Mba 1st

Quest 1. Why should Power8 focus on shedding jobs to save on cost? Are there no alternative strategies?

Answer. The plan, dubbed Power8, aims to cut costs by 2 billion Euros ($2.6 billion) a year by 2010and to offset the crippling effect of a strong euro against the dollar. It is also Airbus' first major effort to transform itself into an integrated company rather than a myriad of national interests. The main features of Power8 restructuring plans are achieving a reduction in overhead and costs while finding partners for the aero structures sites the company wants to sell. The company wants to downsize its workforce and increase the rate of production of existing airplanes as away of generating cash.

Power8 focus on shedding cost was a way to improve cash which was needed as an emergency measure to survive the competition from Boeing. The much needed cash was for the production of A380.

Now, the question comes whether there are alternative strategies for such a programme. As all the workers across France and Germany were unhappy and went on strike, one need to think does Airbus needs strikes to already aggravate the poor cash situation? The answer would be NO. In my opinion they should go for other alternatives to job cuts or layoffs (which happens when a company plans to restructure or its strategy forces it to reduce its workforce). It could be due to Global completion, reductions in product demand, changing technologies that reduce need for workers, mergers and acquisitions are the main factors behind layoffs. The alternatives would be to encourage employees with Early Retirement Programme which ensure a fair compensation package and can also include health benefits too. Other alternatives include having Employment Policies such as Hiring Freeze implementation when greater cost reductions are needed. Temporary employees, contract employees, part time employees should be eliminated to protect the jobs of permanent employees. Other policies would be...