Jatis Final

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Seminar Report

OnIMPACT OFRECESSION ONBUSINESS

Submitted in partial fulfillment of the requirement for the completion of

Bachelor of Business Administration

Submitted To: MR.RAJINDER KAPIL SUBMITTED BY:JATIS ARORA

Roll No. 94752452284
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KC School of Management & Computer Applications NAWASHAHR

Preface

In terms of the instructions given by KC SCHOOL OFMANAGEMENT & COMPUTER APPLICATIONS,NAWANSHAHR, which is during the semester thesemester in Bachelor of Business Administration,during the student of the said course, is said toundergo a seminar report.

For the said project I was allotted as per my choice tostudy the IMPACT OF RECESSION ON BUSINESS. Onthe completion of the seminar report, I submit the

seminar report of my findings based on the guidanceof seminar guide and data collected from variousinformation sources.

I take this opportunity to thank all those whose help,guidance and suggestions have been instrumental inundertaking & completion of the seminar report.Firstly I would like to express my gratitude to my

teachers for giving me this opportunity to undertakethis seminar.


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Acknowledgement

The feeling of esteem & euphoria on the completion

of this report will be worthless without thanking forthe immense help & guidance received from Mr.RAJINDER KAPIL. I am indeed very thankful to him forhis unending support right from the inception of thiswork. He continuously spared his precious time &provided me right guidance at every stage & plug myshort-comings

My sincere thanks to him for his guidance, supportand encouragement, which has enabled me tocomplete the report successfully.

I am thankful to my friends who help me in allpossible ways. I am also very much thankful to my


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family who help me and support me for thecompletion of this report work.

JATIS ARORAB.B.A 3rd sem.

Declaration

I hereby declare that the dissertation entitledIMPACT OF RECESSION BUSINESSthat is beingsubmitted by me in partial fulfillment of therequirements of Bachelor of Business Administration3rd semester to KC School Of Management &Computer Applications, Nawanshahr is record ofbonafied work carried out by me.


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The results embodied in this dissertation have notbeen submitted to any other university or institutionfor the award of any degree

Date:JATIS ARORA

.

.

INDEX

Sr. No. Particulars Page No.


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1

INTRODUCTION


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A recession is normally accompanied by inflation - and

this means that your expenses could rise quite a bit, even as your income is

under pressure.

If you regularly make payments by credit card, then you might lose track

of how high your expenses have shot up as compared to your income;

and one not-so-fine day could find you unable to find the money to pay

off your credit card debt.

If this happens, a lowered credit rating could make it very difficult for

you to get approval for new loans, forcing you to resort to loans where

the interest rates could be quite high - which could literally lead you from

the frying pan into the fire. As recession takes a choke hold on theeconomy, you might find that there are fewer new customers walking

through the doors of your business. Your existing customers may also

seem to have shut their wallets tightly as they also try to control their

rising expenses.


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Unless you manage to think up ways to increase your sales as well as

your profits, the resulting loss of income and decline in profits could be

detrimental to your small business - and could ruin you. If your small

business has a retail location that has a mortgage loan on it, then you

could be in deep trouble. This is because lenders have been steadily

hiking their interest rates in a bid to cover their losses due to other

borrowers not being able to pay their monthly installments.

If your current mortgage is about to end, then you could find that there

are no lenders available who are willing to provide you with a new

mortgage at low interest rates.

This could put enormous pressure on you, as you would be forced to

decide on which loans to clear off first - all on a steadily-decreasing

income.

RECESSION ECONOMIC IMPACT


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Two broad questions concerned us:

1. How long did respondents think that the recession would last?

2. What impact would the recession have on their business in terms of

what they offered to their customers?

1. How long did respondents think that the recession would

last?

We firstly asked respondents to estimate the duration of the recession or

downturn* in respect of the country in which they were based. In this

study, 91.8% of respondents were located in the UK. Therefore, we

report here views in respect of the outlook for the UK only as shown

below in Exhibit


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Only just over 8% of respondents thought that we faced a quick V shaped

recovery. Most saw a longer period of effectively, economic stagnation.

