Super Fitness Health BlogThe End of the Recession?
Everyone in the nation, and without a doubt all around the world, will have experienced the recent global economic downturn in one way or another, possibly as an individual or as a business operator. It may not have had an immediate impact upon your own job or your private earnings, but the knock-on result of businesses losing income will have affected the monetary circumstance of the great majority of folks. It was a really complicated problem with far reaching implications.
The actual downturn now appears to be over, or is at the least on its way to an end, according to many financial authorities. Whilst it might not yet be the time to celebrate having made it through the financial meltdown, it should be a time to start looking ahead and preparing for a future in a steady economy. It is time to seek out some recession opportunities.
Firms of almost all sizes, buying and selling in all types of markets are no doubt going to need to adjust their operations in view of the economic downturn. This may well be after legislation is brought in to more closely govern and keep an eye on the action of worldwide financial companies. Many companies may also be looking at ways to make themselves far more robust and have the ability to withstand financial instability in the future.
The Recent Recession
The recession of the early 21st century began in 2007 and progressively spread around the world over the following few years. Several economic analysts attributed the cause of the economic downturn to be the drop in the U.S. housing market, which in turn affected the worth of monetary products linked into real estate resources.
This fall in value then uncovered the vulnerabilities of such a widespread network of credit agreements between international companies, especially when much of the system was being supported by subprime lenders who were financial risks. A general lack of third-party control of the monetary services market had allowed the creation of a highly complicated web of high-risk credit agreements which depended upon a growing economy. Once the first debtors began to fall behind on repayments, the entire house of cards was quick to come down.
The following economic fallout saw several people lose their jobs and also lose their properties, whilst many large, international organisations were forced out of business. Governments all over the world had to bring in sweeping financial programs to help their own banking systems, and even now certain first world countries are fighting to make it through financially. Many consider it to have been the toughest financial episode since the depression of the 1930s.
All companies, like this particular company providing wedding hair fascinators had to take a different approach to deal with the economic downturn.
The Impact on Business
It’s probably reasonable to say that the recession has had an impact on just about every single enterprise around the world. Particular business models will have been more able to adjust to the extra economic stress than others but they will have nevertheless experienced an impact at some part of their operations.
Thousands of small and medium sized companies have been forced out of business due to the recent recession. Many of these situations will have been fairly basic; as the general public start to reduce their spending these types of businesses lose income, and since profit margins are often extremely slender in a competitive market place there was extremely little room to accommodate this drop. It is a simple case of supply and demand not meeting in the middle.
Other cases were not so clean cut. There were circumstances where one company in a long supply chain had been unable to make it through and the knock-on effect would push every company in that supply chain to the edge of bankruptcy.
Job losses have of course been a pretty sensitive subject to the vast majority of us. It is estimated that the present number of jobless individuals in the UK is over 2.3 million (almost 8% of the entire countries’ workforce), and many of these will have been victims of the international economic crisis.
The End of Recession
It does appear that the downturn is on its way to an end however, and this can only be good news for business. Gross domestic product (GDP) saw a climb in the UK throughout the final quarter of 2009 and total unemployment numbers fell, both of which are signs of an economy that is healing.
Industry experts at the International Monetary Fund (IMF) have forecast that the UK financial system will actually shrink over the course of 2010 and Mervyn King, the Governor of the Bank of England has spoken of the threat of wide-spread unemployment persisting. When added to the possibility of a new or perhaps hung government on its way into power in May 2010, as well as the real need to lower an enormous fiscal deficit, the foreseeable future is definitely not set in stone.
This uncertainty can be used as an advantage though, and organisations which are prepared to take a few risks or that are willing to modify their own operations to cater to a more wary target audience might be set to make great profits.
The demand for good business management inside of the presents men trade has reached an all time high and seems set to continue to be essential.
Price Sensitivity
On the surface it might seem that the clear technique to use whilst the economy is recovering is to raise your own retail charges again to a point that offers your business some margin of comfort in relation to operating expenses. As the market grows and consumers feel safer in their careers they will really feel comfortable spending extra money, so price raises should be an easy thing for shoppers to take. This may not always be the situation.
In fact, many businesses may find that they need to hold their selling prices as low as possible due to the recently triggered price sensitivity amongst the general public. Many of us have had to tighten our belts over the last couple of years, and just because the worst of the economic downturn appears to be over, we aren’t all prepared to begin spending freely again.
The phrase price sensitivity represents how influential the factor of price is to consumers when they are buying a particular item. If a relatively large price shift, for example increasing the cost of a car by £1000, does not provoke a significant drop in demand for that item then the item is said to be price insensitive. If a comparatively small change in price, say increasing the price of a car by only £100, does see a drop in demand then that product is price sensitive.
As a result, the market at large will take great interest in the costs of the items that they are buying. Several people will be looking out for discounts for everyday products that they need, and in particular their grocery shopping. Many of these products are necessities however.
Firms will be in a position to take advantage of this by utilising special discounts and price promotions to attract new consumers into buying their own goods. Consumers will be a lot more likely than ever to move from their favored manufacturers if the price tag is right, and firms which offer the best priced items are most likely to stand to gain from this. Once these prospective customers have turned into customers there is a good chance that they will stay faithful to their new product choice as the market recovers further, which could lead to further spending at the initial price rates.
A particular business has discovered that their own website has been a great method to engage with consumers during the economic downturn.
Financial Security
People’s understanding of the economic system at large along with how it affects us all has greatly increased in light of the economic downturn. Previous buying decisions may well have been made according to the quality of the item and its price, but there is actually a fresh factor that consumers will be considering now.
Recession Proofing
Several firms have endured bankruptcy in the aftermath of economic collapse. This has in turn has left thousands of customers in a really bad predicament. As individuals seek to reinvest income into savings and shareholdings they would prefer to see that the business they are investing in has some form of defense against potential recessions.
Price Guarantees
One very visible element of the recent recession in the Uk was the steep decrease in the interest rate. After this change had precipitated itself throughout the high street shops and financial services organisations many people discovered that they were either struggling as a result or reaping a financial benefit.
Customers that are seeking to open up new savings accounts or private pensions may well be concerned that if the recession does in fact drag on for much more time they will not be generating any substantial interest on their investments. In reality, the tough economy might still take a turn for the worst and interest rates could fall again. In this scenario, a savings product that provides a guaranteed rate of return turns into a really attractive option.
The same could be said for consumers with credit agreements. If the recession is genuinely over and the global market begins to recover more quickly than many expect, then it might not be too long before we see a rise in interest rates. This would signify that consumers would have to pay more every month for their mortgages and loans. A provider which can offer a guaranteed rate of interest that isn’t linked to the base rate of interest can again entice many new clients.
A similar approach was used by a number of companies when the rate of Value Added Tax (VAT) increased from 15% to 17.5% in early 2010. These companies would offer “price freezes” on their items for a particular period in an effort to keep existing consumers and draw new customers in. This price freeze permitted a buffer time for individuals to adapt to the new VAT percentage.
Conclusion
Whether the recession is totally over yet or not, this has served as a timely indication that no business can be complacent with their own position of success. Business managers should always seek to consolidate their situation and boost their operations wherever possible.
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