Abstract
During hard economic times, businesses often turn back to obvious strategies given strengthening their survival. However, continuous plans should be adopted by businesses to shield them from unexpected uncertainties that may emerge during hard economic times such as recession.
This paper discusses strategic choices that a business should strive to institute in its operations to mitigate uncertain risks that can affect its current and future operations. Strategic choices such as retrenchment, investment, marketing and finance among other strategies should be created to ensure business thrives in whatever period it exists.
In conclusion, by assessing suitable strategies, businesses can be able to thrive in today’s business environment and able to achieve the strategic plans it has set in place for future growth and development.
Current economic conditions
Current economic conditions of businesses can broadly be grouped into two categories. The first category can be associated with macroeconomic recession and the second category is based on environmental thunderbolts, aggression or surprise. An environmental thunderbolt encompasses secular weakening in resources of a business entity as noted by Peng (2000). These two categories fix a difference amid businesses undergoing performance waning in times of hard economic times such as recessions or environmental jolt and businesses experiencing degeneration because of disappointment to acclimatize effectively to economical stresses in resilient situations according to Peng (2000).
However, to keep businesses thriving in a viable business setting, businesses can institute successful strategies which can contribute to their strategic goals both in present and future. Besides, Jansson (2008) explains that the current economic conditions especially recession in most countries call for apt strategies for businesses to effectively simplify business to shape its vision therefore influencing future operations and projects both within and outside the business unit.
Strategic choices for businesses
Strategic choices to influence businesses and their strategic goals to gain present and future objectives are diverse. First economic recession compels businesses to employ retrenchment strategies to aid in saving operational costs. Retrenchment entails aids in decreasing running costs and divestment of nonessential resources. Jansson (2008) states that, in economies experiencing recession, businesses target immediate survival solutions rather than converging on extended opportunities.
Businesses can apply retrenchment strategies to mitigate business risks ranging from short to long-term effects. A business believes that it is effective and suitable to reduce overheads than creating more revenue. According to Mathur and Kenyon (2001) businesses can decide to carry out retrenchment to help it aid economic pressure both in the present and in the future.
Opportunities that arise because of retrenchment such as divestment of businesses, closing of plants, reducing employment and working hours ensure that overheads are reduced in business activities such as employee training, marketing, salary and wages among other running overheads. Mathur and Kenyon (2001) state that “retrenchment strategies ensure that businesses remain secure in their survival by improving grip on performance” (pg. 56).
Investment Strategy
Investment strategy contributes to business stability and success of its business engagement. Investment strategy is whereby fixed guidelines or process helps to guide business to make informed decision towards investment assortment. For example businesses can decide to invest in common funds which provide a favorable investment strategy as noted by Cantwell and Narula (2003). Investment strategy is focused on possibility of reoccurrence trade-off for businesses.
A well-outlined investment strategy is vital for businesses if a business has no other or immediate investment choices. Investment strategy is characterized by long-term returns and incorporating it as a business strategy involves factors such as threat to investment and future goals. This is because the return on investment is erratic; businesses should therefore be prepared to expect challenges in investments as Cantwell and Narula (2003) conclude. Businesses should understand equilibrium of investment strategy to ensure that their future is secure and is risk-free or tolerant.
Investment strategy is made up of two parts. The first is passive investment strategy. Passive investment strategy comprises efforts to decrease operation costs the business may be experiencing. The second part is active investment. According to Abrams and Kleiner (2003), active investment is mostly used to exploit returns based on changes such as efficient market timing
Active investment strategy encourages businesses to buy during low periods and sell when prices are favorable during the high season alternatively businesses can decide to buy investment tools when they are inexpensive and sell when their prices escalate. Besides, Businesses can decide to buy and hold the investment strategy to capitalize on inequities, however, equities are unpredictable but it provides a favorable long-term and future return as stated by El-Erian (2008).
Ambidextrous strategies
Ambidextrous strategies help businesses deal with current and future economic conditions. Frey (2008) states that “ambidextrous strategy integrates investment and retrenchment processes to support business to acclimatize to prevalent economic condition they experience” (pg.79). When businesses adopt this strategy it significantly reduces costs and resources by venturing into product improvement and market expansion.
Marketing Strategy
Marketing strategy gives businesses a competitive advantage in reaching out to potential customers. Starting effective marketing strategies ensure businesses acclimatize to the prevailing economy and devise trends for future operations. Harper (2003) notes that in slow economic growth or recession, customers devote less quantity of money, so elaborate, effective and suitable marketing strategy stress the importance of saving which can be stemmed from given goods or associated low price.
Businesses can reverse themselves as a downturn responsive by upholding their message humble and providing quality products at reasonable and just prices. Important emphasis should be placed on critical needs that people need rather than increasing luxury which cannot help businesses to sustain economic difficulties or development with stocking as Harper (2003) observes. By displaying less expensive but quality products businesses can encourage an inclusive brand the business products are reasonable. Conversely, to attract more customers to buy, businesses should consider smaller serving sizes.