Respondents thought that the UK would fare comparatively well when

contrasted with the global economy. Respondents views on the globaloutlook are shown in Exhibit 2:


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Here, respondents expect a lingering recovery globally.

2. What impact would the recession have on their business in

terms of what they offered to their customers?

Just under 10% thought that there would be no impact on offerings the majorityacknowledging that some adjustments would have to be made. 13.9% however felt that

deeper changes would have to be considered in terms of the products and services that

their businesses offered:


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Recession: The real causes

Next, we wanted to understand what, in respondentsminds, were the realcauses of the downturn. We gave respondents a rangeof suggested causes to choose from plus a free format option. Respondents

could choose more than one cause and the result is shown in Exhibit 5:


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The findings point to the values that are perceived now to be a deeply

ingrained part of government, the business world and even social behaviour

as being the real instigators of the economic meltdown. In terms of the

underlying cause of the downturn, over 75% of respondents pointed towards

a short-term profit focused culture, but an analysis of supporting

comments from respondents showed us that cultural shortcomings were seento exist within most, if not all, elements of our society

Taking Action: More than waiting for green shoots

Obviously, more needs to be done than waiting for green

shoots.

Leaders must now consider how they are going to face the strategic, cultural

and the psychological implications of this downturn.


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Whilst many of the issues being observed and experienced by people in the

workplace stem from pressures both personal and professional, business

leaders must play a critical role in supporting their employees through this

difficult time.

This research points to at least three inter-linked key tasks for business

leaders.

The first is the management of businesses through a potentially protracted

period of either negative or negligible economic growth that we refer to as

the downturn in this report.

Businesses now need to strongly consider the competitive strategy that they

need to operate in such an environment.

The second task is to respond to the major cultural concerns that this

exploratory study has surfaced. As we have already mentioned, there are

opportunities for leaders to ensure that their businesses culture and values

are clearly separated from the root causes described in this report.

The final task is of course helping employees to deal with the psychological

implications of the recession and the uncertainty it brings. Without attention

to this dimension, there could be considerable costs both in terms of

individual anxiety and loss of business efficiency.

There are at least two broad courses of action for business leaders to

consider at this stage. The first concerns the issue of business strategy itself.

The second focuses upon the human impact of the recession.

Looking firstly at business strategy, there is great uncertainty regarding the

recovery path that the advanced economies will follow. The newspapers are

full of reports of U, L and W shaped outlooks. Additionally, it is held

that recessions are times of change and creative destruction new

opportunities will eventually rise from the ashes.

From a strategy perspective there are two actions that businesses can

undertake to help manage this period of transition and ambiguity

Firstly, businesses should consider the impact of two alternative scenarios

the first a relatively rapid U shaped recovery, the second an extended L


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shaped outlook. Both will require different responses. Having a thought out

plan for each now will help businesses respond rapidly.

Secondly, new opportunities will appear as we move out of recession. Some

of the respondents have echoed this view in their responses to this survey. It

is important now to set up projects to sense how customers needs are

changing so that this new knowledge can be brought back inside the

organization. This early capture of knowledge and experiences will form a

vital foundation for the crafting of new strategies going forward.

Both these exercises provide an opportunity for staff engagement and act to

demonstrate that the organization is constructively tackling the challenges of

recession.

The second broad course of action focuses more directly on the human costsrevealed in this survey.

There is now obviously the need for managers to actively look for the

symptoms of anxiety and stress. Once symptoms are identified, if they are

tackled appropriately it can have a direct and positive impact on issues such

as employee mental health, productivity, staff recruitment, retention and

customer relations.

Managers who have been coached in how to identify the signs can often

tackle it at source. Research consistently demonstrates that managers with anopen door policy and those who walk the floor and get to know their

team will have lower instances of stress and related issues in their teams.

Managers need to be aware of their role in managing and influencing their

teams. Coaching managers to understand the significance of stress and its

impact and how to create a culture of communication is critical.

