Management
Issue No. 44 - December/January 2008
Thriving in the current economy
by Penelope Herbert
While these are undoubtedly uncertain times the fear-mongering of attention-seeking headlines would have you believe we are in the depths of another great depression.
While it certainly pays to stay abreast of the marketplace, there is little evidence to suggest that it pays to shut up shop and batten down the hatches. On the contrary, history has shown that with the right strategy, decisive action and a dose of courage, economic uncertainty can provide opportunities not seen under normal conditions.
Now is the time to revisit your strategy and adjust accordingly. These volatile times will provide incredible opportunity in certain market segments – it’s a matter of looking for them.
It was reported in The Advertiser recently that Education Adelaide is using the lowering Australian dollar to entice Chinese students to study in Adelaide. This is a classic example of identifying the opportunities of the current climate.
There are other industries, from property developers to caterers, which could take advantage of this alone. A recent Business Week article stated 70% of CEOs and boards will ask themselves the wrong questions about economic uncertainty. They will ask ‘how do we minimise the impact to current earnings forecasts?’, instead of asking ‘how can we take advantage of these times to grow the business?’. The latter is a long-term strategy - you can’t do both.
Cut the fat not the meat
In a study of US recessions, McGraw-Hill research analysed 600 companies covering 16 different industries from 1980 to 1985. The results showed that business-tobusiness firms that maintained or increased their advertising expenditures during the 1981-1982 recession averaged significantly higher sales growth, both during the recession and for the following three years, than those that eliminated or decreased advertising. By 1985, sales of companies that were aggressive recession advertisers had risen 256% over those t...
