Authors Name: V.

SUDHA
College: MRITS
Ph : 9000462678
BUSINESS STRATEGIES IN ECONOMIC
TURBULENCE

Firms resources and capabilities may be

INTRODUCTION: exploited to increase operational
efficiency, or dynamic capabilities may
The old live in the past whereas the be developed to explore new
young in the future, the later on dreams opportunities for revenue generation. To
while the former on memories .The Old leverage their capabilities firms
follow the beaten path whereas the implement a variety of strategies like
young carve out their way. This is the
difference between the Old and Younger
generations. 1. Human resource strategies
So, the younger generation managers at 2. Marketing strategies
this time of most severe global economic 3. Finance strategies
turbulence must do everything within 4. Supply chain strategies
their power to brace for the coming 5. Growth strategies
storm and survive the bad times
predicted by some to the bigger and Strategies are implemented through a
more devastating than the great range of revenue generation and
depression of 1929. They must not only efficiency enhancing actions.
adapt business strategies to immediately Performance outcomes include sales,
recession-proof their business but also profit and market share
come out on top of their competitors
when the economic tide reserves.

An analytical framework for examining

the business strategies and performance
during economic turbulence is presented
in this figure.

Business strategies and performance

vary with the resources and capabilities,
leaders perceptions of threats and
opportunities available , and the wider
organisational market, institutional and
cultural contexts which firms operate ,
their sensitivity to economic turbulence,
including the quantity and quality of
government support to business are the
major influences on how firms react to
recession conditions and their
subsequent performance.
 AN ANALYTICAL FRAMEWORK OF BUSINESS STRATEGIES
IN ECONOMIC TURBULENCE

Environment

Government Market Industry

Capabilities

Firms existing Strategies Implementation

HR- Performance
Resources and STRATEGIES
Capabilities Measures
Strategies Taken Profit
Bottom-line
Firms Operational Marketing
Resources Strategies
Measures Sales
Firms Dynamic Supply Chain Taken
Capabilities Strategies Top line

Finance Market
Innovation/ Share
Leadership Thought Strategies

Leadership thought; this attitude will drive the behaviour

The state of the economic turbulence is a
fact and how you feel about that fact and
what it means to leaders personally is a
belief .Leader beliefs have a major
impact on your employee’s attitude.
‘Beliefs that drive sales behaviours are
the keys to becoming successful in a
economic turbulence. If leader believe
that this economic crisis can provide
you with opportunities then
of his employees’
Sales Belief : A good leader is who’s
always prepared for this turbulence. He
have quality value propositions coupled
with the ability to reach out – network
and build customer relationships for
superior to the competition that
generally only has price going for them.
He believes that he can take business
from the competitors. So the leader
should ask him these questions.

