Effective Strategy in a Recession
Given the current economic climate, how do you retain a viable strategy in the face of what many feel has become an upside-down business world? It is sadly the case for some individuals and organisations, that the certainties of the last decade or so have come crashing down on them. In this article we explain how organisations can best make their way through turbulent times by employing a clear strategy.
A fundamental starting point is to view your organisation?s strategy as a process which helps you manage a changing business. As such it is an ongoing one, a regular conversation with key stakeholders, rather than a fixed plan that is set in stone, or one that is reviewed rarely, say once a year at budget time. Viewed in that light, it provides a basis for making better decisions, in response to what is happening in the outside world and against the resources at your disposal. A strategy can help to give a frame of reference or a compass.
Businesses go through periodic cycles of boom and recession and some commentators are seeing this recession as an example of the dip in a cycle which will inevitably come back up. However steep this cycle, there will always be winners and losers in these circumstances. For example, we know recently that the discount supermarkets are booming because people have shifted down. There is evidence that holidays in the UK may benefit, at the expense of holidays abroad.
Having accepted cyclical realities, how should businesses respond as business turns down? One of them is to cut back on costs. This should not be the starting point - this should be done against a clear set of strategic priorities, or intelligent cost reduction.
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