Job satisfaction is the positive feeling that someone experiences about his job. It includes the positive or negative feelings that employees hold against their job. The happier people are within their job, the more satisfied they are said to be. The job satisfaction of the employees is a major aspect of the employment policy of large and successful organizations. These organizations attempt through job design to enhance job satisfaction and performance using methods that include job rotation, job enlargement and job enrichment. Satisfaction can be influenced also by the management style and culture, employee involvement, empowerment and autonomous work groups. Job satisfaction is a very important attribute which is frequently measured by organizations.
 There are various methods of determining job satisfaction which use various indicators to determine the satisfaction levels. One of the most popular methods to describe job satisfaction is the job descriptive index (JDI). Job Descriptive Index is a scale used to measure five major factors associated with job satisfaction: the nature of the work itself, compensations and benefits, attitudes towards supervisors, relations with co-workers, and opportunities for promotion. The JDI was first introduced in 1969 and since then has been used by over 1,000 organizations in many sectors. Measurements of strengths and weaknesses within each factors will tell practitioners where improvements can be made. There are also other methods of satisfaction that add more indicators. One of them is the Minnesota Satisfaction Questionnaire which measures 20 scales of satisfaction. Some of them are ability, utilization, co-workers, moral values, achievement, creativity and recognition, activity, independence and responsibility (University of Minnesota, 2009).
 Even though job satisfaction is measured through common indicators, it is not perceived the same way throughout different cultures. Robbins and Judge state that although job satisfaction appears to be a relevant concept across cultures, that doesn't mean there are no cultural differences in job satisfaction(Robbins and Judge, 2009, p. 91). Usually global values are combined with local cultural  values  to provide an integrated value framework within a diversified work environment which affects the business level of job satisfaction. Po-Keung Ip, in his research for developing a concept of workplace well-being for greater China, notes that business well-being is not always associated with economic well-being. He says that,
There is no denial that people’s well-being is closely affected by their economic well- being. However, as a result of the increase of business intensity in people’s daily lives, the effect  of  business  activities  on  people’s  general  well-being  is  becoming  profound  and difficult to ignore. People’s activities and interactions with others are increasingly mediated and shaped by business transactions and processes. It is difficult to imagine that the basic activities of people—working, learning, interacting, entertaining, cooperating—can be smoothly conducted without the aid and involvement of business elements. The goods and services provided by business in effect form the infrastructure of modern life without which  a  comfortable  and  normal  life  is  impossible. (2008).

 Another study which shows that culture differences affect the job satisfaction ratings is the one conducted by Benz and Frey. This study shows that the job satisfaction ratings are higher in western countries than the rest of the world. This fact indicates that different cultures weight differently the various parameters of job satisfaction. As western societies emphasize more on individual happiness and success and promote a materialistic approach on employment, in eastern societies moral values, social responsibility and work life balance value more (Benz and Frey, 2003).  
 Moving on, there are evidences that job satisfaction is closely related with the appropriate work life balance. There are findings that relate the appropriate work-life balance to the increase of job satisfaction and as a result of job performance. In the last years the average working time of workers has increased due to the consumerist culture developed in the western cultures. Madeleine Bunting ,in her recent book, "Willing Slaves – How the Overwork Culture is Ruling our Lives", stated that from 1977 to 1997 Americans working full time have increased their average working hours from 43.6 hours to 47.1 hours each week (Bunting, 2004). This fact causes many people to experience burnout due to overwork and increased stress. This condition is seen in nearly all occupations especially in the management section. As a result, these stressful conditions lead the employees to seek for better work time arrangements that will accommodate their need for better work life balance and provide them the ability to cope with their family responsibilities. A study conducted by Aryee, Luk and Stone verifies their hypothesis that satisfaction with work schedule flexibility and supervisor work-family support will be positively related to organizational commitment and negatively related to turnover intentions. Their findings revealed not only a positive but also significant effect of supervisor work-family support on both organizational commitment and turnover intentions   (Aryee, Luk and Stone, 1998). So we can conclude that work life balance is an important aspect of job satisfaction.
 Another study with interesting conclusions is the one published by Origo and Pagani which discusses the workplace flexibility and job satisfaction Europe. Their conclusion is that
 workers attach great importance also to non-monetary aspects of the job, which are more likely to be improved by many forms of functional flexibility rather than numerical and working time flexibility. Given the same wage level, workers may then be more satisfied (and hence more productive) if they perceive some enhancement in the intrinsic aspects of their job (such as control on their tasks and possibility to use their creativity). (2008)
This implies that job satisfaction indicators are not only quantitative but also qualitative.
 The above findings from various studies can lead to interesting conclusions for management practices to develop and retain a satisfying job environment. A major weakness of modern corporations is the inability to retain their staff. This phenomenon is mainly caused by high rates of job dissatisfaction. High employee turnover results to higher costs to recruit and train new staff members.  Especially in cases of highly specialized firms, like in the technology sector, the cost increases even more. Smith reports that a low waged employee costs $4000 to $7000 to be replaced, a middle waged one costs $40000 and a Silicon Valley employee costs $125000 (Smith, 2001). So the big challenge for the modern manager is to to find ways to increase job satisfaction and as a result increase the staff retentionship. Smith also gives basic guidelines for a successful retention strategy. This strategy must be based on actions that a manager needs to take. A manager should always give a clear sense of direction and purpose to his or her staff, must show that cares about the staff, must provide flexible benefits, must communicate with the employees, maintain an engaging environment for them and also award their effort and performance.
 Summarizing, job satisfaction is a worldwide concept and a major aspect of the employment policy of large and successful organizations. Although a global concept, job satisfaction is not perceived the same way throughout the globe. It is closely related with the local culture and beliefs of each working place. This fact leads to different ways and methods of measuring job satisfaction which might not agree on the factors they measure.  But even though, it is obvious that the management of the corporations must pay attention to this subject and develop effective retention strategies and increase the satisfaction level within their personnel in order to gain long term benefits for their companies.

