Many probably remember the one scene from Forrest Gump, when the little boat of Forrest and Lieutenant Dan survived the storm, destroyed the entire fleet in the region and make them major players in the trade in America for one night. The incident may have been particularly instructive in the current economic situation and illustrates that even in the biggest crisis there is room for success if the expression enough courage poemesh reasonable risk at the right time, hold on rudder in the storm and, of course, got a dose lucky to find yourself in her eye
Common perception is that the economy is moving in sinusoidal. Economic crises are an inevitable part of capitalism (as to try to „mellow“ or „master“). They happen periodically, as some argue, with cyclical regularity. Financial crises also occur periodically, albeit more difficult predictable. Today we face both at the same time, leading to perhaps the most serious global economic crisis of the 30-ies of XX century.
Whether through the „invisible hand“ of the market, says Adam Smith, whether through state-building of the pyramids, „as advocated by Keynes, but sooner or later,
more or less blood and sweat, every crisis is over
It is reasonable (even indispensable) to ask what we do in the meantime, in order to survive, and why not take advantage of the crisis.
During the recession in the early years of the XXI Century (2000 – 2003), which experienced Western world and which is most closely comparable to the current crisis, 25 percent of companies have moved from the lowest ranking in 25 percent of its industry in the top 25 percent stake. At the same time, around 20% of the largest companies have fallen into the lowest for a quarter. Or, in other words, one of the most simple advice for any manager would be that the founder of the Dixons / DSG Lord Kalms: to tighten – the strongest will survive. “
Managing the expectations of all stakeholders (investors, creditors, suppliers, etc.) and mature action plans remain the best means to ensure one remained, although very limited financial resources from shareholders and financial institutions which is still available. Communicate actively with all stakeholders. Financial institutions hate surprises, suppliers want to know exactly when they will pay, but clients must be informed of the consequences if not paid on time. Yet in the context of the overall liquidity crisis do not forget that can not always rely on enthusiastic support and understanding from those countries.
In situations like today’s determination and courage in taking unpopular decisions by the management is confident, though short and tactical approach to survival. Mantras „Queen-dough“ and „management costs“ are as trivial as it is more current tools today. More difficult is the application of these maxims in a manner which will not only be short, but long-term effect, and will heal rather than weaken the organization.
The basic tactical approach to stick to the familiar business model
is undoubtedly correct. However, the difficulties which face some of the competitors are appropriate times to look inward and to attract new customers. For companies unable to meet the crisis with a healthy balance standing on the ground (low debt, cash reserves and liquid assets) and good profitability, has a particularly big reason for optimism. Depreciate assets of the other players on the market are ideal chance to increase your own portfolio through acquisitions. Without exaggeration we can say that the refusal to take advantage of opportunities that provides our market would be tantamount to denial of winning our competitive advantage.
In conclusion, the next few years will probably require a major change in the thinking of managers. „Scalded“ investors and lenders will look for a long time suspicious of the ambitious ideas without a clear business model and managers who put the growth in market share and sales as the main objective, ignoring efficiency.
A more highly regulated financial market, more conservative business culture, scarce natural resources, all this presupposes that the world „after tomorrow“ business, one slower and more sustainable growth of average levels of recent years. In this world, management style based on the preservation of primordial corporate values, created and developed the business simple and efficient operating model, solid financial structure, and even corporate-public loyalty seems to be fashionable.
* The author is senior manager, advisory services, Southeastern Europe, PricewaterhouseCoopers Bulgaria “