Abstract This paper discusses the effects of the personnel cost-cutting measures employed by major airlines in the United States and their relationship to aircraft safety. The research focuses on four factors - employee layoffs, increase on employee workload, cutting employee benefits and cutting employee training. The paper presents a survey on aviation pilots at American Airlines (AA).
Table of Contents:
Abstract
Introduction
Background of the Problem
Statement of the Problem
Limitations
Delimitations
Definition of Terms
Acronyms
II Review of Related Literature Hypothesis
Introduction
Employee Benefits Cost Reduction and Wages Cutback
Employee Lay Offs
Increase in Employee Workload
Employee Training
Commercial Aircraft Safety
III Research Methodology
Introduction
Research Design
Research Model
Survey Population
Sources of Data
The Data Gathering Instrument
Pilot Study
Instrument Pretest
Distribution Method
Instrument Reliability
Instrument Validity
IV Results
Introduction
Demographics
Pilot's Awareness of Company Decision and Policies
Pilot's Awareness about AA's CostCutting Measures
Pilot's Perspective on the Effects of CostCutting Measures of AA to Commercial Aircraft Safety
V Discussion
Introduction
Pilot's Awareness of company Decision and Policies
Pilot's Awareness about AA's CostCutting Measures
Pilot's Perspective on the Effects of CostCutting Measures of AA to Commercial Aircraft Safety
Summary
VI Conclusion
VII Recommendations
Appendices
From the Paper "Since, 1998 the Government Accountability Office (2004) (GAO) of the United States had reported that majority of the leading airline industries have a difficulty of acquiring revenue and profit increase because of the growth of Low Cost Airlines (LCA) The proliferation of Low Cost Airlines has caused a strict competition in terms of domestic market share due to the relatively low prices that were offered and the relatively low cost cutting measures of LCA. Hence, it is reported by GAO (2004) that the operation costs of LCA have even increased to $1 Billion or 10% of its total operation costs. In effect of this, the research inferred that such an effect had a significant impact in terms of how passengers in general compare and view LCA to Big Airlines."
Abstract The paper analyzes Chris Murphy's article "What's Next" that focuses on current IT outsourcing practice and Lee and Margaret Covell's article "A Strategic Approach to Overhead Management" that discusses operations cost-cutting. The paper then looks at Joseph Bozada's article "Generating Shareholder Value: Much More Than CostCutting" that suggests that worker layoffs might be counter-productive and finally, the paper examines the editorial in the Measuring Business Excellence magazine that explains how improved cost-efficiency can also be achieved through an innovative use of accounting and financial processes. The paper notes that all four authors agree that companies need to look beyond such traditional cost-cutting methods as layoffs, outsourcing and downsizing.
Outline:
Introduction
Analysis: New Perspectives on Outsourcing and Operations CostCutting Analysis: Novel Approaches to CostCutting Conclusion
From the Paper "In today's challenging business environment, companies are considering cost-cutting strategies more often than just a couple of years ago. There are three well-established methods of cost cutting: downsizing, outsourcing and cutting the costs of operations (Crampton & Hodge, 2007, p.341). Managers usually turn to one or a combination of these strategies during difficult economic times and/or situations of company underperformance. However, according to many analysts, such behavior might be counterproductive and even dangerous (Bozada, 2004, p.17). While hasty layoffs and downsized operations might improve the immediate financial situation, in the longer term they might create a strategic disadvantage and even cut into future revenue gains. According to Bozada, this happens because "This approach primarily focuses on cost cutting and will, by definition, only produce limited results" (p.17). What is needed therefore is a strategic and innovative approach to the concept of cost cutting."
Abstract The paper addresses the issue of Wal Mart's global expansion due to their domination in the domestic market. The paper then discusses Wal Mart's aggressive cost-cutting techniques and how they exploit their employees and prevent unionization in an effort to keep the customer happy through the provision of low costs. The paper believes that while Wal Mart is highly successful and ruthlessly profitable, at some point their treatment of employees and suppliers will result in adverse actions.
Outline:
Wal Mart
The Problem of Expansion
The Value Chain and Power of Wal Mart
The Unionization Issue
Alternative Solutions
Conclusion
From the Paper "Wal Mart is so successful that they must expand, and have difficult in doing so while keeping in pace with the demand for their location. At the current time there are more than 1,170 international stores within the Wal Mart global conglomerate. In 2002 their reported sales were listed at $218 billion. On the Fortune 500 Wal Mart's international business alone would stand tall at a ranking of 42, a hard-won battle which took seven years upon global expansion to pull out of the red and show a profit. (UVA 1) This recognition of the global marketplace has propelled Wal Mart to increased success. The problem lies not in the cost of expansion, but rather the time, as Wal Mart has by fare more than enough money and need only to fill demand as it rapidly arises."