References

Aryee, S., Luk, V., & Stone, R. (1998, January). Family responsive variables and retention-relevant outcomes among employed parents. Human Relations, 51(1), 73.
Benz, M., & Frey, B. S. (2003, November). The Value of Autonomy: Evidence from the Self-Employed in 23 Countries. Institute for Empirical Research in Economics.
Bunting, M. (2004). Willing Slaves: How the Overwork Culture is Ruling Our Lives . HarperCollins Publishers Ltd .
Ip, P. K. (2008, October). Developing a Concept of Workplace Well-Being. Springer.
Minnesota Satisfaction Questionnaire. (2009, December 3). Retrieved December/‌January 3, 2009, from University Of Minnesota website: http://www.psych.umn.edu/‌psylabs/‌vpr/‌msqinf.htm
Origo, F., & Pagani, L. (2008, March). Workplace flexibility and job satisfaction: some evidence from Europe. International Journal of Manpower, 29(6), 539-566.
Robbins, S. P., & Judje, T. A. (2009). Organizational Behavior. New Delhi: PHI Learning.
Smith, G. (2001). Here Today, Here Tomorrow : Transforming Your Workforce from High-Turnover to High-Retention. Dearborn Trade, A Kaplan Professional Company .

In Economics price elasticity is the concept that measures the sensitivity or responsiveness of the customers of a product or a service to the price changes. The mathematical definition of price elasticity is the below.
Price elasticity of demand measures the change in the demand of a product whenever a change in price applies. For example, if the price of a specific product increases by 10% and the demand decreases by 15% due to this price change, then the price elasticity for this product is -1.5. Demand, as related to the sensitivity to the price change, can be divided to three types. A demand can be elastic, unelastic or unitary elastic. An elastic demand of a product is the one where the price elasticity in absolute value is greater than 1. A product with elastic demand is strongly sensitive to any price change as the percentage of the change in demand is greater the percentage of change in price. An unelastic demand of a product is the one where the price elasticity in absolute value is smaller than 1. This means that a product with elastic demand is not very sensitive to price changes since the percentage of the change in demand is lower the percentage of change in price. A unitary elastic demand for a product is the one where the price elasticity equals with 1.
There are several factors that affect price elasticity. The most important factors are whether the product concerned is produced by a monopoly industry or by a competitive industry structure where there exist many substitutes. Another factor important factor is whether the product type is normal or inferior (Kench, 2008). Price elasticity is a great tool in the managers decision toolbox. Thomas and Maurice claim that the price change decision is one of the most difficult decisions a manager has to take and the knowledge of the product price elasticity is important towards the correct decision(Thomas and Maurice, 2008, p. 204).
Price elasticity is important for businesses as it has has implications for setting prices of their goods services and it has an impact to the business total revenue. Businesses can use price elasticity of demand to maximize their revenue and as a result, their profits. For example a monopoly company can conclude that its peak period demand is inelastic and off peak period demand is elastic. So, the company can set higher prices in peak period, set low prices in off peak periods and use price discrimination to maximize revenue or yield. In addition, by considering the factors affecting the price elasticity of demand a business can determine to some extent the price elasticity of demand and enable to set prices on the basis of the price elasticity information in to consideration. Also, if a company knows that switching the cost affects the price elasticity of demand, by increasing the switching cost of their services they can make the demand inelastic charge higher prices because the customers will not be able to switch to other companies easily if switching costs are higher. Furthermore, companies that operate in a competitive environment can utilize price elasticity of demand to create a competitive advantage against the competitive products. As mentioned above, a competitive environment is a factor that increases the elasticity of the products. So, products in competitive environment are mainly elastic. As a result the businesses must consider the market structure because as explained above these factors affect the price elasticity of demand and it has impact on the yield level of the company.
Moving on, price elasticity is important tool that can be used for government decisions also. For example, the government must consider price elasticity of demand in imposing indirect taxes, because the imposition of taxes will increase the prices and it will affect the supply of products. So, if the products are elastic, the consumers will reduce their purchases more and as a result the price will increase due to the tax imposition. In such a case less tax will be paid than if the price elasticity of demand is inelastic. Using price elasticity of demand a government can conclude that it must not impose taxes on elastic goods because they may not be able to collect sufficient taxes compared to if they impose taxes on inelastic goods. In another example, governments impose taxes on cigarettes and alcohol. The demand of these products, which is dependent on habits than on price, is rather inelastic than elastic. Also, if a government is a monopoly supplier of any business services like rail or transport tolls it can charge higher prices in peak periods and low prices on off peak periods because the price elasticity of demand is inelastic in peak periods compared to off peak periods. Thus, governments can use the price discrimination strategy to maximize revenue. A government can also use the concept of price elasticity for other decisions and not only for maximizing income from taxes. So, in addition to the above, if a government realizes that a market is monopolistic in nature, it may introduce more competition and regulation of prices in order to protect customers from price maintenance practices and anti competitive practices by these monopolies. This way the market can become more competitive and therefore the demand can become elastic rather than inelastic. Another way of using price elasticity for pursuing policies is towards reduction of demand on several activities. For example, if a government wants to reduce gambling it can raise the taxes and reduce the demand.
Concluding, price elasticity of demand is an important tool for analyzing the implications of price changes to the demand of services and products. It can become very useful in the hands of businesses and governments towards the adoption of correct decisions and proper policies.

