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.