How to survive an economic crisis? It is a very important question for the whole country and for the separate companies in particular had financial times. It worries even ordinary citizen, who have already appreciated all the “delights” of the crisis on their own budgets. Unfortunately there is no definite answer today to this question.
Recessions don’t dole out their misery evenly. Even in a downturn some geographical areas can do well while others suffer. Moreover a downturn can represent not so much a threat but an opportunity. So some firms manage to take advantage of recessions. Some companies try to weaken effects of downturns. They hire people who have already gone through recessions elsewhere. However it isn’t necessarily that someone with experience of a downturn will do better next time. Besides no two recessions are the same. Although some of them come round again and so some lessons should be learnt.
At hard times people react inadequately. Across large corporations such behaviour may be disastrous. Therefore at times of crisis good management is vital. Top managers are required to be rational, sensitive and to be sure in their decisions, because one mistake could destroy everything that had been created during the years.
The core of good management is a set of 3 old-fashioned virtues. Good managers have to be honest, frugal and prepared.
Ø Managers must be prepared for various situations on the market; they need to be able to make serious decision when it would be necessary.
Ø Managers should be honest about value of their company and its potential.
Ø Being frugal means being sparing with resources at all times and being continually looking for new ways to cut costs. During recessions companies start to make different cuts. As a result some of them suffer because they are connected with each other. Furthermore a lot of people lose their jobs due to cuts. However companies can make orderly cuts. Consistency is the key to it. Support for partners and close relations with them can be also helpful over recessions.
Frugal organizations have some strength in respect of downturns. Firstly jobs are always more secured in such firms. Secondly it is easier for frugal firms to satisfy clients over recessions than for high-cost firms.
Being frugal will help to find additional resources. They may be spent on innovations, talented employees and so on. By the way financial resources are rarely an effective way of inducing loyalty. We’d better combine them with our organizational culture and career opportunities.
The family effect helps firms to work in hard conditions too. Moreover companies with big family holdings outperform others. Thus rational using of saving and the family effect can help a company during recessions.
Moreover a firm should find some balance between specialization and diversification or to choose one of them. Furthermore companies ought to seize opportunities opened by downturns. If they succeed in it they may take the leading positions after crisis. Also redesigning of business processes can help to raise productivity.
As for being prepared, it means planning for the future which can help a company to be prepared for most eventualities. Also companies need to be always confident in its financial sources when they are going to take on credit, because in crisis unsafe financial sources could suddenly disappear.
And finally, the best way of surviving a crisis is a complex approach which combines government help with different tools of effective management which should be designed and tested beforehand.