References
Kench, B.T (2008). Fundamentals of Economics. Ivy Software.
Thomas, C. A.,&Maurice, C. (2008). Managerial Economics. McGraw-Hill .

Demographic changes have always been an important factor affecting the economy. Demographic phenomena have been often detected and characterized by the scientists and named with distinct names like the Baby Boomers, the Generation X or the Generation Y. These trends have been stimulating the economy and triggering various economical events during the recent history like the recent economic recession. Reuters has claimed even before the increase of the crisis volume that the retiring Boomers generation would affect the economy negatively (Reuters, 2008). The most prominent demographic change predicted for the next decade is the aging population of the planet. Bloom and Canning (2004) assert that the segment of the global population that is age 60-and-older is rising sharply both in percentage terms and absolute numbers, with the expectation that it will surpass one billion within two decades. The probable consequences of this situation will be that pension and health care expenditures will rise while unemployment will fall, as result of a smaller labor force offered. Also economists predict that stock prices will fall while bond prices will rise, suburban property prices will fall while old people will move to the country side (Moffatt). It is a dominant opinion that the demand for products that the elderly people are interested in will increase, resulting to a price increase. Personally I predict that we will experience an increase in property investment, in tourism services demand and in health care services demand.
Pessimists believe that the aging population will affect negatively the economy as taxes and health care expenditures will increase and they would have to be paid by the younger people. In contrast, I believe that these consequences can be avoided with proper use of the technology and medicine evolution. As these areas advance day by day, they can improve dramatically the productivity of the workforce while increasing the quality of life of the populations. Less workers will be able to produce wealth for more people while the health care system can save great amounts of money if diseases that require long term treatment like diabetes, Alzheimer or cancer are finally cured. In addition, I consider the reduction of the overall global population as a positive turn as our planet is already overutilized and its resources are exhausted.

References
Bloom, David E. and David Canning. 2004. "Global Demographic Change: Dimensions and Economic Significance." Paper presented at the Federal Reserve Bank of Kansas City Symposium on "Global Demographic Change: Economic Impacts and Policy Changes." Jackson Hole, Wyoming. August 26-28.Bloom, David E.. 2004. In Global Demographic Change: Dimensions and Economic Significance ,

Kaiser, E. (2008, January 31). Economy faces bigger bust without Boomers. Retrieved from http://www.reuters.com/article/ousivMolt/idUSN3131412220080131

Moffatt, M. (n.d.). The Baby Boom and the Future of the Economy. Retrieved September 20, 2009, from http://economics.about.com/od/healthcareeconomics/a/baby_boom.htm

Economists possess a variety of tools in their toolbox for assisting them in taking optimal decisions. One of the most important ones is marginal analysis. Marginal analysis can be defined as "A technique used in microeconomics by which very small changes in specific variables are studied in terms of the effect on related variables and the system as a whole." (Investowords.com). Marginal analysis is a method used by economists to determine the optimal level of activity in an organization. It observes the changes in the values of some variable, which are called marginal changes and studies the effects of the change in the values of a depended variable. Following this methodology, marginal analysis attempts to determine the maximum marginal benefit, which derives from the values of the two variables and where the activity is optimized.

Marginal analysis is based on fundamental principles of optimization theory. Thomas and Maurice state that "These principles of optimal decision making turn out to be nothing more than a formal presentation of commonsence ideas that you already apply, probably without knowing it in your everyday decisions." (Thomas and Maurice, 2008, p.83). This is a true statement and can be proved if we analyze our daily activities and the decision process we follow to take a decision. We apply unconsciously marginal analysis whenever we decide to work or not, to buy something or produce it at home, even to attend an event or not. I will explain in the following paradigms how marginal analysis concepts are used by anyone for decision making and that it is effective in most of the cases even if most of us conclude to different decisions than others. The main reason behind this is not that we failed to apply correctly optimization techniques but that each one tried to optimization the marginal benefit of different variables.

