The World Is Not the Same Anymore

Dr Olasode's blog - The World Is Not the Same Anymore
The World Is Not the Same Anymore

Evolution, Revolution, Or Transformation

Times of change create opportunities as well as threats. For some companies, the current economic environment will challenge their very survival. While for others the downturn offers the chance to extend their lead over the competition.

“High performing” companies will be looking at ways to strengthen their position and emerge from the downturn stronger and better-placed to win.
In our article ‘Business Resilience, Money Management and Change’, we have suggested the key areas that every business, and indeed, public sector leader, needs to consider as a matter of priority.

Business Resilience

Reposition: Repositioning may not mean you are in the wrong business. You may choose to renegotiate contracts. Lenders, landlords, and contractors are not impervious to changing economic conditions so trying to renegotiate is worth a shot. Streamline and Simplify: People are expecting change, and companies should use this opportunity to adjust their business model. You can do this by eliminating duplication, moving activities to the most economically advantageous location, exploiting economies of scale, and upgrading performance management systems.

Invest in Innovation: Whether a company serves consumers or other businesses, it makes sense to invest now in understanding how purchasing patterns are likely to change and what new needs are emerging. Moving early to anticipate and service these needs can help to establish strong customer loyalty and provide a sound base for future growth.

Leverage Competitive Advantage: Information from customers is valuable for competitive advantage. Hire some customer service investigators or ask customers directly, but let those extra eyes be your customer service guide. Now is the time more than ever to develop and implement strategies to get your competitor’s customers and leverage on business alliances.

Money Management

Maximize Impact of Fuel Prices: There are 3 ways to maximize the impact of Fuel Price Adjustment if a crude price drops below $45 per barrel; forward export contracts, import hedging, and introduction of ‘just in time inventory management. Optimize Assets Management Although asset sales are not an appealing prospect in the current environment, the reality is that prices could go much lower. As one pundit said “Don’t panic, but if you do panic, panic early!”.
Minimize Expenses, don’t use knife Tactical cost reduction will include eliminating discretionary spending, renegotiating purchasing contracts, and reducing exposure to poor payers. Only when times get tough to do companies look at their expenses. Taking a knife to businesses could do more harm in the long-term than the good of taking pressure off cash flow in the short term. Review Pensions and Credit Control with equity markets heading downwards, pension fund shortfalls are likely to emerge. Companies may need to review policies on defined benefit schemes, retirement ages, and levels of company contribution. Also, remember that these are difficult times all around, so strengthen your credit control activities to avoid bad debts.

“Don’t panic, but if you do panic, panic early!”
Growth Strategies

Scale Up: The underlying trends that have been driving consolidation across a range of industries have not gone away. The benefits of scale, broader geographic reach, and access to scarce resources will continue to make large acquisitions an attractive source of future growth. Access to debt with which to fund such deals will create an ongoing problem for private equity firms and companies with weaker balance sheets, reducing the competition for attractive assets. The largest and most financially secure companies are likely to use this downturn to consolidate their position through substantial acquisitions at attractive prices.

Create Entrepreneurs and Strengthen Human Capital While other companies are laying off staff, this is a unique opportunity to access skills and reshape your workforce to the needs of your future business model. Strong alignment of performance to goals is important at this time, along with a review of key performance indications for all staff. Tough times are an opportunity to become a better business. Businesses who embrace creativity are more likely to move forward by finding and capitalizing on opportunities through foresight.

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