Business Capital Modal

Posts Tagged ‘Economic crisis’

There are many areas in which the directors of organizations can act to address the current economic crisis / financial and improve all business operations:

1. Reducing costs at company: Given the seriousness of the current slowdown and the need to preserve cash, many companies have already begun to implement cost reduction initiatives at the company.

The selling, general and administrative and shopping are two areas where companies can reduce costs and achieve efficiencies productively. The slowdown is also a platform for change and consolidation of the organization that can be used to accelerate the efficiencies of shared services that leaders of business units previously rejected for fear of losing control.

Outsourcing contracts duly executed allow the company to dispose of high fixed costs to be shared among many firms and favor variable costs that can be adjusted according to the trend of the economy.

Recessions may also involve reductions in research and development, but this may undermine future delivery of products on the market.

2. Shopping: In times of rapid growth, suppliers can set prices higher. The slowdown can improve the bargaining power of buyers and lower prices. Reverse auctions can be a particularly useful tool for the sectors of goods.

During a recession, you may want to buy options and forward contracts at low prices. For U.S. buyers, the dollar has strengthened on many currencies, and commodity prices have fallen considerably. CFOs have the opportunity to obtain bids for the various categories of assets, from real estate to commodities.

3. Pricing: Many companies fail to set their prices consistently. An increase of 1% can provide 10% in operating income, in most cases. In many companies, pricing is decentralized and fixed price sales staff are not the same for all customers. Read the rest of this entry »