Continuing, I will provide as example for using marginal analysis concepts on real decisions, the decision of a news vendor about the optimal number of newspapers he must obtain daily to resell. The news vendor is responsible to refill his daily inventory. For any inventory level, if it is found that its expected marginal profit equals, or exceeds its expected marginal loss, then an additional unit must be added. If we set p to be the probability that the demand will be greater than or equal to a given supply, then the expected marginal profit (MP) can be easily found by multiplying p by the marginal profit obtained for every unit sold. Similarly, the expected marginal loss is determined by multiplying the marginal loss (ML) by (1 - p). The optimal decision may be simplified to the following inequality, p ≥ ML/MP+ML. The above inequality means that, as long as the value of p exceeds the ratio on the right-hand side, any additional unit must be kept in stock. For this example we will suppose that the marginal profit for each newspaper is 1 and the marginal loss for each one is 3. Now, lets also suppose that the news vendor has performed observations about the levels of sales during the previous periods and has concluded the following probabilities. The probability to sell 40 newspapers per day is 35%, to sell 50 newspapers is 40%, to sell 60 newspapers is 15% and to sell 70 newspapers is 10%. Solving the p ≥ ML/MP+ML inequality with the provided data we find that p, the probability that the demand to be greater or equal to a given supply, is p ≥ 0.75. Proceeding with this example and analyzing the probability distribution of the daily newspaper sales we will see that the probability of selling up to 60 newspapers is 75% which is the same with the p value so it can be proposed as optimal. As a conclusion, the news vendor must be supplied with 60 newspapers per day.

Moving on, marginal analysis can be used in several daily decisions for maximizing the efficiency of different kind of activities. Another example where we can use marginal analysis for optimizing an activity is the attempt to determine the level of a car's engine activity. Using the method of the first example, we can gather statistical data and determine the optimal car's speed where the km/Lt variable is optimized.

Then, marginal analysis can be used not only to find the optimal level of an activity but also to determine if it should be increased or not. We can use this rationale to decide how many hours to work per day. Let's suppose that our active hours are 16 per day. During these 16 we have to accomplish various activities. We do not mind working a few hours per day since we have 16 hours and we still have a lot of time to do other things that we have in mind. However, when we begin to increase out working hours per day this results to the reduction of the number of hours we can spend the other things. We need to start giving up more and more valuable opportunities to work those extra hours. So each extra hour of work cost more than the previous one. Now let's consider that we value the first working hour $2 and we add to each subsequent hour $1. If the we are paid $12 per hour, then applying simple marginal analysis concepts we can see that we should work up to 10 hours per day. This is because from the 11th working hour on the marginal cost equals and exceeds the marginal benefit. The above rationale is applied throughout our daily lives and enforces our decision making. We use marginal analysis methods for decisions like the quantity of food to cook, the amount of time we leave our car in the parking space or the even in our daily diet.

Closing, marginal analysis is a method used to optimize various decisions but is not a method that is dedicated to scientists and managers only. It used unconsciously by all of us in our daily actions and decisions. Economists just provide a solid background and strong foundations to this method in order to be successfully used to solve much more complicated optimization problems than the ones we face daily.

References

Marginal Analysis. (n.d.). Retrieved September 5, 2009, from Investowords.com website: http://www.investorwords.com/‌5652/‌marginal_analysis.html

Thomas, C. A.,&Maurice, C. (2008). Managerial Economics. McGraw-Hill .

Certainly, the linear increase of workers within an organization does not always result in a linear increase of the output. The fundamental reason behind this phenomenon is that businesses and organizations are not just collections of individual workers where the work of each one is added to the final output, but instead, they are systems that behave as a whole towards a common target. These systems act as a single organizational unit and its members execute different roles in order to achieve the common target. The fact that I want to emphasize is that this situation is true when you examine it within an organizational unit and not from outside. For example, if you put 100 doctors within a operating theater you will not achieve to finish the surgery earlier. Here you examine the situation withing the organizational unit of the operating theater. But, if you have 100 doctors within a hospital and you perform ten surgeries at a time, then here is where you will see the output increasing. Moving to the next level, hiring 1000 doctors for a hospital with 10 operating theaters will again not achieve an output increase. This is where marginal analysis can play a vital role, which is to determine the marginal benefit, thus the optimal number of workers within an organizational unit whether this a team, a small business or a large corporation. Marginal analysis must be based on this organizational unit concept. But, commenting various thoughts that have been heard recently, I cannot accept the argument that minimizing the unemployment will hurt the economy's productivity. A national economy is not a single organizational unit with a single way of wok and a single output, so it cannot be analyzed with techniques that are used for much less complex systems like business departments and factory units. Most of the times simplifying complex situations is the source of the biggest problems.

