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Financial crisis, adverse supply shock, technological disruption, or natural hazards and disasters significantly affect global businesses.\u00a0 Recessions caused by these global incidents and problems have serious outcomes on commodity prices, stock markets, economies, and even countries.<\/p>\n
A Downturn can be described as a contracted business cycle with a significant decline in economic activity across markets with subsequent drop in spending, GDP, real income, employment, and manufacturing.\u00a0 Downturns cause inflation, decline in sales revenues and profits, and cutbacks on R&D and other crucial expenditures.\u00a0 The scenario challenges businesses because of tightening credit conditions, slower demand, layoffs, and general insecurity.<\/p>\n
The organizational readiness to manage and curtail the adverse effects of downturns is the top agenda for the senior executives.\u00a0 However, the uncertain nature of an economic crisis often triggers rash responses or even inaction.<\/p>\n
Any haphazard responses or inaction can make recovery of an organization from a downturn costly later on.\u00a0 Downturn management<\/a> necessitate a calculated approach to confront the uncertainties, anxiety among the employees, and to unlock opportunities out of such crisis. \u00a0An effective approach to deal with the downturn crisis encompasses 2 key phases:<\/p>\n Let’s dive deeper into the 2 phases.<\/p>\n This phase entails a series of actions to safeguard the organization from downturns and maintain the liquidity required to sustain the period of uncertainty. \u00a0Leading organizations take downturns as an opportunity to deploy planned yet urgent, high-priority interventions to maintain standard functioning of the enterprise.\u00a0 They carry out careful analysis to appraise and curtail the risks of exposure.\u00a0 Key steps required to stabilize the organization during a downturn include:<\/p>\n This step demands a methodical assessment of risks associated with exposure.\u00a0 This necessitates evaluating various scenarios and their impact on the organization as well as on the industry.\u00a0 The step helps in ascertaining the units that are more susceptible to downturn risks and warrants prompt action. \u00a0\u00a0The analysis of various scenario assists in highlighting and communicating the rationale\u2014for interventions required to manage the downturn\u2014to the people across the organization.<\/p>\n Specifically, the step involves initiating 3 fundamental actions:<\/p>\n Once the executives have determined the impact of downturn exposure on their business, it\u2019s time to work on reducing the exposure from crisis risks. \u00a0An understanding of the effects of a downturn exposure on the business helps the senior executives discern the most appropriate method to subsist and make the most of their organizational performance<\/a> during the downturn.<\/p>\n In order to subsist and minimize downturn exposure risks senior leadership needs to maintain enough liquidity and access to capital to make sound investments in future, keeping a check on cash flows by generating weekly \/ monthly cash reports, cutting down or delaying discretionary spending, carrying out interventions to improve fundamental business, improve business processes<\/a>, and maintain the organization\u2019s market value and positive outlook for the investors.<\/p>\n Specifically, the executives have to work on achieving these 3 objectives:<\/p>\n The Capitalize phase focuses on growing the business and making the most of the economic situation.\u00a0 Leading organizations prudently manage downturns with greater diligence and immediate, well-thought-out response.\u00a0 Downturns do not preclude executives from investing in critical interventions.\u00a0 Most investments take time to fruition and postponing crucial investments may put an organization on the back foot when economic conditions normalize.<\/p>\n To capitalize on these hard times, senior executives need to carefully think about and prioritize the various investment options and endeavors critical for improving productivity and revenue, consolidate the business through mergers or acquisitions, hold back spending on projects with unclear results, shelve the endeavors that do not have a key role in future success, and invest in developing their people.<\/p>\n Specifically, they should chart out 3 key actions to take advantage of the crises and emerge rejuvenated after these tough times:<\/p>\n Interested in learning more about the phases and key actions required to manage Downturns?\u00a0 You can download an editable PowerPoint on Downturn Management and Transformation<\/strong> here <\/u><\/a>on the Flevy documents marketplace<\/a>.<\/p>\n You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library<\/a>. FlevyPro<\/a> is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:<\/p>\n “My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today\u2019s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”<\/p>\n \u2013 Bill Branson, Founder at Strategic Business Architects<\/p>\n<\/blockquote>\n “As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. 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While FlevyPro contains resource material that any consultancy, project or delivery firm must have, it is an essential part of a small firm or independent consultant’s toolbox.”<\/p>\n \u2013 Michael Duff, Managing Director at Change Strategy (UK)<\/p>\n<\/blockquote>\n “FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight \u2013 it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”<\/p>\n \u2013 Roderick Cameron, Founding Partner at SGFE Ltd<\/p>\n<\/blockquote>\n “Several times a month, I browse FlevyPro for presentations relevant to the job challenge I have (I am a consultant). When the subject requires it, I explore further and buy from the Flevy Marketplace. On all occasions, I read them, analyze them. I take the most relevant and applicable ideas for my work; and, of course, all this translates to my and my clients’ benefits.”<\/p>\n \u2013 Omar Hern\u00e1n Montes Parra, CEO at Quantum SFE<\/p>\n<\/blockquote>\n","protected":false},"excerpt":{"rendered":" Financial crisis, adverse supply shock, technological disruption, or natural hazards and disasters significantly affect global businesses.\u00a0 Recessions caused by these global incidents and problems have serious outcomes on commodity prices, stock markets, economies, and even countries. 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![\"\"](\"https:\/\/flevy.com\/blog\/wp-content\/uploads\/2020\/08\/Downturn-Mgmt.png\")
<\/a><\/p>\nStabilize<\/strong><\/h2>\n
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Determine Exposure<\/strong><\/h3>\n
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Minimize Exposure<\/strong><\/h3>\n
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Capitalize<\/strong><\/h2>\n
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Do You Find Value in This Framework?<\/h2>\n