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Winning Companies Take a Different Path During Economic Slowdowns

March 25th, 2008

Companies need to take advantage of business opportunities and fight their instinct to freeze or even cutback their growth strategies during times of economic uncertainty.

By viewing the business landscape as ripe with opportunity as opposed to plagued by certain economic failure, Chief Executive Officers (CEOs) wield the power to secure future successes.

“CEOs creating cautionary growth strategies and consumers spending more conservatively based on their fear of what the future will bring will fundamentally cause any real slowdown or recession we may experience,” says Frost & Sullivan Chairman David Frigstad.

While an economic downturn does require a re-evaluation of current business objectives, it does not necessitate the immediate halt of growth strategies.

Below is a list of recommended courses of action for an economic slowdown:

• Rethink targets and expectations to ensure hitting margin and revenue objectives

• Invest in technology by protecting new product development and create a plan to launch new products during an economic rebound

• Explore asset acquisitions since pricing will be attractive in many instances

• Partner with financial institutions to leverage ability to improve balance sheet and strengthen capital structure in times of Fed easing

• Implement aggressive competitive strategies to gain market share

• Look to global market for geographic expansion and investments

• Take advantage of competitor uncertainty and weaknesses to attract exceptional talent and fill key positions

“It is not uncommon for companies to get distracted and focus inwardly by cutting costs and laying off employees when facing economic uncertainty.

Leading companies have the opportunity to take advantage of the uncertain times by surprise and drive initiatives that their competitors may not respond to as quickly as they would during a time of economic growth,” notes Frost & Sullivan Global Financial Services Vice President Ken Herbert.

“Moreover, interest rates are likely coming down further, which will make it easier to raise money or reconfigure the capital structure for leading firms, thereby increasing their overall flexibility in the marketplace.”

Companies have the opportunity to take advantage of cheaper asset prices and weaker competitors by utilizing this time to realign cost structures to strengthen future competitiveness, refocusing on market segments that present growth prospects.

Proactive investments during the short term will ultimately differentiate a company from its competitors during an economic turnaround.

“Overall, our research on technology, markets and economics clearly shows that the global economy is very healthy and fuelled by technology driven productivity improvements, enhanced logistics, global democratization trends, better trade infrastructure and a very dynamic commercially-focused Asian business community,” notes Frigstad.

Global investment in commercial real estate increased from $665 billion in 2006 to $930 billion in 2007 and there is a strong possibility that foreign buyers will look to the United States for properties with long term value.

Additionally, with a recent exchange rate of 1.51 per Euro, the weak dollar expects to support the growth of exports.

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