Economics is the science of choice. Our daily economic behavior is based on making the most rational choice under the given circumstances. Whenever we buy or sell products and services, we weight the facts, process them and make a choice. The economics is a science that attempts to evaluate the data and provide the best possible information and knowledge, in order to perform the best possible choice. But the choice procedure has an important risk, the existence of scarcity. Scarcity often leads people, businesses and states to perform non optimal choices because of inability to choose what is needed and what is not. The fact that we live in an unreasonably consuming society is forcing the adoption of habits and cultural changes that promote irrational economic decisions.

The budget control is a process that is followed by any thinking creature on planet. The ants are saving food for the winter, the camels are saving water in their back for the hot days and even the kids are trying to think what are they going to spend their petty cash. The same logical process is followed from the smallest economy system, which is the individual and the household economy system, to the higher and highest forms of economic organizations, like multinational corporations and national governments. Governments each year plan their expenses based on their current financial status and the expected financial status of the near future. State budgets usually end with surpluses or deficits at the end of each year due to the complexity of the economy, the lack of accurate predictions and the appearance of unexpected incidents like natural disasters, wars and economic uncertainties.

Although the management of the federal budget is conducted by scientists and professionals, the final results do not really differ from the way any individual manages his or her own budget. The federal budget is affected by scarcity and irrational decisions that are based in inadequate information. Soros claims that individuals base their decisions on solid knowledge but rather on incomplete understanding of the reality that they are a part of (Soros, 2008).
The U.S. federal budged has faced problems during the last years. As Rubin states

Since 1998, budgeting reforms at the federal level have unraveled extensively. The budget process has become ad hoc, fragmented, and opaque, balance has been elusive, and the failure to prioritize has become endemic. One cause was the mismatch between the budget process in 1998, which was designed to eliminate deficits, and the emerging budgetary surpluses of that time. A second contributing factor was the desire to reduce taxes while expenditures were increasing as a result of wars and natural disasters. The consequences of this great unraveling include the failure to fund Medicare and Social Security adequately when the opportunity was presented, as well as threats to constitutional and democratic governance. Renewed reform may require greater transparency and a willingness to embarrass elected officials with iconic stories (Rubin, 2007, p.608).

Further on, Dr Rubin advocates that the U.S federal budget has gone from surpluses to deficits during 2000-2002 due to spending that was pushed mainly by 9/11 terrorist attacks and the actions related to this event, like the wars in Afghanistan and Iraq and by unexpected disasters like hurricanes. But, this cannot become an excuse for consecutive budget prediction failures as in most of these years these circumstances where known and could have been predicted.

But even though, unexpected circumstances are not the only reason of unbalanced budgets in the recent years. Another major reason is the inability of choice and scarcity. A federal budget is about managing the inputs and the outputs of the government money. But many times, the citizens of a state are unwilling to understand that the raise in government spending implies a raise in government income which in simple words means a raise in taxes. The citizen needs are constantly increasing in a way that the government cannot cover the increasing demand for services and goods. At this state, the attempt of the politicians to satisfy public opinion and service short term political interests leads to wrong choices for the long term, choices that will probably affect next administrations and next generations.

Obama's current administration has came to power in the middle of the worst economic uncertainty of the recent years. Obama's spending strategy effectiveness to encounter the economic crisis is still under dispute and it is in the center of big discussion. But the fact that the U.S. federal budget is leaded to a deficit again is indisputable. Estimations state a deficit of 9.3 trillions for 2009 (Zumbrun, 2009). At the same time that the American people are creating a huge dept in order to save their economy and mortgage their children future, the consumers of the national aid and the stimuli packages seem to be avaricious. A good example of this statement is the AIG retention plans. While AIG bailed out by the government four times since last September and received an aid of $182.5 billions, the company has planned $165 million in retention pay at Financial Products (Boston.com, 2009). Everyone understands the necessity of retaining the key staff of a company. But the unreasonable fact in this case is why should AIG pay additional retention bonus to the staff that almost led the company to bankruptcy. AIG is just a paradigm of the waste of public money. It is certain that other companies that received national aid have offered generous compensations to senior staff. These situations show that the inability of choice from the government side, which was not able to choose the most effective ways to support the economy, and the scarcity of the senior corporate staff, which is not willing to quit from its privileges even during ressecion periods contribute to another year with deficit .

