Global Financial Management & Summary - Assignment Example

Increase in the price of oil is one of those major events. Oil is an important and essential raw material for running airline business service. Without it, the company will not be able to provide their airlines services to its domestic and international customers. In the last year 2013, increase in the high oil price also increased the operational costs of this company and as a result, price of flight ticket was comparatively higher than the normal situation and this price was not affordable to all income groups.

As a result the company was starting to lose its competitive advantages in the global market. Again this is observed that salaries and bonuses paid to the senior level managers are more than the amount of dividends which the company distributed among its investors. This situation created some unsatisfactory issues among investors. The investors are now not interested for further investing their money in this business and they are moving to the other competitor companies which are existing in the same industry.

So the company is going to lose its capital for further progress of its business activities. In the year 2014, El Al Airlines Ltd announced that it cannot provide security services to abroad as the Finance Ministry has approved less amount of budget than the required amount for the purpose of security. This will also decrease the amount of revenue in the business if competitors can provide the same facilities to the customers. As this company is doing business across the national borders so fluctuation of exchange rate and currencies in different countries will also affect the financial condition of this business.

The recent Euro crisis is one of its examples which affect the activities of this business in a worst way (Madura, 2014). The competition of airline services is increasing in the global market and so many emerging and existing companies are providing more cost effective offers to the customers and through this