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Opportunities For Companies Who Have Survived The Global Recession

Everyone in the nation, and in fact around the planet, will certainly have experienced the recent global economic downturn in one manner or another, possibly as an individual or as a company operator. It may not have had a direct impact on your own job or your private earnings, but the knock-on effect of businesses losing revenue will have affected the financial predicament of the great majority of people. It has been a very complex issue with far reaching implications.

The actual downturn now appears to be over, or is at least coming to an end, according to many financial authorities. Whilst it may not yet be the time to celebrate having survived the financial crisis, it should be a time to start looking forward and preparing for a future within a stable economy. It is time to seek out some recession opportunities.

Companies of almost all sizes, buying and selling in all sorts of marketplaces are no doubt going to have to alter their operations in light of the economic depression. This may be after law is brought in to more closely govern and monitor the actions of global monetary companies. Many firms will also be considering methods to make themselves much more robust and have the ability to endure financial instability in the future. Either way, there will probably be changes for several companies, and wherever there is change there is opportunity.

Our Recent Economic Downturn

The economic downturn of the early 21st century began in 2007 and progressively spread around the world over the following couple of years. Numerous economic analysts attributed the cause of the economic downturn to be the drop in the U.S. housing market, which in turn impacted the worth of monetary products linked into real estate assets. The expansion of the property market until that point had encouraged homeowners to refinance their first properties in order to obtain second or third houses with a view to a long-term gain.

The economic downturn of the early 21st century began in 2007 and gradually propagated around the world over the next few years. Several economic analysts attributed the cause of the recession to be the drop in the U.S. real estate market, which in turn affected the value of monetary products tied into real estate assets. The expansion of the housing market up to that stage had encouraged homeowners to refinance their primary properties in order to buy second or third homes with a view to a long-term profit.

The following financial fallout saw several people lose their jobs and also lose their properties, whilst many large, international organisations were forced out of business. Governments all over the world had to introduce sweeping financial programs to help their own banking systems, and still now certain first world nations are struggling to make it through financially. Many believe it to have been the most severe economic period since the depression of the 1930s.

Even suppliers which specialise in offering mobility scooters needed to change their operations in order to survive the recession.

The Affect to Industry

It is probably fair to state that the economic downturn has had an effect on just about every enterprise around the globe. Certain company models will have been more able to adjust to the extra financial pressure than others but they will have still felt an impact at some portion of their operation. If a key service provider or a key customer goes out of business then that can have a detrimental effect upon your own business.

Many thousands of small and medium sized businesses have been pressured out of business because of the recent economic downturn. Several of these situations will have been fairly simple; as the general public begin to decrease their spending these businesses lose revenue, and since profit margins are often extremely slim in a competitive market place there was very little space to allow for this decline.

Other cases were not so clean cut. There were scenarios where one company in a long supply cycle were unable to make it through and the knock-on effect would push every business inside of that supply chain to the edge of bankruptcy.

Job losses have of course been a very sensitive subject to the vast majority of us. It is estimated that the present number of jobless individuals in the UK is over 2.3 million (nearly 8% of the entire countries’ workforce), and many of these will probably have been victims of the international economic crisis. These kinds of job losses head to a larger decrease in general spending, which triggers a further drop in revenue for business.

The Ending of Economic Recession

It does appear that the downturn is on its way to an end however, and this can only be good news for business. Gross domestic product (GDP) saw a climb in the UK during the fourth quarter of 2009 and overall unemployment numbers dropped, both of which are indicators of an economic system that is recovering.

Industry experts from the International Monetary Fund (IMF) have forecast that the UK economy will actually shrink over the duration of 2010 and Mervyn King, the Governor of the Bank of England has spoken of the threat of wide-spread joblessness persisting.

This kind of uncertainty can be utilised as an advantage however, and companies which are prepared to take a few risks or that are prepared to alter their own operations to cater to a more cautious audience might be set to make good profits.

