airline Industry2366 Words   |  10 Pagesec Economic Analysis of the Airline Industry Tisha Smith Axia College of UOP ECO 305 Economic Theory George Harris March 18, 2007 Economic Analysis of the Airline Industry Introduction The airline industry is one that is both costly and necessary to the economy. Costly because of the funding provided by the government, recent layoffs; which has a hand in rising inflation, dealing with negative externalities and high security risks;Read MoreEconomic Profile of the Airline Industry Essay2195 Words   |  9 PagesEconomic Profile of the Airline Industry Airlines use a formula of combining their yield and inventory costs to determine ticket prices. While it is imperative to focus on the idea of being profitable, the focus is to maximize the cost of the flight revenue. One huge factor that encourages an increase in the cost of tickets relates to a customer ordering a ticket close to the departing date, define this as a risk factor because they need to make up for all unsold seats. A high percentageRead MoreHow Is the Economic Downturn Affecting the Airline Industry?969 Words   |  4 PagesEXECUTIVE SUMMARY ï  ¶ Stagflation in US economy threatens outlook for the airline industry profitability. US airlines forecasting Q108 losses citing high fuel costs and a potential economic slowdown. ï  ¶ Other regions of the world will expand such as Asia, Middle East and Latin America. ï  ¶ Slowdown has already affected some US small-mid cap carriers with the recent onslaught of bankruptcies. ï  ¶ US majors are better armed to combating the effects of the sharp increase in jet fuel. Cost reductionRead MoreDemographic, Economic Technological Factors of Hr Planning for Airline Industry in Spore4005 Words   |  17 PagesIntroduction The airline industry is by itself plays a big part in the economy. It generates 31.9 million jobs globally. (The impact of the financial crisis on labour in the civil aviation industry) It involves transportations, catering, securities, logistics, etc. As it does not work as an industry by itself, HR planning comes to be an important task. The airline industry has generally seen success in the many aspects involved with it – service, tourism, innovations etc. Despite the terrorismRead MoreEconomic Impact on Aviation Industry1294 Words   |  6 PagesThe economic situation has proven to have impacted the airline industries in many ways. For instance, changes in price of an airline industry may also change the demand and elasticity of the services offered by the airline company. In this regard, the outlook of the airline industry can still be considered to have strong growth in spite of changing economic conditions. For airlines, the economic situation for prices, wage inequality and even monetary aspects will hold many challenges and only thoseRead MoreThe Civil Law Limits Property Rights1718 Words   |  7 Pagespublic sector and the absence of a strong centralized economic planning. However, this common belief is a myth long. Through the civil law and regulation, state and local governments and the federal government substantially affect almost all industries. The civil law limits property rights, contractual obligations defines and establishes quality standards for goods and services through laws. Regulatory policy takes two general forms. Economic regulation controls the benefits, sets prices and determinesRead MoreCurrent Situation of Airline Industry1122 Words   |  5 PagesCurrent Situation of Airline Industry Since the airline industry was deregulated in the late 1970s, they shall hold the line on the number of planes they fly. The result is that the people by plane shall be more and more, and the fares shall become expensive. Because air transport is faster than other transportation methods, the people increasingly prefer to fly. The air transportation shall be an important transportation method in the future, and the people engaged in air transportation shall haveRead MoreThe Flight Of The Airline Industry1231 Words   |  5 PagesOffice air mail), cargo services (e.g. Ford) and passenger service airlines had emerged during this period. With the passage of the Airline Deregulation Act in 1978, it opened a new chapter for the airline industry (Air Transport Industry, 2014). Thought out the past 110 years, the airline industry progressed with technology aspect as well as the economic aspect; recessions, economic downturns and oil crisis have impacted the industry (Zarb B. , 2014). The air travel in the United States grew fast until

The Disabled An Unseen Entity Of The Community And Most...

