Factors influencing the strategies firms adopt in the recession.

I will be speaking about the factors that made the businesses react to the recession in the way they did.
One factor could of been there price elasticity because if you are inelastic this means that you can afford to put your prices up with the raising costs, but if you are a small business and are elastic, this will be harder as if you raise your prices with your costs you will lose customers and so more money, so they need to find other ways of making the money back of which they are losing by putting the prices up.
Another reason it HR or employee relations, this means if you have good employee relations or Hr you can reduce their wage, or the amount of time they work to reduce their costs and delay putting their prices up, an example of this is KPMG these offered 11,000 staff a dramatic cut in hours hoping it would save them making people redundant, and so they could lower their costs and keep the same amount of people working with the company.
The main one in this recession I would say is the availability of finance, this is if you can get banks to lend you money or if you can get any kind of funding this could be through the stock market or through methods like business angels. In this recession banks have not been borrowing as much as they normally would have because they have had their own cash flow problems, this has left many businesses without an available finance option. An example of a business of this happening is to a small business called 2K manufacturing, this is a manufacturer that produces an award winning material, he was turned down by all the UK banks for funding this left him with a big gap to fill as he wanted to expand and he ended up going to a bank abroad.

Strategies firms could have adopted to prepare for the recession

In this recent recession there have been lots of failing businesses and I am going to explain why I think these have failed and why they could have succeeded.

One reason why the company could have failed is a bad cash flow through the business, a good example of this is MFI this was a furniture sale stall, its cash flow problems could be caused by bad debts from there debtors this means they will not get most of the money back from people that owe them. Also it could be from too many sales which have left no money in the company to pay for day to day bills like people’s wages and their rent.

Another reason is bad brand image, this was why Woolworths failed they had a bad brand image and stocked to much of the wrong stock, this left them with no customers and massive debts to their creditors, all this caused people not to visit or revisit Woolworths causing them to shut their doors for a final time.

Different departments in a business must work well for the business to survive and make a substantial profit.

For the business to survive the HR must work very well, this is because the employees need to be happy and motivated to get the best work out of them, and if the HR are not working well then this is nearly an impossible task, another thing they need to do very well is to hire the best people for the job, this is so they know what they are doing and means that the business could save money through training somebody up or rehiring because the person who has been hired is wrong for the job.

Another department is marketing, this is important because it is there job to create an interest in the products or service the business is selling, but they need to do it efficiently and without wasting money on something that is obviously not going to attract more attention. If the marketing department fail the repercussions of this will be felt throughout the business.

Some business have prepared for the recession, one of these are cost control this is where you control your out goings, this could be to reduce them as much as possible, this can be done by having words with your suppliers or reducing your capacity utilisation. This means for the business they can reduce their prices to the customers or to increase their profit margins.

Another thing they can do is diversify into other markets, this means that they make a new product or buy another business in a completely different market to what they are currently in, this means that when one of their markets are failing they will still have an income from the other market to keep the business up and running.