Abstract This paper is a case study on Global Communications. It examines the company's plans for profitability, and whether they are appropriate and ethical. The paper discusses the plan's provision for new services and for costcutting measures to improve company profitability.
Tags: global communications, case study, profit, telecommunications, marketing, innovation, costcutting, offshore, outsourcing business ethics
Abstract This paper looks at a mental health organization which is destined to face drastically reduced or eliminated discretionary costs.
From the Paper "Identify which costs you think are likely to be discretionary or committed costs. The list of discretionary costs includes supplies, advertising and promotion, professional meetings/dues, transportation, and consulting. Committed costs consist of all the salaries, accounting/billing, and other activities/costs requisite to engage in the primary business activity. One possibility is to eliminate all discretionary costs. The discretionary costs could easily be eliminated or at the least reduced. However, this option is rarely good for morale and often increases costs in other areas unforeseen in the planning process. Yet, when faced with a required reduction in budget, these are the areas that must go first. In the following budgetary periods, strategies to reduce the fixed/operating costs, such as property/facilities overhead should be examined. "
Abstract This paper analyzes a 2003 article regarding the Bush tax cuts and argues that the cuts are in accordance with the principles of John Maynard Keynes. The paper discusses the theory that tax cuts can result in federal deficits that can lead to increased interest rates.
From the Paper "Monetary and fiscal policy are the two primary mechanisms used to stimulate and slow the economy. Monetary policy uses the availability of money-interest rates for example-to control how much money is available for investment and spending in the market. Fiscal policy on the other hand uses taxation and government spending to accelerate or decelerate the economy. While there can be many different goals for controlling capitalist economies, the overriding goal is to keep a balance between inflation-rising prices-and deflation. Inflation is sometimes described ..."
Abstract This paper considers the relatively new costing model called activity-based costing, developed in the 1980s and then refined through use by various organizations since. This approach is designed to focus attention on the causes behind indirect costs. The ABC system is directed largely at the issue of allocation, placing an emphasis on activities rather than traditional organizational departments as a way of isolating the causes of costs, or the factors that are most likely to cause or contribute to the accumulation of costs.
From the Paper "Activity Based Costing (ABC) was developed in the 1980s and has been refined through use by various organizations since. This approach is designed to focus attention on the causes behind indirect costs. The ABC system is directed largely at the issue of allocation, placing an emphasis on activities rather than traditional organizational departments as a way of isolating the causes of costs, or the factors that are most likely to cause or contribute to the accumulation of costs (Lewis, 1993, 12). The elements of this system can be applied to the working of a given business to help identify what may be driving costs upward. ABC can also be described as "a costing model that identifies the cost pools, or activity centers, in an organization and assigns costs to products and services (cost drivers) based on the number of events or transactions involved in the process of providing a product or..."
Abstract The paper explains that activity-based costing (ABC) allows accountants to obtain a more precise view of the costs associated with specific products or services. This paper uses a case analysis to explore how ABC can help to achieve greater cost effectiveness in the healthcare industry. The paper concludes that although ABC can play an important role in reducing healthcare costs, little can be done to reduce direct costs associated with a procedure without a sacrifice of patient safety.
Outline:
Introduction
Objective of the paper
Analysis, Findings & Discussion
Suggestions, Recommendations & Conclusions
From the Paper "Activity-Based Costing (ABC) allocates the costs of production to specific products or services. It is more precise than older methods of accounting that involved adding a broad percentage of expenditures to direct and indirect costs. The definitions of direct and indirect costs varied and were often a judgement call on the part of the accountant. ABC allowed accountants to obtain a more precise view of the costs associated with specific products or services."
An overview of the methods of applying the "activity-based costing system" at Dakota Office Supply, in which actual costs associated with each product are established.
Abstract The paper discusses, in a detailed description, the effectiveness of an activity-based costing system or ABC and the ineffectiveness of the current costing system in use at the Dakota Office Supply (DOS) company . The paper then relates the methodology of implementing ABC at DOS and the procedures involved in its application.