Intellectual Disabilities Jason Andersen Wayland Baptist University MGMT 5320 Research Methods August 2, 2015 Abstract Many intellectually disabled are an unseen entity of the community and most people don’t understand what intellectual disabilities. What else are unknown to most people are the benefits that are available to them. What are the programs available to the disabled and what are the implications of being in the programs, those are the questions that by knowing the programs that are available to those with intellectually disabilities is a step in becoming an advocate for those with disabilities. Knowing the difference between the programs and what each program has to offer helps those searching for help for a loved one more knowledgeable in finding the care for their loved ones. This paper outlines what the differences are on care for the intellectually disabled in Texas and Tennessee and looks and what funding each state receives and where the money goes. This paper also looks at the understanding of the public’s knowledge and understanding of these programs. Key words Intellectually disabled, Mentally handicapped, Mental Health Mental Retardation. Home and Community Based Services Introduction Societies growth can be seen in the manner in which it treats and cares for those who cannot care for themselves. Understanding the programs available and how they are funded helps society become aware of the needs of the disabled. This paper willShow MoreRelatedEssay on Silent Spring - Rachel Carson30092 Words   |  121 Pageseditor of all agency publications.) It wasnt until 1951 that her next and most popular book, The Sea Around Us, appeared. It was among the first examples of what was to become an important late twentieth-century genre, science as literature. On the New York Times bestseller list for eighty-six weeks, this volume earned Carson enough royalties to enable her to retire from government work and focus on the projects that most interested her. After completing the third and final volume of her biographyRead MoreSda Manual Essay101191 Words   |  405 Pages.......................................... Personal Ministries Secretary .................................... ............ Community Services/Dorcas Society ...................................... Community Services Center ................................................... Adventist Men ........................................................................ Ministry to People With Disabilities ...................................... Bible School Coordinator .......................................Read MorePlenary Session69346 Words   |  278 Pageswork: a. To deadlines b. Just â€Å"whenever† Do you tend to choose: a. Rather carefully b. Somewhat impulsively At parties do you: a. Stay late, with increasing energy b. Leave early with decreased energy Are you more attracted to: a. Sensible people b. Imaginative people 14. Does it bother you more having things: a. Incomplete b. Completed 15. In your social groups do you: a. Keep abreast of other’s happenings b. Get behind on the news 16. In doing ordinary things are you more likely to: a. Do it the usualRead MoreMarketing Manage ment130471 Words   |  522 Pagesto be different than the competitors. Hence marketing becomes a very important functional area for every firm where the competition is very high. In a business firm, marketing generates the revenues that are managed by financial people and used by the productions people in creating products or services. The challenge of marketing is to generate that revenue by satisfying consumers wants at a profit and in a socially responsible manner. Marketing is not limited to business. Whenever you try to persuadeRead MoreLogical Reasoning189930 Words   |  760 PagesDiablo Valley College; Kevin Galvin, East Los Angeles College; Jacquelyn Ann Kegley, California State University-Bakersfield; Darryl Mehring, University of Colorado at Denver; Dean J. Nelson, Dutchess Community College; James E. Parejko, Chicago State University; Robert Sessions, Kirkwood Community College; and Stephanie Tucker, California State University Sacramento. Thinking and writing about logical reasoning has been enjoyable for me, but special thanks go to my children, Joshua, 8, and JustineRead MoreStephen P. Robbins Timothy A. Judge (2011) Organizational Behaviour 15th Edition New Jersey: Prentice Hall393164 Words   |  1573 PagesSociology 14 †¢ Anthropology 14 There Are Few Absolutes in OB 14 Challenges and Opportunities for OB 15 Responding to Economic Pressures 15 †¢ Responding to Globalization 16 †¢ Managing Workforce Diversity 18 †¢ Improving Customer Service 18 †¢ Improving People Skills 19 †¢ Stimulating Innovation and Change 20 †¢ Coping with â€Å"Temporariness† 20 †¢ Working in Networked Organizations 20 †¢ Helping Employees Balance Work–Life Conflicts 21 †¢ Creating a Positive Work Environment 22 †¢ Improving Ethical Behavior 22

Business and Service Industries