In conclusion, in the current economic climate, stress and related symptoms

are on the increase. It is vital for the health of both the individual and the

organization that managers are trained to be aware of the signs and are

supported to act swiftly and appropriately to reduce the triggers to the stressthat they have control over

. The recession scenarios provide us with a mechanism to see what the new

worlds could look like, but in this post I would like to start to explore what

the process of transition to the new world itself might look like. When

looking at the transition process, I will adopt the perspective of your
http://www.drrobertdavies.com/recessionscenariosstrategyimplications.phphttp://www.drrobertdavies.com/recessionscenariosstrategyimplications.php


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businesses customers and clients, in other words the phases of change that

your clients and customers will go through.

Phase 1: Shock and Horror.

Whilst there was some talk about 24 months ago of an impending economic

blipage, nobody thought it would ever be this bad. The accepted thinking

appeared to be at worst that we would have say a slowdown period of 12

months and then we would get back to growing in a predictable world.

Nobody thought that capitalism mightbe brought to its knees. Therefore,when the news broke last year particularly when Lehman Brothers went

down on 15 September we were all thrown into a state of shock. It was as

if the bottom of our worlds had been pulled away. A good way of looking atthis is to think about that old, but classic, motivation model Maslows

Hierarchy of Needs. It was as if the bottom layers, the foundations, had

been stolen. For this reason, people and organisations act a little irrationally

during this first phase. As security is threatened, we need to do something to

protect ourselves and this usually means making immediate cost-cutting

decisions many of which might not be in the long-term interest of either the

individual or the business. In shock there is the over-riding desire to dojustsomething. An example is that 74% of Americans intend to cut back oneating out and entertainment [1].

So this is where we are now. In an irrational period. From a business

perspective, it is a period to make temporary adjustments to match these new

behavioural patterns. But it certainly is not the time to make long-term

irreversible decisions. As I try to show in the first illustration below, this is

a temporary phase
http://www.drrobertdavies.com/motivationmaslowrevisited.phphttp://www.drrobertdavies.com/motivationmaslowrevisited.phphttp://www.drrobertdavies.com/motivationmaslowrevisited.phphttp://www.drrobertdavies.com/motivationmaslowrevisited.php


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Phase 2: Acceptance

Phase 2 is important for three reasons.

1. It represents almost certainly a longer period than the first phase.

2. It is the period when customers adjust to accept the fact that we are

(probably) in for the long haul. Expect therefore more reasoneddecision making that will hold for the medium term.

3. During this period the behaviours of Generation Y (the children of the

baby boomers, Generation X) will be shaped permanently.Remember that in the last real downturn, Generation Y would have

been in nappies (diapers). What they see and feel during this period

will have a permanent impact. It is the first time that their world will


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have been shaken and their beliefs and assumptions challenged.

Long-term behavioural changes will appear, such as a move awayfrom external, tangible displays of wealth.

At the time of writing this entry I would say that we are just about to enter

this phase a phase that may last for 3 or more years, butas I show in thissecond illustration, the impact is far more permanent.

Phase 3: Emergence

At some point the stimulus packages

and measures that are now being put in place will bear fruit. Confidence

will be restored. Demand will increase. New demands and needs will


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appear, but these will have been materially shaped by experiences (that are

now largely unknown) that will have occurred during phase 2 Acceptance.New customer segments will appear. But the effect may not be so dramatic

in the long-term in terms of customer needs

Phase 4: Restructuring

I opened this post by saying that we cant just

sit this one out. One of my propositions is that certain developed economies

need to undergo second order macro economic changes. The UK is a good


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case in point as I have observed earlier with its near 22% of employment in

financial services. These macro economic changes should produce newopportunities and needs to meet as new employment champions appear

just as financial services did in the early 1980s when manufacturing went

into decline, at least here in the UK. This phase, as new employment sectors

appear, will be more permanent in its impact.

Phase 5: New Influencers

Here we go out into the medium to long-term,

beyond the illustration above. And I have in mind 3 to 10 years out from

now. During this period the winning BRICs (the emerging economies of


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Brazil, Russia, India and China if any of them do make it) will really have

the position to reshape both the business world and capitalism itself. The

mechanism to do this (G20) is already being put in place and remember that

by 2019 China could control 13% of the worlds banking system and 16% of

the global stock markets[2].

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