In my personal opinion, another bad choice in the formation of the U.S. federal budget is the defence and military spending. During FY 2008, the U.S. government spent nearly $800 billion on defense and homeland security. (GAO, p .35) The U.S. defense budget (excluding spending for the wars in Iraq and Afghanistan, Homeland Security, and Veteran's Affairs) is around 4% of GDP(Eaglen, 2009). Personally, I agree with Barnley Frank's call for immediate reduction on defense spending. He stated that

"The math is compelling: if we do not make reductions approximating 25 percent of the military budget starting fairly soon, it will be impossible to continue to fund an adequate level of domestic activity even with a repeal of Bush's tax cuts for the very wealthy. I am working with a variety of thoughtful analysts to show how we can make very substantial cuts in the military budget without in any way diminishing the security we need...[American] well-being is far more endangered by a proposal for substantial reductions in Medicare, Social Security or other important domestic areas than it would be by canceling weapons systems that have no justification from any threat we are likely to face." (Barnes, 2009)

Federal budget problems are not a privilege of United States only. Budget deficits are a common issue in most countries of the world. Unfortunately, the short duration of administration periods encourage decisions that are driven by micropolitical interests than by long term economic plans. Politicians are mostly interested in satisfying short term public needs, in order to raise their popularity for the upcoming elections, than to implement strategic plans for long term prosperity and growth. This leads to situations like the current economic crisis which is a fine example of non rational choices and scarcity in economic decisions.

References

AIG staff called to explain bonus. (n.d.). Retrieved August 27, 2009, from Boston.com Web site: http://www.boston.com/‌business/‌articles/‌2009/‌03/‌27/‌aig_staff_called_to_explain_bonus/

Barney, F. (2009, February 11). Cut the Military Budget--II . Retrieved August 27, 2009, from The Nation Web site: http://www.thenation.com/‌doc/‌20090302/‌frank?rel=rightsideaccordian

Eaglen, M. (2009, March 23). USA: A 21st Century Maritime Posture for an Uncertain Future. Retrieved August 26, 2009, from http://www.defenseindustrydaily.com/‌USA-A-21st-Century-Maritime-Posture-for-an-Uncertain-Future-05342/

Financial Statements of the United States Government for the Years Ended September 30, 2008, and September 30, 2007 . (n.d.). Retrieved August 26, 2009, from U.S. Government Accountability Office (GAO) Web site: http://www.gao.gov/‌financial/‌fy2008/‌08stmt.pdf

George, S. (2008). The Next Parading For Financial Matters (A. Fillipatos, Trans.). Athens: Livanis.

Rubin, I. (2007, July/‌August). The Great Unraveling: Federal Budgeting, 1998-2006. Public Administration Review, 4(67), 608-617.

Zumbrun, J. (n.d.). The Next Bubble: Obama's Budget Deficit. Retrieved March 20, 2009, from Forbes Web site: http://www.forbes.com/‌2009/‌03/‌20/‌federal-budget-deficit-business-washington-budget.html

The word economics originates from the Greek word οικονομία , which at first meant the management of the household. The economy is mainly driven by the forces of demand and supply of goods. The households and the individuals are the cells of the economy system. The significance of the study of households and individuals behavior has great importance as they are the main and the final source of consumption. On the other end of the scale, multinational corporations and governments are the main source of production and supply of goods.

The role of the economic science is to predict behaviors of the two parts of economy and balance the forces of demand and supply in order to maintain a prosperous and well developed economical environment. This balance is known as equilibrium. Tendencies towards disequilibrium have often causes the short term and long term collapse of the economic balance and prosperity. My personal opinion is that the current economic uncertainty has is main cause in the disequilibrium in energy consumption and supply. Governments and economists throughout the globe have failed to predict the current demand for energy, which is mainly caused by the households of the developing nations of Asia. Thus, they failed to develop the proper politics to increase the supply which would meet the demand. This fact causes the raise in fuel prices and decreased the buying power of the households. As a result, we experienced a decrease of demand in other expensive products like real estate properties. This resulted to the reduction of the prices of the properties which acted as a domino effect towards the banking system and caused its collapse. Another example was the disability of the communist states to maintain equilibrium throughout a centralized economy. The weakness of the states to predict the demand and supply of the goods causes long periods of depression to those states and finally resulted to the failure of the applied socialism.

So, the need to study all the entities of the economic system from the individuals to the big multinational corporations and governments is obvious and significant for the economic science, in order to achieve its targets.

Southwest Airlines is an American low cost Airline. The company was founded in 1971, in Texas, by Rollin King and Herb Kelleher with main purpose to provide low cost, efficient and fun flights inside United States. Currently, the company servers 64 cities inside United States by operating a fleet of 500 Boeing 737 aircrafts. It employees around 35,000 people and operates more that 3,300 flights a day. Its common stock is traded under the symbol "LUV" on the NYSE. The financial statistics report a net income of $645 million, 101.9 million passengers carried, total RPMs of 72.3 billion and a total operating revenue of $9.9 billion. Southwest Airlines announced that 2008 was the 36th consecutive year of profitability (Southwest, 2009). This fact ranks Southwest airlines in the most profitable airlines worldwide. The company has succeeded to maintain profitability through difficult times for air transports sector, like after the 11th of September era and the recent rise of the oil price, periods which led competitors to serious loses even to bankruptcy. This brought Southwest airlines in an advanced position against its competitors. The main factor that aid to this success was the ability to keep the ticket price low while not compromising on the efficiently and safety of the flight. Southwest Airlines was able to provide these prices by following successful business practices. Some of them are the fuel pricing strategy that protected company's costs from rising during the raise of the oil price, the "one type aircraft" strategy than reduced the training expenses for the personnel, the reduction of useless to many people amenities during the flight like meals or business class seats and the excellent use of online booking and check-in system. In the following paragraphs I will analyze which factors I consider as strengths and which as weaknesses for the company, I will state what facts I see as opportunities and what as threads and I will describe an implementation and evaluation plan for my proposals.