In hard economic situations customers relentlessly sustain business that displays concern on issues of social responsibility particularly to economies and people who suffer the effects of challenging economic periods. When business gives enticements and rebates for individuals experiencing hard economic times, the possibility of the business surviving economically is guaranteed according to Navarro (2009). Sound marketing strategies aids in expansion of the business customer base when business cares for their needs enough to balance their costs.
Strategic Business operations
Strategic business operations should be analyzed to assess the efficiency of the business operations and areas where it can save resources, decrease wastes and streamline its business processes. Retrenching employees should be a last alternative for any business to embark on unless it is conditionally needed. If reducing employees is an inevitable, proper and efficient strategy should be exercised and that no new employees should be hired to replace the retrenched employees. This according to Navarro (2009) is to ensure the business lowers its running costs therefore embracing a saving strategy. Besides, businesses should strengthen open and honest communication in areas such as talking to employees towards reduced working hours.
Businesses should help employees understand the financial situation of the business. By honest and open communication, employees can contribute to bringing up ideas that can make a great difference to a business entity. Employees will work effectively if they feel their opinion are valued and they will further be committed to the business strategic goals if they view a business unit as committed to them. This will contribute to business progress to survive in the present and in future
Financial strategies
Cost-effective and proper institutions of financial management strategies can contribute to business stability and economic security. Blanchard (2009) states that, “a financial strategy covers how a business uses its financial flow, manages and controls its capital resources to strengthen business growth and development” (pg. 134).
A financial strategy helps businesses to explore and take advantage of every prospect that every likely spring of finance to aid business growth. Besides, it helps businesses to assess what should be done to improve timeliness of accounting and accuracy so as information on performance is available to aid in decision making as concluded by Blanchard (2009).
Organizational Strategies
An effective organizational structure drives a business entity to meet its business duties which are influenced by economic conditions. Organization is a strategy that strives to hold organization together as indicated by Frey (2002). Businesses are comprised of schemes, strategies, processes and structures which assist in unifying an organization. Organization strategies should aim at setting up a distinct job description for every position created and fix a system where duties, responsibilities and authority can be distinguished among other people in the business.
According to Frey (2002) analysis of major activities in the business such as selling, marketing, taking orders to set up ways on how efficiency and speed can be achieved by removing unnecessary steps, reducing costs and improving quality. Business should ensure systems in the company such as planning; accounting and budgeting are of good quality and performs mentioned work effectively. Besides they should be fully utilized. Innovation should be part of organization strategies. Frey (2002) concludes that new systems should be innovated and embraced which will improve business performance.
Product and service quality strategies
Product and service strategy should also be part of a business goal to adapt to the current and future operations to aid its growth. Businesses should encourage innovation in their products and services by adding new dimensions to them. Besides, products and services should be customized to meet the psychological needs of customers to promote greater enjoyment, security or educational value as El-Erian (2008) indicates.
By creatively executing innovation, a business would continue to thrive despite recession or other risks that can arise uncertainly. Continued, expanded and upgrade the services and product knowledge and technical expertise should be encouraged to ensure that business is not left behind new technologies. Moreover, businesses should enhance quality always to promote reliability and dependability of their products and services by customers. This according to El-Erian (2008), would help it maintain present economic balance therefore planning for the future
Conclusion
Strategic alternatives can aid in driving a business to achieve economic success when created and practiced in tandem with what the business objectives entail. By applying strategies such as retrenchment, investment, market, organization and product and service quality, businesses can advance and develop by cutting spending, therefore, having economic security should it occur. Economic security ensures that a business continues to thrive now and in the future therefore when harsh economic times such as recession struck; the business can confidently contain the situation without straining financially.
References
Abrams, R., and Kleiner, E. (2003) The Successful Business Plan: Secrets & Strategies. Chicago: The Planning Shop.
Blanchard, R. (2009) Creating Wealth with a Small Business: Strategies, Tactics and Models for Entrepreneurs. Massachusetts: Ralph Blanchard.
Cantwell, J., and Narula, R. (2003) International Business and the Eclectic Paradigm: Developing the OLI Framework. New York: Routledge.
El-Erian, A. (2008) When Markets Collide: Investment Strategies for the Age of Global Economic Change. New York: McGraw-Hill Professional.
Frey, S. (2002) Successful Proposal Strategies for Small Businesses: Using Knowledge Management to Win Government, Private Sector, and International Contracts. Massachuttes: Artech House.
Harper, C. (2003) The McGraw-Hill Guide to Starting Your Own Business: a Step-by- Step Blueprint for the First-Time Entrepreneur. New York: McGraw-Hill Professional.
Jansson, H. (2008) International Business Strategy in Emerging Country Markets: The Institutional Network Approach, Pennsylvania: Edward Elgar Publishing.
Mathur, S. and Kenyon, A. (2001) Creating Value: Successful Business Strategies. Amsterdam: Butterworth-Heinemann.
Navarro, P. (2009) Always a Winner: Finding Your Competitive Advantage in an Up and Down Economy. New York: John Wiley and Sons.
Peng, W. (2000) Business Strategies in Transition Economies. California: Sage.