Moreover, it has affected the performance of the Qantas Airlines by freezing the recruitment and adoption of cost-cutting measures to reduce costs incurred by the company and laying off employees. Another way in which the Global Financial Crisis (GFC) has affected the performance of the Qantas Airlines include reduction in the global competitiveness, the shift of operations to short haul routes, and the introduction of smaller jets to replace the larger jets operating long routes (Glaesser, 2006)
Significant evidence shows that many of the employees have lost their jobs due to the effects of the crisis on the company. The company responds to the decreasing performance, productivity, and market share by reducing the number of their employees to counter the diminishing organizational performance (Kim & Mauborgne, 2005)
However, changes in the global financial performance have resulted in a decreased performance of the tourism sector. This has affected the performance of the airline industries including the Qantas Airlines that rely on the tourism sector (Lago, 2010)
This financial crisis badly shocked the world economies when few of the largest commercial banks of the United States went bankrupt. Lehman Brothers, Morgan Stanley, Goldman Sachs were among the most successful banking companies of the country, but took the bad impacts of this financial crisis and went bankrupt due to non-payment of their liabilities to the housing sector (Barth 2009)
Organization Behavior Global Financial Crisis The most recent financial crisis has badly affected the Global economy. Individuals, businesses, and Governments; every entity has taken its impacts in one way or another (Burger, Coelho, Karpowicz, & Tyson 2009)
This section gives an overview of these impacts on different sectors in the light of some important economic measures. The overall impact of the financial crisis can be discussed by highlighting its impacts on the inflation rates, balance of trade, monetary policy measures, and economic reform programs taken by governments from time to time (Chorafas 2009)
This downturn in the financial performance was quite minor in the beginning, but suddenly increased up to such a large extent that these banks, insurance companies, and financial institutions could not survive in their industry and went bankrupt due to huge unpaid obligations. The financial crisis started in the financial sector of the United States, but spread to the whole world markets in a very short period of time (Corker 2012)
Department of the Treasury 2012). Economists and Financial Analysts have discussed various reasons for this Global financial crisis; a big downturn in the financial and housing mortgage sector is said to be the biggest reason of all (Donath & Cismas 2009)
The second risk factor is the competition among businesses which can both impact the revival programs in a negative and positive way. The price war between different businesses can lead to greater competitiveness but it can lead to more relaxed terms and conditions as the world experienced before the recent global financial crisis (French, Baily, Campbell, & Cochrane 2010)
Economists and Financial Analysts have discussed various reasons for this Global financial crisis; a big downturn in the financial and housing mortgage sector is said to be the biggest reason of all (Donath & Cismas 2009). The Global financial crisis has hit almost all the sectors of the economy which have not only hampered the industrial growth in the countries, but also caused serious challenges and issues for the Governments and regulatory bodies (Independent Evaluation Group 2012)
Senate Committee on Banking, Housing, and Urban Affairs 2012). These things resulted in a decreased level of production by the manufacturers which means they had to run their plants under-capacity (International Monetary Fund 2012)
RISK ANALYSIS IN THE GLOBAL FINANCIAL CRISIS In order to revive the world economy from the severe financial crisis, there are different strategies which the businesses and government have adopted in the recent past. The first and the foremost is the risk analysis of different factors which had caused the financial crisis and badly hampered the industrial growth and economic performance of different entities (Kaufman 2009)
It helps them ensure that they are offering their products and services to the right customers who will surely be profitable for their business. Secondly, they believe that the gradual improvement in the economic conditions of the countries will facilitate the public-private partnerships in the international markets and an encouragement to the business organizations to set up their independent projects in the potential countries (Krugman 2008)
The later sections discuss the different aspects of the global financial crisis; including its major impacts on the different sectors of the economy, what strategies businesses and governments have been adopting to overcome its consequences and bad impacts, and what are the potential impacts which this financial crisis can bring in the near future as well as in the long run. HISTORY OF THE FINANCIAL CRISIS The most recent financial crisis started in late 2006 in the United States when its largest banks, insurance companies, and other financial institutions noticed a big decline in their sales and profitability (Magdoff & Foster 2009)
Similarly, the inter-bank rate has also been set high in order to discourage the landing and borrowing transactions between the local banks. The economic reforms by the governments of different countries include encouragement of foreign direct investments in their countries, running industries on their full capacity, and supporting the micro-financing in the rural areas (Nanto 2009)
The governments are controlling the level of inflation in their countries through tight monetary policies. They have set the discount rates for baking companies higher in order to discourage their borrowings (Patterson 2010)
Similarly, the value of currencies in the Asian and European markets were also depreciated due to low production level, high trade deficits, and discouraged international trade (Donath & Cismas 2009). The terrorist activities also increased during the previous three to four years which also discouraged the tourism and travel industry around the Globe (UNCTAD 2009)
Before this financial crisis hit the United States market, the housing mortgage and finance market was dominated by a few large commercial banks (Donath & Cismas 2009). They were in a stiff competition with the local and international banks and financial institutions that offer these facilities at comparatively lower interest rates than banking institutions (United Nations Organization 2009)
The result of this over-selling was seen in the form of a big disaster to the United States' banking industry (United Nations Organization 2009). A significant percentage of borrowers was unable pay its liabilities to the respective banks and financial institutions due to limited income and extra expenditures of monthly interest payments (World Bank 2012)
' This is completely wrong -- and unless policy makers realize that it's completely wrong, they're not likely to make the right policy decisions." (Brewer, 1) Such mischaracterizations are both troubling and indicative the pressing demand for us to promote open dialogue on the nature of the financial crisis and the most appropriate ways of moving forward