1. Is his glass ½ FULL or ½ EMPTY?
If leader believe the glass is ½ FULL
there is a window of opportunity build
on following foundation. Then leader
follow offensive strategies.
Going on the offensive in an uncertain
economy is not for the faint-hearted. It
takes confidence and courage to spend
money in a recession, when the timing of
recovery is uncertain.
Offensive strategies include:
• acquisitions and mergers;
• targeting the clients of weakened
competitors;
• Intensify marketing
• Adopt cutting edge technologies
• Increasing investment
• seeking new ways to improve
• reorienting the company or its
products to new geographic markets
and new customer groups;
• continuing to develop new products
and processes; and
• taking advantage of government
stimulus packages, especially for
infrastructure and green technology.
Growth strategies are always risky, but
even more so now. Yet standing still or
contracting is likely to result in a loss of
market share. For firms whose financial
foundations were shaky at the onset,
there is little choice.
If the leader believes the glass is ½
empty then the leader follows
Defensive strategies include:
• cutting staff and salaries;
• reducing production to bring
inventories in line with demand;
• pressuring suppliers to drop prices;
• reducing marketing efforts; and
• lowering prices on products and
services.
The determining factor of whether a
company can go on the offensive is its
financial strength on the onset of
economic turbulence. The good
companies are those that had their
financial house in order, with
manageable debt and cash reserves. Its
like a disease, “if you were not in good
physical and mental shape before,
there is little you can do to fight
disease”. Its the same thing for the
companies in the face of an economic
turbulence. If you are not financially
strong and with a low cost-base the odds
are against you.
“If you are a good company, the banks
are chasing you. If you are a bad
company, you are chasing the banks”.
“When the economic outlook is good
most leaders focus on growing sales. But
when the economy slows down and
times get tough, the focus inevitably
shifts. Most leaders turn inward to
reassess business operations, as they face
hard choices as how to manage the
company. As businesses struggle to
survive a downtown, leaders generally
behave in one of the 3 ways – Coupa”
1. ‘The Ostrich’ – pressure the status
quo & just hope for the best.
2. ‘The Bull’ blindly cut expenses
across the board.
3. The Fox use the downtown to make
your business more effective so
when growth returns you will be in a
stronger competitive position.
So, I suggest leaders to behave like a fox
instead of viewing a recession through
fearful eyes, use it as a means to pounce
an emerging trends and to get lean, mean
and in position to crush the competition
as economic conditions improve.
Deliberate leadership, clear thinking and
solid strategies lead to success in any
economy.
Human Resources Strategies:
HR should be the model for the
organization and manage the
transformation – not be managed by it.
To win their heads, hands and hearts the
manager must create a culture of
continuous leaning and environment that
not only accepts, but actually embraces
change. For eg:- at Toyota, they say “we
build people before building cars”.
1. Don’t build a kingdom on the backs
of your employees: If economic
times dictates cutbacks layoffs and
expense control start at the top.
Share the pain.
Cut across the workforce by down
sizing and right sizing the
employees.
2. Rewards & Benefits
3. Positive leadership modelling
through enhancing values, habits and
cross training key people.
4. Implement human development
programs and cross train key people.
5. Hire Top talent.
6. Drive creativity before making
capital expenditure.
7. Create flexibility in your
organization structure.
8. Constructive feedback from
employees can be help full.
9. Communicate the company’s value
effectively.
Finance Strategies:
1. Retrenchment Strategies: Involve
cutting operating costs and
divestment of non-core assets. They
include : 1) Closure of establishment
2) Reduction in employment
3) Expenditure cuts on wide range of
activities.
2. Investment Strategies: It involves
expenditure on innovation and
market diversification. Recession is
regarded as an opportunity to
implement strategic change that
would otherwise not have occurred.
Such strategies are risky and firms
are likely to be too pre-occupied with
short term survival to think about
innovation and growth or lack the
resources to implement such
strategies effectively. They include:
1) ‘increased investment’, with the
aim of attaining market leadership.
2) ‘holding the investment level’ to
continue with tactics used previously
3) ‘shrinking selectively’ to
reposition the business, by retrieving
the value of some prior investments
while reinvesting else where if
necessary
4) ‘milking the investment’ to
harvest the value of earlier
investments, without regard for long-
run positioning
3. Mixed Strategies: Combine
retrenching and investment. It is
likely that most firms adopt under
recession conditions through
1) cost / asset cutting behaviour
2) investment in product innovation
& market development
4. Analyze worst case scenarios by
modelling potential impacts on profit
and loss balance sheets and cash
flows.
5. Immediate divestment to recoup
asset value.
Marketing Strategies:
One of the biggest mistakes leaders
make during periods of economic
turbulence is to cut back on marketing
and advertising. This could be most
detrimental to business. Instead, your
marketing needs to be more aggressive
and more comprehensive than ever
“Without promotion, something
terrible happens – NOTHING!”
Marketing strategies includes:
1. Start contacting past clients
2. Offer discounts & others as extra
incentives.
3. Position yourself to be a market
leader i.e., to lead than to follow
your competitor.
4. Set the company apart from the
competition by developing their own
USP-Unique Selling Position also
called ESA (Essential Selling
Advantages). Then there is
absolutely no reason to worry about
the economic turbulence or
competition once customers
experience USP. Infact USP can be
used to ruthlessly eliminate your
competitors.
5. Offer Outstanding Customer Service:
Once you have started attracting
customers you need to think about
retaining them in a stagnating
economy that may be even more
difficult. You must not only provide
a high quality product, but also
exceptional customers service. When
money’s tight client expect more for
every rupee they spend.
6. Insure every step from taking the
order to delivering the product.
7. Consider making your service more
valuable to clients through
1) Fast delivery
2) Wider selections for more flexible
payments.
8. Diversifying through Innovation: In
week economy diversification may
be your business best friend. The
more service you can offer the more
clients you can find. No matter what
service you offer with a little
innovative thinking you should be
able to develop a several “new
offers”.
9. Stay focused: Nothing will damage
your business more than business
myopia or short sightedness. In
order to stay successful you must
always keep an eye in your long term
goals and objectives.
Supply Chain Management Strategies:
Logistics & supply chain management is
been touted to create a success story for
any organization.
“In the middle of our economic
recession, its easy to focus on moment-
to-moment survival, but its not
enough to just stay alive. You must
still plan ahead when the good times
return. That way, you’ll be first in line
when the economy turns around”.
- Tim Whitmore, special contributor –
supply chain management review,
10/29/2009.
The strategies include:
1) Reduce inventories
2) Eliminate long term purchase
agreements.
3) Cheque capacity for readiness to
accommodate increased buying
activity.
4) Improvement in quality
5) Reducing the lead times
6) Increasing delivery performance
7) Increasing the overall efficiency in
supply chain
8) Reducing costs & wastages
9) Providing exceptional customers
service.
10) Adopt cutting edge technologies:
CONCLUSION:
1. So, combination of offensive and
defensive strategies – cutting cots in
non priority areas in order to use the
savings to develop new products and
enter new markets – is the best way
to ensure a firm comes out of great
economic turbulence in better shape
than it went into.
2. “Turn Vision into Cause”: You
see, almost anyone can have a vision
but if you have a vision without a
cause you are just dreamer.
“A vision without a cause”, simply
makes you a dreamer.
global arena. Strategies can play an
important role in supporting businesses
either to exploit the opportunity enabled
by recession or to manage the threats
posed and it should be acknowledged
that they are strong limits to what is
possible.
As the impact of economic turbulence
spreads no organization will remain
untouched. Companies that first manage
the risks and then exploit the
opportunities of the crisis in a strategic
deliberate and speedy manner will
emerge as the winners.

I know plenty of dreamers in my life

time whose ship never has and never
will come in . One thing I know for sure,
If your ship misses harbour …..Its
generally not the Harbours fault….

“Leaders are visionaries with poorly

developed sense of fear and no concept
of Odds against them”

If you aren’t a visionary……Hire

one…..more importantly …..turn your
vision into a cause.

So deliberate leadership, clear thinking

and solid strategies lead to success in
any economy.

Lastly to put into a nutshell, The

economic turbulence represents both a
threat and opportunity for businesses.
Grabbing opportunities will be the key to
securing the competitive advantage in