Surviving Economic Downturn

2010

SURVIVING ECONOMIC DOWNTURN

Giacomo J. Maggiore

12/4/2010

SURVIVING ECONOMIC DOWNTURN

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“Concentrated power is not rendered harmless by the good intentions of those who create it.” – Milton Friedman THE PROBLEM WITH SURVIVAL

strategies in order to survive economic downturn. As a business undergraduate, I believe that cutting costs through layoffs will not make companies succeed in the long run. The onus is on me to demonstrate that in order to survive; employees must be engaged to help their company’s bottom line. Firms must find a balance between cut backs and investment in order to improve employee morale and diminish turnover. This in turn, causes companies to carry on effectively. The subsequent text establishes the basic ground for deciding what (and how) strategies should be (and are) implemented to survive an economic downturn.

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hat happens when Canada comes out of a recession? Rundown businesses, barely clinging to survival, begin importing at massive levels because many of their suppliers were unable to survive. Only a select few could afford to innovate, develop, or in the best case scenario, avoid laying off employees. One director from Abitibi Bowater said, “That’s what you’ve got to do, that’s what we did and that’s why we still exist”. If companies are faced with a factory loss in one quarter, management has to decide what to do. At Abitibi Bowater, we “cut back enormously”. On the other hand, a branch manager from the Laurentian Bank stresses the importance of preserving for the future and investing throughout the recession. Thus, Abitibi Bowater responded to the recession by disinvesting, while Laurentian Bank hung on and developed. The effects of these different strategies have varied effects in terms of corporate performance during the recession of 2008 and, in the long run, all through the recovery of 2010. Despite this distinction in strategies and results, the two companies survived the challenging two...