Super Fitness Health BlogOpportunities For Companies Who Have Survived The Global Recession
Everyone in the nation, and without a doubt around the planet, will have experienced the recent global economic downturn in one manner or another, possibly as an individual or as a business owner. It might not have had an immediate impact upon your own job or your personal income, but the knock-on result of companies losing income will have affected the monetary situation of the vast majority of folks. It was a very complex problem with far reaching implications.
The recession now appears to be over, or is at least coming to an end, according to many financial authorities. Although it may not yet be the time to celebrate having survived the financial meltdown, it should be a period to start looking ahead and planning for a future in a stable economy. It is time to seek some recession opportunities.
Businesses of almost all sizes, trading in all kinds of markets are no doubt going to have to adjust their operations in view of the economic downturn. This might be after legislation is introduced to more closely govern and keep an eye on the action of international economic organisations. Many companies may also be considering methods to make themselves far more robust and able to endure economic instability in the long term. Either way, there will certainly be adjustments for many companies, and wherever there is change there is opportunity.
The Recent Recession
The recession of the early 21st century began in 2007 and gradually propagated around the world over the following couple of years. Numerous financial analysts credited the cause of the economic downturn to be the drop in the U.S. property market, which in turn impacted the value of financial products tied into real estate assets.
This fall in value then uncovered the vulnerabilities of such a widespread system of credit agreements between global corporations, particularly when much of the system was being backed by subprime lenders who were financial liabilities. A basic lack of third-party control of the monetary services sector had allowed the development of a very complex web of high-risk credit agreements which relied upon a growing economy.
The following financial fallout saw many people lose their jobs and lose their properties, while many big, international companies were forced out of business. Government authorities across the world had to introduce sweeping financial packages to support their own banking systems, and even now certain first world nations are struggling to make it through financially. Many consider it to have been the toughest financial episode since the depression of the 1930s.
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The Impact on Business
It is probably fair to state that the economic downturn had an effect on just about every enterprise around the globe. Certain business models will have been more able to adapt to the extra economic strain than others but they will have still felt an impact at some part of their operations.
Many thousands of small and medium sized businesses have been pressured out of business because of the recent economic downturn. Several of these situations will have been comparatively simple; as the general public start to reduce their spending these types of companies lose income, and since margins are often incredibly slender in a competitive market place there was very little space to accommodate this decline.
Some other cases were not so clear cut. There were scenarios where one company in a lengthy supply cycle were unable to survive and the knock-on effect would push every business inside that supply chain to the brink of bankruptcy.
Job losses have obviously been a very sensitive subject to the vast majority of us. It is estimated that the current number of jobless individuals in the UK is over 2.3 million (almost 8% of the total countries’ workforce), and many of these will have been victims of the international financial crisis.
The End of Recession
It does seem that the downturn is on its way to an end however, and this can only be great news for business. Gross domestic product (GDP) experienced a climb in the UK throughout the fourth quarter of 2009 and overall unemployment figures fell, both of which are signs of an economic system that is recovering. This is not a view embraced by everybody though.
Industry experts at the International Monetary Fund (IMF) have predicted that the UK economy may actually get smaller over the duration of 2010 and Mervyn King, the Governor of the Bank of England has spoken of the risk of wide-spread joblessness continuing. When added to the prospect of a new or perhaps hung government on its way into power in May 2010, in addition to the need to reduce an enormous financial deficit, the future is definitely not set in stone.
This kind of uncertainty can be utilised as an advantage though, and organisations which are prepared to take a few risks or who are willing to alter their operations to cater to a more cautious target audience might be set to make great profits.
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Price Sensitivity
On the outside it may seem that the clear strategy to use while the overall economy is recovering is to increase your very own retail charges again to a point that affords your company some margin of comfort in relation to operating costs. As the market grows and consumers feel safer in their jobs they will really feel relaxed spending extra cash, so price increases should be an easy thing for consumers to take.
In fact, many businesses may find that they have to hold their prices as small as possible because the recently provoked price sensitivity amongst the general public. Many of us have had to tighten our belts over the last few years, and simply because the worst of the economic downturn appears to be over, we are not all ready to begin spending freely again. This is a trend that is tough to precisely quantify, but companies will want to be aware of how their particular consumer community feels toward spending.
The phrase price sensitivity represents how important the element of price is to shoppers any time they are buying a specific item. If a fairly large price change, for example increasing the price of a car by £1000, does not provoke a big decrease in demand for that product then the product is said to be price insensitive. If a fairly modest change in price, say raising the price of a car by only £100, does see a fall in demand then that product is price sensitive.
As a result, the market place at large will take great interest in the costs of the things that they are buying. Many people may be watching out for deals for everyday products that they need, and particularly their grocery shopping. Several of these things are essentials however. When it comes to purchasing expensive items, for example televisions, cars and holidays, the price of the purchase is likely to be an more important decision maker.
Companies will be in a position to take advantage of this fact by using special discounts and price campaigns to attract new shoppers into purchasing their items. Buyers will be a lot more likely than ever to move from their favored manufacturers if the price is perfect, and firms that offer the best priced items are most likely to stand to gain from this. After these prospects have become clients there is a good chance that they will stay loyal to their new product or service choice as the economy rebounds further, which could lead to additional spending at the original prices.
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Financial Security
People’s awareness of the economy at large and how it influences us all has significantly grown in light of the economic downturn. Previous purchasing choices may well have been made according to the properties of the item and its value, but there is actually a fresh factor that shoppers will be considering now. Financial security.
Recession Proofing
Several businesses have endured bankruptcy in the aftermath of recession. This has in turn has put thousands of buyers in a very poor situation. As people look to reinvest income into personal savings and shareholdings they will like to see that the business they are investing in has some sort of safeguard against future recessions.
Price Guarantees
One particular very visible feature of the latest economic downturn in the Uk was the steep decrease in the interest rate. Once this change had precipitated itself throughout the high street stores and monetary services institutes many people discovered that they were either suffering as a consequence or enjoying a financial advantage.
Customers that are looking to open new savings accounts or private pensions may be concerned that if the recession does indeed drag on for much longer they won’t be earning any significant interest on their investments. In reality, the recession may even now take a turn for the worst and interest rates could fall again. In this situation, a savings product that offers a confirmed rate of return becomes a very attractive option. This technique can be used to appeal to many new savings customers.
The exact same can be said for customers with credit agreements. If the recession really is genuinely over and the international economy begins to recuperate much more swiftly than many anticipate, then it might not be long before we see a growth in interest rates. That would signify that consumers would have to pay more each month for their mortgages and loans.
A similar approach was utilised by a number of companies when the rate of Value Added Tax (VAT) increased from 15% to 17.5% in early 2010. They would offer “price freezes” on their products for a certain time period in an attempt to keep their existing consumers and draw new customers in. This price freeze permitted a buffer period for people to adapt to the new VAT rate.
Conclusion
Whether the economic downturn is entirely over yet or not, this has served as a timely reminder that no business can be complacent with its own position of survival. Business managers should always seek to consolidate their position and boost their operations wherever possible.
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