These two issues are interconnected, because fuel prices will have dramatic impact upon the costs for the company and can adversely affect its bottom line. Where, the costs for transporting both cars and passengers will increase, while the fare price will remain the same (at least for a certain amount of time). However, if fuel prices continue to rise, this could mean that ticket prices will have to increase or some type of a fuel surcharge must be imposed. In either case, this would have a negative impact upon demand, as rising costs will force many consumers not to use the company's services. (Irish Passengers Numbers Down 10% 2009)
Then, you have the overall impact that this will have upon consumer demand in general, which could possibly cause an industry wide slowdown. This is because the rising price of fuel, will dramatically affect consumer spending and psychology. When fuel prices are increasing, it will have an impact upon the costs of a variety of goods and services in the economy. Once this occurs, it means that many consumers will reduce their spending, which will cause the economy to slow dramatically. At which point, the company and all its competitors will have extra seat capacity and slowing demand. This will result, in a sharp decline in earnings, as the company could struggle with excess capacity, which would require drastic cuts in service. A good example of this kind of situation can be seen with Irish Continental Group which saw: a 10% decline in passenger traffic, a 5% decrease in cars and a 29% decrease in goods shipped. This is significant, because these result occurred in 2009, when fuel prices had damaged consumer demand so much that it would have profound impact on earnings. In many ways, one could argue that fuel prices and the company's possible exposure to economic forces are the biggest challenges going forward. As these two factors: can cause earnings to become more volatile, while affecting the financial foundation of the company. Therefore, it is prudent to create some kind of strategy that can be used to mitigate these effects as much as possible. (Irish Passengers Numbers Down 10% 2009)
Clearly, the European ferry operators are being affected by globalization. Where, this is causing a number of unique challenges going forward. From a human resources perspective, the costs of labor and the number of hours worked have created a heated debate in Ireland. As the union, is demanding that all Irish ferry companies' use unionized workers, even through their labor costs are high and the total number of hours is limited. To rectify the situation, some companies have tried to hire non-unionized workers; which has resulted in legal action and strikes. In order for the company to remain profitable in the future requires that some kind of balance is stuck between the union requirements and the use of non-unionized workers. If these two issues can be rectified, then the odds are high that some kind of compromise can take place on this issue. As far as financial resources are concerned, the two biggest challenges that the company will face going forward are: rising fuel prices and changes in the economic cycle. These two issues are the greatest challenge to the company / industry, as the increase in fuel prices could have a negative impact upon the overall bottom line. At the same time, it can affect consumer spending and psychology, which could cause the economy to face serve economic challenges going forward. This problematic, because mitigating these two factors as much as possible requires, using different strategies that can reduce the negative impact; that events can have on the liquidity position of the company. As result, there is an interconnected relationship between the different human resources challenges and the various financial / economic issues are: the biggest factors that can affect the long-term profitability of the company.
Irish Ferries Dispute Resolved after Bitter Stand Off, 2005, Available from . [31 July 2010].
Pressure Grows for EU Ferries Directive to Combat Social Dumping, 2005, Available from . [31 July 2010].
Irish Passengers Numbers Down 10%, 2009, Available from . [31 July 2010].
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