managing firms throughout the business cycle (Business confidence was…
managing firms throughout the business cycle
Business confidence was high in the millenniums and this is due to the internet and online selling
Some countries opened their markets with international trade
E.g. Poland, Estonia, Lithuania and Latvia joined the EU
Dusing 2008/9 many banks were lending money to risky borrowers
This led to loss of confidence in the banking system meaning it is harder to get a loan
David service group offers maintenance service in UK and Europen
They manage to maintain sales while the demand is falling
This is because the 2 sub companies have the authority to profit centre throughout the group.
David service group managed to survive due to the fact that 30% of their product is connected go healthcare.
Even in time of recession, the government tries to keep this sector alive meaning that David service group still managed to generate revenue
The business cycle - fluctuation in demand of goods in either boom or recession
During BOOM businesses are better off because the customers have more money meaning they spend more and therefore businesses generate higher profit
During recession the opposite happen. The people have less money to spend in the economy and the business meaning the businesses are failing
Gross Domestic product (GDP) is the amount of goods and services sold in an economy in a period of time .
Some businesses are located in mature markets meaning that there will be fall in demand in this markets because the product life cycle is nearly at the end and when there is recession, less people will have interest in it.
David service group is growing in countries such as Poland which are EDC countries meaning that new products such as textile have less chance of being affected by recession.
people lose jobs
companies are cut out in new investments
businesses close down
Davis's has left their most successful products in the market in order to keep selling and make revenue
they will seek another kind of wear made for industry that is more likely to not be part of recession
Davis services continued making more products because their strategy was when recovery occurs, they will be able to start selling the products again as the demand will increase meaning that they will recover from the losses
One key advantage for Davis is that their management was in local level meaning that the managers in the area can decide how much volume of product they need.
Davis is also keeping the shareholders happy in this period meaning that their share prices are not decreasing in value,
In recovery, the businesses have more disposable income so they have more money to spend on products
Preparing for recovery
operating existing plans more efficiently
Invest in new plants with better opportunities
reducing cost to increase profit
Changes that can arise from boom
firms might find it harder to recruit skilled labour
Inflation can arise as people have more money than before