Question

• Drawing on current business publications (find one article), discuss how the slow economic recovery after the 2007-2009 recession has affected the current strategies used by businesses to maintain and increase profits.

Answer 1

When sales revenues and earnings fall, the company will either cut back on hiring new employees, or fully freeze hiring. The supplier may stop buying new equipment, reduce research and development, and stop new product rollouts (a factor in revenue growth and market share), in an effort to cut costs and improve the bottom line. Marketing and advertising expenses may also be cut. Such cost-cutting measures would affect many companies, large as well as small, that provide the goods and services the big supplier uses.

When declining sales appear on its quarterly earnings report, stock price of the manufacturer may decline. Only dividends can slump, or completely disappear. Company shareholders may get upset and may call for the appointment of new company leadership, along with the board of directors. An advertising agency of the company may be fired and a new agency may be employed. External advertising and marketing divisions can also undergo a shake-up of staff.

A recession will also dampen receivable accounts (AR) for a company. Customers who owe the money to the company can make payments more slowly, later or not at all. The affected business may then be forced to pay its own bills more slowly, later, or in smaller increments than their original credit agreement allowed, with decreased revenues. Making late or overdue payments would the the value of the debt, bonds and the ability of a company to receive financing