Strengths

Fuel Pricing Strategy

Currently, one great advantage of Southwest Airlines that can be considered as strength is its fuel pricing strategy. Southwest Airlines was able to lock down fuel prices to $51 for the last year, at the time the competitors where paying $126(Pae, 2008). Although this is a risky strategy because oil prices can also be reduced, it gives the ability to plan effectively since the management can plan company's costs and thereafter the long term strategy without this being affected by periodical price turnarounds.

Online Presence

Southwest has one of the most successful online presences in the airline sector. Its website, Southwest.com, is the number one airline web site for online revenue according to PhoCusWright. Also Nielsen/ Netratings reports that Southwest.com was the largest airline site in terms of unique visitors(Southwest, 2009). Online presence is of great importance in today's business operation as it can generate revenue while reducing the general operating cost. So being a leader on this sector, as Southwest does, is a great advantage for any company.

Human Resources

The human resources effectiveness is one of the key factors of success for any business. The facts show that Southwest faces with respect and appreciates its employees and their rights. Southwest personnel is heavily unionized as the 86% of it is registered in a union (Southwest, 2009). Southwest also presents a good record on layoffs as it has never laid of personnel in its 38 years of operation despite the last rough economic crisis at the time that the competitors have proceeded laying of 29,400 employees since the start of 2008(Schlangenstein, 2009). The feeling of safety, especially in difficult times, is of great importance in the upkeep of the employees morale and their high performance

Weaknesses

Low quality of Amenities

An important weakness I spot in Southwest Airlines is the low quality of amenities. The effort for reducing cost while maximizing profit has led to reduction of amenities offered to customers. Narrow seats, elimination of business class treatment and snacks are measures that keep the price low but at the same time discourage potential demanding customers from using the Airline. Due to the current economic crisis, this weakness in not so obvious but it may result in bad reputation when the financial situation improves and the customers will be more willing on spending a bit more for quality service

Short Range of Operation

Southwest operates only domestic flights and only in 34 states (Southwest, 2009). This a short range of destinations comparing with its main competitors. Additionally,Southwest does not utilize a hub system which would allow it to reach further destinations. These two factors leave a lot of potential market uncovered and delivered to the competitors.

One Type of Aircraft

Southwest's practice of utilizing only one type of aircraft has been beneficial until now but it is a potential risk for the company. Being limited to one type of aircraft leaves the company with little flexibility in case the model receives a bad reputation or a critical flaw is discovered. This would be a costly venture for the company to replace the entire fleet and retrain the staff in order to avoid bad reputation.

Opportunities

Current Economic Situation

The current economic conditions have given to Southwest Airlines a competitive advantage at the time that major competitors are facing difficult times. People are seeking for transportation in the lower cost and Southwest Airlines has the potential to fulfill this expectation. This is the right time for Southwest Airlines to expand its activities to more and cities, even internationally, while the competition is in retreat mode. It is the time to move aggressively and eliminate the competition

Partnerships

Southwest Airlines already has implemented a form of partnerships through the Rapid Rewards program which rewards the customers with points which can later be exchanged with free tickets(Southwest, 2009). This program can be expanded and partnerships can be extended in order to attract more customers to Southwest from partners. For example, travelers that book in specific hotels can get discount if they travel with Southwest Airlines. This way Southwest Airlines will be considered as a choice from a bigger audience that now.

International Activities

Expanding its activities internationally should be seriously considered by Southwest Airlines as part of an aggressive strategy. Europe can become a potential new target as it has the same needs for low-price transportation and the conditions in the airline sector are similar to United States with many airlines facing difficult times.

Fare Search Engines

Southwest must reconsider its strategy and expose its fares in fare search engines (Sardone, 2009). Fare search engines is a great place to promote the price difference from competitors and it is also a place where a lot of travelers develop their whole trip package. Southwest should not be absent.

Threads

Competition-Imitation

Successful business practices are not patents and are not protected from copyright laws. So, upon success, they are always imitated by potential competitors. Southwest's business model has already been applied by other companies outside United States like EasyJet and Quantas and it will not take long for Southwest's competitors to start utilizing it. So Southwest Airlines needs to be aware that it wont be the only low fare company and must keep on innovating continuously.

Economic Comeback

Most probably, the current economic crisis will be over in the next one or two years. This will have as effect a lower demand on low cost trips and an increase in demand for higher quality. Business people will not worry so much about traveling expenses anymore and will seek for business class treatment, facilities and amenities. Travelers and tourist will not have as a priority the cost of their vacations but mostly the comfort, relaxation and well being. If Southwest Airlines fails to meet the above criteria in that time, it will probably face a drop in customer's choice.