Question: You have decided to open up a restaurant in London serving fast food takeaway. You would like to open up 1 restaurant initially and then in a few years open more restaurants in in London. You need to prepare a report to potential investors how you plan to fund and price your products. Answer: Introduction We have decided to open a restaurant in the great city of London. The restaurant will be in nature of fast food takeaway. We have decided to open one such restaurant during first year of operations and we shall expand our business once this restaurant is settled operationally. Sources of Funds available for Business and Service Industries According to Brooks (2009), every business and service industry has following sources to finance its business operations: Equity Share Capital funds from: Friends and Relatives Angel Investors Loan Funds from: Friends and Relatives Venture Capital funds Small business schemes Retained Profit Debt Factoring Equity share capital is the primary source of finance for every business. It is permanent source of finance. Moreover, payment of dividend is no compulsory on equity shares. The company can pay dividend only if it has profits and directors declare dividend. However, as the equity shareholders bear the risk, it is more risky. Moreover, as the dividend is not tax deductible, it also increases cost of equity capital. Equity capital can be raised from existing investors if they are ready to make further investment in the company. It can also be raised from friends and relatives if they are ready to make participation in the ownership of the company. Angel investors are also keen to invest in start up companies with potential to grow big in size and provide huge returns. They can be very good source of finance for start up companies with solid fundamentals (Higgins, 2007). The company can also finance its operations through debt. Debt capital is more flexible as compared to equity as the company can raise and repay debt as per its requirement. Moreover, cost of debt is lower as compared to equity as interest is tax deductible. The company can increase return of equity shareholders with the help of positive financial leverage. However, debt capital carries more risk as the company has to pay interest on debt even if it does not have profits. If the company is unable to serve interest and principle timely, debt holders can demand liquidation of the company. Therefore, debt capital increases financial risk of company. The company can raise debt from friends and relatives if its requirement is low to medium. However, if the finance requirement is high, the company will have to approach bank and bank will finance the company after completing credit check and document formalities. The company will have to mortgage its assets with bank for the purpose of obta ining debt. The company can also raise long term debt from venture capital funds. These funds provide long term finance with flexible interest rate and repayment schedule to start up companies. The rate of interest can be low during the initial stage to support profitability of the company and interest rate can increase at growth stages. Moreover, moratorium is also provided for repayment of principle (James, 2010). Retained profit is also very important source of finance for the company. The company can retain the profit in the business instead of distributing it to the owners if it has cash requirement. The company can get this finance without any cost. The owners will also be happy as the company is employing their funds profitably (Yescombe, 2002). Creditors are also very important source of financing working capital of the company. The company can negotiate with the suppliers for better credit terms and it can also request the suppliers to enhance credit period to support its working capital requirement. The biggest advantage of this source is that it comes without any additional cost if terms are properly negotiated (Yescombe, 2002). The company can also discount its accounts receivables with the factoring company and get finance against its accounts receivables. This debt can be repaid from proceeds of accounts receivables (Yescombe, 2002). Thus, it can be said that there are various sources of finance for the business and it can raise finance according to its requirement. Source of Income According to Neal Pike (2009), income generation is very essential for every business to survive and prosper. We have designed a unique business model for our restaurant. Therefore, we would be able to generate income from various sources such as; - Sales - Commission - Sponsorship - Grants The primary source of our revenue will be selling of fast food. We shall target young students and jobbers to sale our food. These customers are always looking for quality food at reasonable price and they are also heath conscious. We believe that we will be able to get good share of these customers as we have kept our prices very reasonable looking to the overall market rates. Moreover, we shall serve best quality food. We will also sell readymade foods of large retailers. We have already signed long term contract with two such retailers. These retailers already have base of royal customers. We shall utilize the market strength of these retailers and sell their products through our restaurants. We will get commission of 10% on food sell on behalf of them. We will also accept sponsorship from local companies to market their products. Our restaurant will be situated in the middle of the city. Moreover, we will have regular young and earning customers. Therefore, local companies will be interested in advertising with us. We are also eligible for local government grants as we are a new enterprise with young entrepreneur. This grant will help us meet our operational expenses during the initial stages. Financial Analysis Cost Analysis Variable Cost per unit of fast food