The Aerospace Industry

Topics: Gross domestic product, Unemployment, Economics Pages: 13 (4384 words) Published: April 9, 2006
The Aerospace Industry

The modern business organization has undoubtedly been prompted by continual social, political and economic growth. Drastic changes in technology and global communications have created the need for managers to develop beyond simply understanding the business environment. Now, they must also invest their resources into researching the climate which they wish to create within their organization as they realize the effects which this climate can have on both: their internal and external customers, as well. As a result, business has evolved from a meager place of work into the business environment. This is a place in which ethically responsible managers make conscientious decisions knowing that they will impact the potential economic, political, and social threats that face them. However, these decisions must first be studied. The derived data must come from practices that can be used reliably. And, the most effective means of gathering this knowledge is by conducting a systematic inquiry into these areas known as business research. Good business research generates dependable data as is described in this report. The Aerospace Industry

Economists use the Gross National Product (GNP) as a way to measure our nation's income and the overall health of the economy. GDP is the market value of all final goods and services produced in the economy in a single year. One way to figure GDP is to add up the income received by American businesses and households. Another way is to look at expenditures made by the decision-makers in the economy: expenditures by households, business investment, and government expenditures. Another way is to look at the success (or failure) of leading industries, such as the airline market. In the airline business, Over the past 30 years, world Gross Domestic Product has tripled.(Bisignani, 2005, p.82) In the same period, passenger traffic has increased seven-fold. With 6% annual growth, air transport is expanding at more than twice GDP. The problem is that the more the industry sells, the more they lose. In 2004, 1.8 billion people flew (p.82). Shocks such as SARS, terrorism and war have interrupted the normal business cycle. The shock for 2005 started last year. With rising fuel costs to add onto the industry's problems, the predicted shortage of employees will have a major impact in the industry and eventually the GNP. Competition and markets should define the future of the industry. There is intense competition and consumers are complicated. The airline industry must make a change to keep up with the global demand of the next 30 years. Both the U.S. and Europe must take the lead in making these changes. There seem to be a change in the equilibrium and government must let the airline business conduct themselves as a business. Other economic factors contribute to predicting the success of the airline industry during the coming year. Personal income as an indicator is a projection of consumer spending. As income increases, more importantly disposable income, more free cash is used for leisure travel. Market indices such as the S&P 500 and Dow Jones Industrial average, are barometers of consumer wealth. As these indices rise, so does personal net worth. This perception of wealth whether real or on paper creates a positive sentiment towards spending on luxuries. This again creates more leisure travel boosting travel and aiding the airline industry with an increase in business. According to market (2006), the consumer confidence index saw signs of recovery since last summer. This would indicate the population's faith in their future economic prospects is on the rise. In the case of the airline industry, a rise in consumer confidence would produce freer spending on luxury travel as worries about future economic prospects subside. Other economic indicators contribute as a negative force to future growth in the airline industry. Increases in lending rates...

References: Airline Business news Airline business, March 2006 volume 22 number 2 Fox news
Airlines.Org. Retrieved March 10, 2006 from
Bisignani, G. ‘Keep it Simple ': Here 's An Updated Formula for Airline Success,
Aviation Week & Space Technology. New York: April 18, 2005.Vol.162, Iss. 16; pg. 82, Accessed March 3, 2006, University of Phoenix Library, ProQuest database
Boeing. Retrieved November 18, 2005 from
CPI and S&P 500 forecasts. Retrieved March 11, 2006 from
Defense Industry (2005, October 28). US Congress attempts to boost future aerospace workforce. Retrieved November 19, 2005, from
McGhee, T. (2005, October 30). The graying of the workforce. Retrieved November 19, 2005, from
RTT News (2006, February 25) News Story, Market Center Online. Retrieved March 6, 2006, from
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