The purpose of this assignment is to apply your learning from this week to real-world

situations to help you better understand business strategies for economic downturns.
The assignments in this course required you to complete questions from the textbook.
For this assignment, complete the Application Question 4 (100 points) in Chapter 1 of
the required Economics for Managers textbook. When responding to this question, also
address the following:  Based on your professional experience and your own research,
which business strategy would best help businesses in an economic downturn. Explain.
Use at least one of the suggested articles below in your response and at least one
additional article that you have located from an outside credible source (such as
the Wall Street Journal or other business publications)
Suggested Articles:

 Roaring Out of Recession

 Finding Your Strategy in the New Landscape

General Assignment Instructions

When you complete each week’s homework, you will do the following for each assigned
question in order to provide an in-depth response that fully answers the question.  Your
responses should be separated by each question, but if the homework requires that you
answer more than one question, you should submit them in the same file.
An in-depth response for a question typically involves:

 Analyzing the question

 Introducing, defining, and correctly applying key relevant concepts
 Connecting the question and concepts to other concepts in the course and/or the
textbook and other outside sources
 Illustrating the response with examples and/or graphs, tables, or charts

Support your major arguments with credible sources, when appropriate for the question.
The sources may be scholarly articles or reputable business periodicals. The articles
should directly relate to managerial economics.  Do not use Wikipedia or Investopedia
as your sources.
Follow APA style formatting, including a 12-point font and double spacing.  Your
response should include a cover page. When citing sources, a References section and
in-text citations are required.  Use proper grammar, spelling, and punctuation
throughout.
Generally, your combined responses to all questions should be a minimum of 1,000
words (about 3-4 pages, not including the cover page and reference section).
Application Question
4. The slow recovery from the recession of 2007-2009 forced many firms to develop
new competitive strategies to survive. Find examples of these strategies in various
business publications.
Based on your professional experience and your own research, which business strategy
would best help businesses in an economic downturn. Explain.
An economic recession is technically characterized by the reduction of two consecutive

quarters of a country’s Gross Domestic Product. The GDP is a measure of how much the

economy has grown over a given period of time (typically 3 months or a year). Therefore, a

recession means an effective contraction or decline of a country’s economy. The recession

can be measure by the declines of industry productive levels, increases in unemployment,

decreases in household income as well as a decline in consumer investment portfolios.

(Chokshi, 2018)

Walter Frick states, in his 2019 HBR article “How to Survive the Recession and Thrive

Afterward”, that a recession puts great pressure on a company’s leadership team so to

progress successfully through a recession a company needs to be flexible and open to

changes.

Organizations with a leaner structure, a faster decision-making process and greater

flexibility are better positioned to maintain their current performance trends or even

sometimes financially thrive through a recession.

Highlighted below are some practical steps that a company can take to survive a recession.

1. Operational.

Companies should resist the temptation to lay off their workforce. Training new

employees and bringing them up to speed on the company’s processes will

eventually end up being more expensive to the company in the long run. (Nazareth,

2019) Instead companies should focus on optimizing products and services,

switching suppliers, and renegotiating existing contracts. These efforts can help

focus the company’s resources on the generation of profits, optimization of

production and the reduction of waste.

2. Sales.

Evaluate the impact of the sales teams and dismiss the salespeople with the worst

performance, ensuring that they have been evaluated appropriately.

Conduct a competitive analysis to ensure the product portfolio quality and cost

are competitive. (Chaffold, n.d.)

Conduct a product evaluation analysis to ensure that the company is focused on

products that are generating the most profits. Products that are not generating a

strong profit should be deprioritized with less of a sales emphasis.

Evaluate suppliers’ contracts to ensure that best price is achieved as well as

volume discounts being optimized. (Axson & Rosander, 2014).

3. Marketing.

Typically, companies’ first move in the event of a crisis is to make cuts in

marketing and communication, which can be a huge mistake. Instead, the

company should conduct research with their customers. During a recession,

customer’s habits change, they start buying less and paying more attention on

how they are spending their money. (Quelch, 2008) Based on the research

results, the company’s market mix may have to change based on these new

habits. A focus on being customer centric is important because the happy

customer comes back and brings more business to the company. For example,

the company may have to launch a coupon strategy to existing customers to get

them into their stores.

