Can someone please provide a feedback to this discussion post on a managerial ec
ID: 1167349 • Letter: C
Question
Can someone please provide a feedback to this discussion post on a managerial economic class. Thanks
Firms regardless of the country they are based from face different risks. Most of the risks companies faces are connected to the strategy they implement against the competition they have in the same industry. A very good example of this is Netflix vs. Blockbuster. Netflix came in around 1999 but was infamous back then due to the overwhelming presence of Blockbuster. The process of obtaining fees from both companies is different. Netflix charges monthly while Blockbuster charges on fees by movies rented. Blockbuster heavily relied on late fees from rentals and underestimated Netflix and thought that they will never grow. Due to the advancement of technologies, Netflix was able to mainstream movies without the use of DVDs and that lured customers to their side. Blockbuster’s strategy to cut the late fees off from rentals came into place however; this could not prevent the inevitable. Technology didn’t cause the destruction of Blockbuster instead; the strategy they used to counter Netflix is to blame. Aside from Netflix, Blockbuster also had to deal with Redbox which became more main stream than them.
Another risk that businesses deal with is the destruction of their reputation. Having a good reputation often leads to good consumer relationships which then lead to the possibility of increased profits depending on how viable a business is. One of the most tweeted or spread news early this year was the scandal that occurred in one of the flights in Southwest Airlines. Just a couple of months ago, a passenger passed away when one of their planes performed an emergency landing due to a blown out engine. Reports came out and it stated that the passenger was almost sucked out of the plane when the depressurization happened. Although that death of a passenger hasn’t happened with the airline for 9 nine years, sandals other than this incident has been an ongoing issue with the airline. Late last year, a woman was forcefully taken out of a flight after she declared that she had a life-threatening allergy. In order to pacify the situation, Southwest Airlines has posted a public apology to address the incident and surprisingly, accepting the responsibility of the casualty gave a positive perception to some customers. Whenever a business’ reputation is placed on the line, companies normally formulate strategies to gain their customers trust.
The importance of having a wide range of knowledge in economics is a necessity for most managers. Going back to Southwest Airlines, in spite of the scandals they’ve faced through the years, they are still one of the best airlines in the aviation industry. One of the main reasons is the superb cost analysis their managers have. Some of the cost strategy that they’ve done is the continuous purchase of Boeing 737 which for them proved to be cost efficient. Managers also shortened the turnaround for each plane so that they can bring it back ready for flight because they believe that the only way they can make profit is by having the planes back in the air. Due to the efficient control of finances, they were able to generate competitive pricing decisions reasonable for customers who are in a tight financial situation and forecast future risks.
It is clear to both of the situations posted above that the risk of implementing strategies has strong ties with the reputation and financial well-being of businesses. It is important to have a clear mission statement and have the correct plan to control the risks in order to achieve the company’s goals.
References:
https://www.theverge.com/2018/4/17/17248518/southwest-airlines-emergency-landing-passenger-dead
https://www.nbcnews.com/storyline/airplane-mode/southwest-airlines-apologizes-after-video-shows-woman-being-dragged-plane-n805111
https://www.fastcompany.com/1690654/blockbuster-bankruptcy-decade-decline
https://www.inc.com/jim-schleckser/secret-to-success-of-southwest-airlines-google-ritz-carlton-its-not-what-you-think.html
Explanation / Answer
knowledge of economics and proper cost analysis plays an important role in framing policies and taking proftable decisions. It also necessary for the firms to be in line with changing technological environment and make teh required changes in technologies , procurement and revenue generation for which proper knoledge of ecomics is must.one has to keep in mind how not lose customer's trust and eventually run out of race.