Strategy For Successful Growth

Following the brief SWOT analysis I will propose a strategy for the next 5 years, which I believe will keep Southwest Airlines in a successful path.

Extent Quality Range

Southwest Airlines should start providing a small number of seats with business treatment. Demanding customers is an area where the Airlines should focus more. The seats should be less than in a common airline's flight, in the range of 4 to 8 per flight, in order to keep the overall cost low and at the same time provide the choice for the customer.

Extend Range of Operation

Southwest Airlines should extent its operation nationally and also experiment with pilot international flights, in order to reach a wider audience and increase its customer base

Increase Aircraft Types

Southwest Airlines should increase the variety of airplane types by adding another type of airplane. It is important to increase the variety by only one so it keeps the benefits of a few types fleet while eliminating the risk of utilizing a single type. Also it would be good to increase the suppliers by purchasing non Boeing airplanes also. Airbus A320 series would be a good alternative for Boeing 737.

Aggressive short term price policy

In the next couple of years and while the economy is still in recession, Southwest Airlines should take advantage of the bad financial situation of the competitors and follow and aggressive low price policy in order to eliminate competition and gain a bigger market share.

Improve Partnership Schemes

Southwest Airlines should improve the cooperation with the rest of the traveling sector, in order to attract more customer by providing complete traveling packages in very low prices.

Investigate International Activities Potential

Southwest Airlines should investigate the potential of beginning activities outside the United States, in promising markets like Europe and Asia.

Revise Fare Search Engine Policy

Southwest Airlines should revise its policy and start exposing its fares in search engines like Expedia, Orbitz and Travelocity in order to stress the difference in price from

competitors.

Implementation And Evaluation Plan

The following steps should be followed by Southwest Airlines in order to implement and evaluate the proposed strategy.

Pilot Business Class Flights

Three or four major routes should be selected based on a customer evaluation for pilot flights with business class treatment. Response should be recorded and evaluated. If the demand equals or exceeds the average passengers per flight, Southwest should proceed implementing Business Class in all its flights.

New Destinations

New destinations should be selected carefully based on the competitors prices on the candidate roots. If the competitors maintain high prices with an average equal or more that $0.12 per seat mile, which is the competitors average(Miller, 2009), Southwest Airlines should enter aggressively into that market. After entering the market, continuous evaluation should take place by comparing the roots passengers per flight with the total passengers per flight

Lower Prices

In roots with strong competition where the competitors face financial trouble, Southwest Airlines should benefit from its wealthy financial situation and drop even more prices, even with the potential of temporary loses, in order to make it unprofitable for the competitors to operate on the specific roots. The response of the competition should be evaluated periodically and the policy reconsidered based on the current situation.

Purchase New Airplanes

Southwest Airlines should proceed with a deal with Airbus for a small number, less than 10, of A320 airplanes. The new airplane type should be evaluated for a period of 1-2 years and if it proves satisfying, the company should proceed with the purchase of more airplanes as a part of its expansion in new routes

New Partnerships

Southwest should take the initiative to provide discounts to preferred partners as hotels and car rental agencies in order to attract new customers. The response on this should be evaluated and if profitable to be extended.

Cooperation With Search Engines

The policy of not exposing fares in search engines should be immediately revised. Agreements with major search engines must take place and this policy must be evaluated yearly by analyzing the incoming profits through these channels

Research For International Destinations Potential

Southwest should hire consultants to research the potential of expanding to international destinations. Upon completion, the research should be evaluated and action should be taken accordingly.

References

Miller, A. (n.d.). Future Looks Dim For Legacy Carriers, Regardless of Cost-Cutting . Retrieved April 18, 2009, from http://bus.utk.edu/‌cba/‌News_Articles/‌AWST%20Editorial%20Final%20-%20miller.pdf

Pae, P. (2008, July 25). AIRLINES; Southwest is poised to reign as area's busiest; Fuel hedging helps the carrier take advantage of rivals' cutbacks at LAX and three other regional airports. Los Angeles Times,p. C.1. Retrieved April 17, 2009, from Los Angeles Times database. (Document ID: 1516530331).

Sardone, S. B. (n.d.). Get the Most Out of a Southwest Airlines Flight. Retrieved April 18, 2009, from http://honeymoons.about.com/‌od/‌airlinessites/‌qt/‌Southwest_Air.htm

Schlangenstein, M . (2009, April 17). SOUTHWEST SKIDS TO 3RD LOSS IN ROW AIRLINE OFFERS INCENTIVES FOR EMPLOYEES TO LEAVE. South Florida Sun - Sentinel,D.3. Retrieved April 22, 2009, from Sun Sentinel (Ft. Lauderdale) database. (Document ID: 1680333031).

Southwest Airlines Official Website . (n.d.). Retrieved April 18, 2009, from http://www.southwest.com