Acquiring new customers is also essential to a company’s performance.

Companies should constantly reexamine their marketing strategy to consider

 new ways such as digital marketing, to get close to costumers and to help the

company grow and generate more revenue through new customer acquisition.

(Higgins, 2003)

4. Finances.

Reexamine cash reserves, assets and possible additional sources of money in case the

company needs to raise more cash flow for its business. (Conerly, 2018).

It is also important to emphasize that the company should reduce the monthly waste

by wiping out unnecessary expenses so that it doesn’t rely so much on investments,

since bank loans and credit are hard to get in times of recessions. Therefore, the

company should cut the extra expenses and pay close attention to its cash flow.

(Kolesnikov-Jessop, 2008)

Another way to survive the crisis is to use your financial resources in activities that

will deliver quick results rather than long terms initiatives. One way to put this plan

into action would be investing in the expansion of markets of a product that already

exists, making small modifications to meet the expectation of new customers,

offering the product in other areas of the country and opening new channels of

sales. (Evans, 2014)

Good evaluations are important in order to take strategic measures that optimize revenue

and ensure that good production performance is maintained. With accurate data,

companies can adapt and react quickly and make decisions more accurately. They are able

to operate more efficiently and “do more with less”.

From my own professional experience, the businesses strategies that would best help

businesses in an economic downturn would also be:

  Make the partners/owners of the business “leave the backstage” – When in

negotiation with the owners of the company, big consumers feel comfortable buying

more.

 Reduction of the partners/owner’s salary – The money can be converted to lower

sales prices, invest in more diversified products and increase marketing budgets.

 Offer new products, adapted to the new reality of the consumers – Ensure that your

company has in market products that satisfy the new spending habits of the

consumers.

 Move to a cheaper location – Or improve the use of the space the company already

has. In times of crisis, creative, low-investment solutions may be the best strategy.

 Train all employees to be salespeople - Invest in sales training for all company

employees and create a commission plan for the company’s entire team. In that way,

everyone is engaged in sales.

As Ranjay Gulati, Nitin Nohria, and Franz Wohlgezogen say in their 2010 HBR

article “Roaring Out of Recession”, A recession is an event that many business leaders

should take very seriously in order to keep the integrity and overall business model intact

when that time comes. It is highly recommended that the business leaders have a plan in

place that will help offset the negative effects of a recession so that their business will

continue to be profitable and have long-term success. In order to do so, business leaders

should find what practices work for their industry to improve efficiency as well as asset

and market development. According to data analysis of companies in the stock market,

performance is shown to be continued even after a recession due to the business leaders

having a portfolio of initiatives to take when a recession occurs. It is said that these
proactive strategies have also made it possible to continue business momentum during and

after a recession is over. This not only will help mitigate any decline in business but will

also help guarantee long lasting success and establish a concrete foundation for the

business to continue to strive long-term.

References

Chokshi, N. (2018). What Is a Recession, and Why Are People Talking About the Next One?
Retrieved from https://www.nytimes.com/2018/12/17/business/economy/what-is-recession-facts-
history.html
Frick, Walter. (2019). How to survive a recession & thrive afterward. Retrieved from
https://hbr.org/2019/05/how-to-survive-a-recession-and-thrive-afterward
Gulati, G., Nohria, N., & Wohlgezogen. (2010). Out of Recession: What to do now to rebound
from the downturn. Retrieved from https://hbr.org/2010/03/roaring-out-of-recession
Nazareth, L. (2019) In a recession, companies should not see layoffs as the cure-all solution.
Retrieved from https://www.theglobeandmail.com/business/commentary/article-in-a-recession-
companies-should-not-see-layoffs-as-the-cure-all/

Quelch, J. (2008). How to market in a recession. Retrieved from https://hbr.org/2008/09/how-to-

market-in-a-recession

https://www.sba.gov/sites/default/files/articles/Survival%20Tips%20for%20Managing%20During%20an
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https://www.insperity.com/blog/managing-a-business-in-a-recession/

https://www.nytimes.com/2008/06/04/news/04iht-rbogwaste.1.13451389.html

https://www.accenture.com/us-en/~/media/accenture/conversion-
assets/dotcom/documents/global/pdf/technology_6/accenture-understanding-profitability-companies-
improve-businesses-profitability-analytics.pdf