Overall, the adverse influence that was endured across the childrens bed linen market was easier to tolerate than certain different industrial sectors worldwide.

Price Sensitivity

On the outside it might seem that the obvious strategy to use whilst the overall economy is recovering is to increase your very own sales charges again to a point that affords your company some margin of comfort with regards to running expenses. As the economy grows and people feel more secure in their jobs they will really feel comfortable spending more money, so price increases ought to be an easy thing for consumers to take on. This will not necessarily be the case.

In fact, many companies may find that they need to keep their prices as small as feasible because the newly triggered price sensitivity amongst the general public. Many of us will have had to tighten our belts over the last couple of years, and just because the hardest of the recession seems to be over, we are not all prepared to begin spending freely just yet.

The term price sensitivity represents how influential the element of price is to shoppers when they are purchasing a specific item. If a fairly large price change, for example raising the cost of a car by £1000, does not see a significant drop in demand for that item then the product is said to be price insensitive. If a comparatively small change in price, say increasing the price of a car by just £100, does see a fall in demand then that product is price sensitive. The exact same principle can likewise be applied to consumers themselves, and after a period of recession people are much more likely to be price sensitive.

As a result, the market place at large will have great interest in the costs of the items that they are purchasing. Several people will be watching out for bargains for everyday products that they need, and particularly their grocery shopping. Several of these things are essentials however. When it comes to buying luxury items, like televisions, cars and holidays, the cost of the purchase is likely to be an even more crucial decision maker.

Firms will be in a position to take advantage of this by utilising special offers and price campaigns to entice new shoppers into purchasing their goods. Buyers will be more likely than ever to move from their preferred brands if the price tag is right, and companies which offer the best priced products are most likely to stand to gain from this. After these prospects have become customers there is a good chance that they will stay faithful to their new product choice as the market recovers further, which could lead to further spending at the original prices.

I was particularly satisfied by the way this particular organisation preserved effectiveness as well as made profits throughout the hardest times of the recession.

Economic Stability

People’s understanding of the economic system at large along with how it influences us all has significantly increased in light of the recession. Prior buying decisions may well have been made with respect to the quality of the product and its price, but there is a new aspect that shoppers will be considering now.

Economic Recession Proofing

Several companies have endured bankruptcy in the aftermath of economic collapse. This in turn has put thousands of consumers in a very bad predicament. As people seek to reinvest income into personal savings and shareholdings they would prefer to see that the business they are investing in has some kind of protection against future recessions.

Prices Pledges

One very visible element of the recent economic downturn in the United Kingdom was the sharp decrease in the interest rate. After this change had worked itself through the high street shops and financial services institutes several people discovered that they were either struggling as a result or enjoying a financial advantage.

Customers that are seeking to open up new savings accounts or private pensions might be concerned that if the recession does in fact drag on for much longer they will not be generating any significant interest on their investments. Actually, the recession might still take a turn for the worst and interest rates might drop again. In this situation, a savings product that provides a secured rate of return turns into a really appealing option. This method could be used to appeal to several new savings customers.

The exact same can be said for customers with credit agreements. If the recession is genuinely over and the international market starts to recover more quickly than many anticipate, then it might not be too long before we see a growth in interest rates. That would mean that customers would need to pay more every month for their mortgages and loans. A company that can offer a secured rate of interest that is not connected to the base rate of interest can again attract many new clients.

A similar approach was made use of by a number of businesses when the rate of Value Added Tax (VAT) increased from 15% to 17.5% in early 2010. These companies would offer “price freezes” for their items for a certain time period in an effort to keep existing customers and bring new clients in. This kind of price freeze permitted a buffer time for people to adjust to the new VAT percentage.

Conclusions

Whether the recession is completely over yet or not, it has functioned as a timely reminder that no business can afford to be complacent in its own situation of survival. Company owners should always seek to consolidate their own situation and boost their operations wherever possible. The companies that are able to survive the economic downturn will have learned important lessons.

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