will be as under: Particulars Amount Materials 5.00 Consumables 1.00 Labour 2.00 Total Variable Cost 8.00 We will purchase best quality materials from the local city area. The material will cost 5.00 per fast food. The material cost is very high because of its quality. This quality is very important for the restaurant as it wants to develop long term royal customers. Consumables will cost 1.00 per unit. This consists of various small items required for the purpose of preparing the food item. We will employ skilled workers on contract basis. These workers will be paid 2.00 per fast food item prepared by them. These workers already have very long experience of preparing quality food in other restaurants. Therefore, they will ensure quality food with good test. Fixed Costs per month will be as under: Particulars Amount Rent 1,000 Salaries 2,000 Marketing Expenses 500 Administrative Expenses 600 Maintenance Expenses 400 Total Fixed Expenses 4,500 We will run our restaurant in a rented premises instead of own premises. This will save us from huge investment at the initial stage. We have executed a long term contract with the landlord to use this premises for the purpose of our restaurant with an option to purchase the premises after 5 years. The monthly rent will be 1,000 per month during first year of operations. We will also hire full time staff for the purpose of smooth running of the restaurant. This includes a restaurant manager to oversee operations of the whole restaurant and helpers to assist the manager. Monthly salary of 2,000 will be paid to these employees. The promoters believe in the magic of marketing. Therefore, they will spend 500 per month for the purpose of marketing the restaurant. The marketing will be targeted at our target customers so that it is effective and value for money is received. This exercise will help create awareness about the restaurant and build brand of the restaurant in the long run. The restaurant will be able to charge premium price for its brand. Therefore, marketing expense is very essential part of total expenses. We will also employ one administrative staff for the purpose of day to day administration of the restaurant. Moreover, it will have to incur various administrative expenses such as electricity, stationary, telephone, utility etc. These expenses will add up to 600 per month. We will also have to incur heavy expenses on maintenance. The regular maintenance of furniture and other items is very essential in restaurant business. Therefore, we will spend 400 per month for this purpose. Revenue Analysis We will price our fast food products at 12 per unit. This price has been arrived after evaluating detailed market research carried out by an independent market research firm; price charged by other restaurants for similar products and cost structure of the restaurant. We firmly believe that we would be able to sell our products at this price. There will be no need to offer discount to customers as the selling price is already competitive. Break Even Analysis The selling price of fast food is 12 per unit whereas variable cost per unit is 8. Therefore, contribution margin is calculated as under: Particulars Amount Selling Price 12 Variable Cost 8 Contribution 4 Contribution Margin Ratio 33.33% Thus, it can be seen from the above table that contribution margin ratio of the restaurant is 33.33%. The fixed expenses of the restaurants are 4,500 per month. Therefore, breakeven point is calculated as under: Particulars Amount Fixed Expenses 4,500 Contribution Per Unit 4 Breakeven units 1,125 Breakeven Revenue 13,500 Thus, it can be seen from the above calculations that breakeven sales are 1,125 units and breakeven sales revenue is 13,500. The restaurant must generate this revenue to avoid loss. Profitability Analysis The management plans to generate after tax profit of 7,000 per month from the fast food business. As the tax rate is 30%, before tax profit required is 10,000 month. The target revenue for this profit is calculated as under: Particulars Amount Fixed Expenses 4,500 Target before Tax Profit 10,000 Total Target Contribution 14,500 Contribution Per Unit 4 Target Units 3,625 Target Sales Revenue 43,500 Thus, the restaurant must generate sales revenue of at least 43,500 to generate after tax profit of 7,000 per month. The restaurant will also get commission of 2,000 for selling products of other retailers and sponsorship revenues are expected to be 500 per month. It has been assumed on conservative side that the restaurant will not get any government grant. Further, simplicity of calculations, it has been assumed that no expenses will be required for the purpose of earning commission and sponsorship. Projected Profit Loss Statement Projected Profit Loss Statement of the restaurant for first month of operations is as under: Particulars Amount Sales Revenue 43,500 Cost of Goods Sold: Material 18,125 Consumables 3,625 Labours 7,250 29,000 Gross Profit 14,500 Other Income: Commission 2,000 Sponsorship Revenue 500 2,500 Fixed Expenses: Rent 1,000 Salaries 2,000 Marketing Expenses 500 Administrative Expenses 600 Maintenance Expenses 400 4,500 Profit before Tax 12,500 Tax @ 30% 3,750 Profit after Tax 8,750 Thus, it can be seen from the above projections that the restaurant will generate gross profit of 14,500 and net profit of 8,750 per month. Stock and Cash Controls Stock Controlling Methods Stock controlling is very essential