Outline:
Overview
Situational analysis
Activity based costing ABC in practice at Dakota
Procedural steps of ABC
From the Paper "Before performing ABC, a baseline or a starting point is needed for business process improvement and a baseline can be expressed in some form of model. This baseline is critical for DOP because in order to establish this baseline metric the analytics just performed must be done for each individual account. If DOP performs this activity on each customer the strategic management benefits would be substantial because all the excess cost-drivers could be eliminated resulting in much wider operating margins and thus profitability without increasing costs or committing resources to gain this efficiency. Therefore, a baseline is a documentation of the organization's policies, practices, methods, measures, costs and their interrelationships at a particular location at a particular point in time (Maiga & Jacobs, 2003). Through base-lining, activity inputs and outputs across functional lines of business can be identified. ABC is the only improvement methodology that provides output or unit costs. Value added activities are those for which the customers are usually willing to pay in some fashion for the product or service. Non-value added are activities that create waste, result in a delay of some sort, and potentially adds costs to the products or services. Resources are assigned to activities so that the activities can be performed in the first place. Some of Pilgrims' resources are measured in man-hours, machine hours as well as machine maintenance and operational overhead. It is through ABC that an organization can begin to see actual dollar costs against individual activities, and find opportunities to streamline or reduce those costs, or even eliminate the entire activity thus removing the cost altogether. This is the process inherent in ABC that reduces overall expenditures of the company. "
Discusses a costing system proposed for a computer hardware manufacturer who is also going to develop computer software to be sold along with the hardware.
Abstract This paper first recommends a costing system and then states how variances from budget would be identified. It further goes to state how the budgets for the cost centers should be set. Then it mentions some possible sources of funds for financing the project and, in conclusion, mentions how the financial ratios of the company will be affected.
Method of costing How variances can be identified
Method of budgeting
Sources of finance
Effect on ratios
Comparison with system in operation
From the Paper "There are many methods of costing that could be applied to this scenario. The current system in place is absorption costing. This is a very traditional approach, in which it is assumed that the total overhead expenses of the company are related in some way to the number of labour hours or machine hours used. In this case, all the overheads are allocated on one basis. If labour hours are used, then it the total overhead amount is divided by the total labour hours expected, and then the amount of overhead is allocated to each product based on the total amount of labour hours it uses."
Abstract The following discussion will focus on problems with cost-benefit analysis in the context of natural resource policy and development. In order to achieve this goal certain fundamental premises must be outlined and accepted. The cost/benefit approach to natural resources holds that natural resources-from clean water to sub-surface minerals-are commodities that ultimately have a value. It also asserts that economic theories and principles can, therefore, be applied to decisions relating to the disposition of natural resources. As a consequence of these first two premises it does not accept any moral arguments: Notably those that assert that conservation is morally superior to extraction or development as costs and benefits cannot be quantified in this paradigm.
Abstract This paper examines activity based costing (ABC) which is an effective business management tool that will enhance and support a total quality management (TQM) environment. ABC analysis provides the information necessary to make business decisions such as determining if investments in efficiency initiatives, such as just in time (JIT), are warranted. When implementing ABC, management should use proven project management methodology to minimize the risk of failure. ABC is an effective total quality management tool, and supports just-in-time manufacturing methods in several companies as detailed in the paper.
From the Paper "After developing ABC in the 1980?s, Robin Cooper and Robert S. Kaplan have written extensively about its benefits (Shih-Jen & Holinda, p. 46). ABC is defined as a "costing system that identifies the various activities performed in a firm and uses multiple cost drivers"to assign overhead (or indirect costs) to products? (Siegel and Shim 2000, p. 15). ABC seeks to accumulate and allocate factory overhead costs to products (or services) by using focused drivers, such as, quality inspecting, moving, assembly, and matching (Warren, 2002, p. 328). Proponents of ABC cite many examples where cost accuracy is superior to traditional costing methods that use cost bases such as units produced, labor, or machine hours used (Warren, p. 421). "
Abstract This paper analyzes and argues that activity based costing is most appropriate for assigning costs to products for all types of organizations.
Abstract This paper presents an assessment of the economics of health care costs. The paper argues that the problem is a complex maze of related issues such as funding mechanisms, delivery structures and individual responsibility. Additionally, the paper recommends a national health care system for managing family health care costs that is based on universal access to health care.
From the Paper "Health care economics is entering another state of turmoil in the United States as the moderating effects of the managed care concept on increasing health care costs appears to have run its course. The Congress and state governments believed the promises of managed care proponents that managed care would lower health care costs dramatically and are resisting rapid increases in health care costs. Managed care companies are responding by dropping governmentally-funded patient groups including Medicare and Medicaid raising charges to..."
