According to Robert E. Scott and Christian Weller, “further increases in real short - term interest rates herald a slowdown.” Further evidence that suggests a recession was on the horizon was information released from the National Bureau of Economic Research that states, “A peak marks the end of an expansion and the beginning of a recession.”(The Business Cycle Peak, March 2001.) During an expansion, however the economy is experiencing normalcy, and during this period the economy is between a trough and peak. The National Bureau of Economic Research, however, defines a recession as, “ a significant decline in activity spread across the economy, lasting more than a few months, visible in industrial production, employment, real income and the wholesale-retail trade.” (the Business Cycle Peak.) Therefore, when a peak date was determined in March 2001 it marked the end of an expansion that began in March 1991, and hence the beginning of a recession. This marked the end of the longest economic expansion that lasted ten years of rising incomes and employment.
FIRM ANALYSIS The Airline Industry is currently in a recovery since 2008. At that time the industry went through a financial crisis. This was brought on by a sharp passenger decline and rising costs of oil. The industry had to reshape how they do business. Today the industry still seems grim.
Auto Industry in Crisis: The automobile industry is among the sectors that have been hit most by the recessions over the years. In the most recent recession, “demand for cars fell sharply, accentuating the difficulties of excess production capacity already faced before the crisis and deepening the economic downturn in major car-producing countries” (Dargay, Gately & Sommer, 2007). Relative to the general downturn, the decline in car sales was nonetheless not deeper than what was observed in the past. Role of Auto Industry in Economy: The size of the automobile industry relative to overall activity is small, but because of its strong linkages with other parts of the economy, the final impact of a shock in the industry on the broader economy is sizable, and is economically important. As Sturgeon & Van Biesebroeck (2009) point out that the “automobile and business cycles usually move in line with each other but the amplitude of the cycle is higher in the automobile industry”.
Competition? Misguided strategies?) Princessa’s decline in sales was caused by a variety of reasons: - Canada was sliding into recession, following the economy crisis in the United States. 90% of Pricessa’s customers earned less than $45,000 annually and about half of these earned less than $25,000 annually. These low income people are likely to be affected severely by the recession, thus they would cut off their
Bombardier Transportation and the Railway Market in Europe International Business Strategy IBM 2011 – 12 Christophie Bianchi Pearl Ansheryn Lu Leatrice San Juan Neža Erjavec Clemente Baissat ESPEME, EDHEC Business School 26 September 2011 I. Overview of the Railway Industry The rail transportation industry experienced difficulties as a result of the challenging economic conditions during 2008-2009. It has been slowly recovering in recent years. Because of the low demand for goods, freight and passenger transport volumes decreased significantly. Despite being impacted by the economic environment, many governments decided to invest in rail transportation in 2009-2010. This led to a very significant market during the economic crisis.
The smaller, more efficient aircraft is the trademark of Embraer’s success. In 2009 when the global ecnomic crisis hit sales fell by a substantial amount. Executive jets are normal goods so the overall decrease in consumer income along with fewer buyers led to a sharp decrease in demand. Another factor that causes demand to shift left is the tastes and preferences of the buyer. During rough financial periods people tend to look down on Executive Jets as unnecessary and overkill.
The policy of reducing debt made MC leave the company with just $36 million cash which was well under the number of 1990 ($283 million cash ). MC’s stock prices fell more than two-thirds from $33.38 in 1989 to $10.50 in 1990, resulting in a drop of $2 billion in market capitalization; even if in 1991 it went up to $16.50. Another consequence was an important decrease of Times interest earned from 2.6 in 1989 to 1.4 in 1990 and 1.5 in 1991 which triggered a depreciation of bond rating from A3 in 1989 to Baa3 in 1991 quite close to junk bonds. For the future this is a strong signal of the MC financial crisis situation. Most liquidity and solvency indicators show that the group would have not been unable to cover its current obligations/liabilities and was close to bankruptcy.
However, the SPH program put a lot of pressure on store managers and sales. In 2010, a large group of the R&R associates sued it for “working off the clock”. This lawsuit might cause reputation damage, and the settlement is up to $200 million. In 2008-2009 before the case, there was an economic recession. The whole luxury goods industry in the U.S. dropped over 14%, and R&R revenues declined 10%.
We will be looking at 2 aspects of the economic cycle, here is an example of an economic cycle graph. We will be analysing the recession, which is the downward growth from the ‘boom’ to the ‘bust’ and the ‘boom’ itself. Recession is continuous negative growth of GDP for 2 quarters (6 months). Direct affects of this would be rising unemployment, a decrease in consumer expenditure, lower investment and therefore a low inflationary pressure. With these factors taken into consideration, a decrease in consumer expenditure would be a direct causation to a lowering of both organisations activity.
Crafting and Executing Strategy John M. Baryogar Strayer University BUS 599 Dr. Russell Handlon October 30, 2011 Discuss the trends in the U.S. airline industry and how these trends might impact a company’s strategy The airline industry is facing one of its most difficult times in history. A worldwide recession along with the terrorist attacks of September 11, 2001 have led to a decrease in passenger traffic, reduction in revenue and rising fuel prices. Additionally, airline companies face the increase competition from new entrants. The shortage of pilots has also caused problems for the airline companies. In 2008 when the economy started to take a downward turn, businesses began to cut back on employee travel, consumers were being more conscious about their spending.