for safeguarding assets of the company as stock is one of the major inputs for the purpose of making the food. Moreover, as our stock consists of food items, it is even more essential. We will establish following controls for the stock: We will set minimum and maximum level of stock for each item of raw material. This will ensure that adequate quantity of material is available for the purpose of making food. Setting minimum level will ensure that we dont have to miss the sales opportunity in the absence of raw material. The non-availability of raw material will result in loss of customer to the other competitor and loss of image of the company. Similarly, maximum level will ensure that there is no over investment in stock. Out stock is a perishable item and it lost its ingredients and values very quickly. The excess investment will result in wastage and unnecessary carrying cost. Therefore, setting maximum level is very essential (Avis, 2008). We will also set re-order levels for each item of material after considering its monthly requirement and lead time. This will ensure that material is timely available as and when required and there is no over investment. This will also remove subjectivity of purchase department regarding placing order (Avis, 2008). We will also set economic order quantities after considering re-order level, ordering cost and carrying cost. This will ensure that inventories are ordered in optimum quantities resulting in lowest ordering and carrying cost (Avis, 2008). We will also establish system of just in time system to control inventory level as our materials are of perishable nature. We have made long term strategic arrangement with the suppliers. We will place purchase order as per the requirement and suppliers will ensure timely delivery. This will reduce investment in inventory and wastage (Drury, 2007). We will also establish system of periodical physical verification of inventory. This physical verification will be done by persons other than persons engaged in purchase and stores department. This will ensure that physical inventory matches with inventory as per books and this will also reduce theft of material (Drury, 2007). We shall also verify slow moving and non moving items periodically. These items will be recorded and stored separately from regular items. This system will ensure that slow moving and non moving items are disposed off timely and there is no loss because of holding these inventories (Rose, 2008). We shall also conduct constant quality review of our suppliers. We shall establish system of quality check for each of our purchase. This will help us identifying goo quality and inferior quality suppliers. We will reduce business with inferior quality suppliers with the help of this analysis (Rose, 2008). Cash Controlling Methods Cash is also very important component of current assets of the company and it is prone to theft and fraud in the absence of adequate internal control systems. We will establish following systems to control cash: We will segregate cash collection and billing function between different employees. This will ensure that the person collecting cash from customer does not have access to customer ledger and the person maintaining customer ledger does not collect cash (Delena, 2013). We will make policy to deposit daily cash collection in our bank account. This will ensure that excessive cash does not remain with the cashier (Delena, 2013). We shall conduct background check of cashier before employing him. Moreover, he will be required to deposit security amount with us (Tracy, 2013). The cash will be stored in safe locker and security will be provided to it. This security person will also accompany the cashier when the cashier goes to bank for cash deposit (Tracy, 2013). We will periodically verify physical cash with cash balance as per books. This verification will be done on surprise without any prior notice (Tracy, 2013). We will periodically obtain balance confirmation from the customers to ensure that cash collections are correctly accounted (Tracy, 2013). Thus, it can be seen from the above discussion that stock and cash can be controlled with effective internal control systems. Conclusion It is clear from the above discussion that our restaurant has very good potential to grow big in size. We have already acquired the premises on long term lease and we have also hired skilled labours. We have also secured selling contracts from the leading retailers. There is large market for our products at our price. This will ensure that we earn profit from the first month of starting the business. References Avis J., 2008, Management Accounting Decision Management, 2008-2009 Edition, Oxford: CIMA Publishing. Brooks R., 2009, Financial Management: Core Concepts, 1st edition, Pearson Education Delena S., 2013, Fraud Analysis: Strategic and Methods for Detection and Prevention, London: Wiley Drury C., Management Cost Accounting, Business Press Thomson Learning Higgins R., 2007, SE edition. Analysis for Financial Management,McGraw-Hill Education James S., 2010, Essentials of Working Capital Management, Wiley Neale B. Pike R., 2009, 6th edition, Corporate Finance and Investment Decisions and Strategies, Prentice Hall Rose H., 2008, Internal Control Policies and Procedures, London: Wiley Tracy J., 2013, Accounting For Dummies, For Dummies Yescombe E.,2002, Principals of Project Finance, Massachuettes: Academic Press