marketing analysis for airline
Privatization 1. Introduction. Privatization is one subject matter current and important all over the world. The wave of privatization started in 1970 and spread globally because seeking of results substituted the socialist ideology. Indeed, it is now quite difficult to find a country that has not embarked on a program to divest some or all of its state-owned enterprises (SOEs) or to involve the private sector in their management, ownership, and financing. The reasons for the rise of privatization are well-established. In general, SOEs performed, and continue to perform, poorly. They proved wasteful and inefficient, tending to produce goods and services of low quality and high cost. They became seriously overstaffed as governments used them to generate and maintain employment. Sheltered from competition, SOEs often were instructed to keep their prices low, resulting in mounting financial losses. Old concepts such as the market should be substituted for the State failured and collapsed, because it became clear that the flaws produced by government activities could be worse and cause more damage than the defects of the market. Privatization seeks to reduce or minimize: low performance in the financial area, in the commercial or in the administrative field, dependence on subsidies and other governmental revenue transfers, the process that places political decisions as a priority where it would be better to have technical criteria to serve for public interests. Privatization is part of a bigger process that intends to eliminate the practice of economical policies that limit internal and external competition. 2. Study of ¡°before and after¡± Privatization is associated with improvements in the firm¡¯s financial and operating performance. In this paper, we use the privatization of British Airway as an example with ¡°before and after¡± study in comparing efficiency and profitability before and after privatization, changes in number of employees and industry effect to show the ways that the privatized company changed compared to the state-owned organization which it has replaced. 2.1. Profitability and efficiency. The first strand of the case is probabilistic in nature. Because, SOE¡¯s first goal is not profit-maximization, they are not managed like a private firm. So, the efficiency, profitability are not so important criterion for government managers. This incentive leads huge losses in the future, which is usually offset by the governments. As the lack of a profit motive is held, it removes an important element of accountability in the use of resources. Private companies are, in theory, accountable for their use of scarce resources to their customers and to their shareholders. As long as there is genuine competition in the market, consumers only buy the goods produced by a particular firm if those goods satisfy their demands at a competitive price.