Recession Proof Leadership @RecessionProo15

Companies that respond to a slowdown by re-examining every aspect of their business models: From how they have configured supply chains to How they are organised & structured Eventually reduce their operating costs on a permanent basis.

Most enterprises implement aggressive cost-reduction plans to survive a recession. Companies that attend to improving operational efficiency fare better than those that focus on reducing the number of employees.

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Sony planned to delay its investments—such as building a much-needed LCD television factory in Slovakia—in its core electronics business. The cuts helped Sony increase its profit margin.

An example can be of Sony, which announced a cost-reduction target of $2.6 billion in December 2008, epitomising the prevention-focused approach. It planned to close several factories and eliminate 16,000 jobs and stated that it will delay investments.

CEO's further postpone making fresh investments in R&D, developing new businesses, or buying assets such as plants and machinery amid recession.

CEO's quickly implement policies that will reduce: Operating costs, Shrink discretionary expenditures, Eliminate frills, Rationalise business portfolios, Lower head count, and Preserve cash.

Confronted by a recession, many CEO's swing into crisis mode, believing that their sole responsibility is to prevent the company from getting badly hurt or going under.

SMEs play an integral role in the global economy. In emerging and developed markets they stimulate: 1) Employment 2) Productivity 3) Competitiveness But in times of economic downturn, SMEs are often the first companies to feel the sting.

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The businesses with a pessimistic approach are not prepared for the economic uncertainties, so they implement reactive strategies such as exiting and escaping behaviours. To tackle the recession, these types of businesses sell the business or reduce the size of the business.

The businesses with a neutral approach take a middle path to tackle the recession. The aim of these businesses is to survive in a recession rather than achieving growth. They start retrenching the overhead expenses, and they try to increase the sales turnover.

Businesses with a proactive approach usually implement optimistic strategies. They plan the changes and reduce the expenses in advance. During the recession, these types of businesses buy other businesses or expand their existing businesses.

SMEs choose one of the three strategies to cope with recession: Optimistic Neutral Pessimistic

A medium sized business can be defined as a firm in which: Number of employees are 50-250 The annual turnover is above €10 million but below €50 million.

A small business can be defined as a firm in which: Number of employees are 10-50 The annual turnover is above €2 million but below €10 million.

A micro business can be defined as a firm in which: Number of employees are ten or fewer The annual turnover is under €2 million.

SMEs are defined as small to medium sized enterprises. You can split them out into 3 categories: 1) Micro enterprises 2) Small enterprises 3) Medium sized enterprises.

Small and Medium Sized Enterprises (SMEs) in periods of prolonged economic crisis may suffer disproportionately from economic downturns, because of their limited financial resources and dependence on banks’ lending, paying such high interest rates.

How to strive in a recession? There are various approaches which companies adopt during recession, such as: Progressive companies, which deploy the optimal combination of defence and offence.