Happy families are all alike, every unhappy family is unhappy in its own way.
—Leo Tolstoy in Anna Karenina
—Leo Tolstoy in Anna Karenina
A slowing economy hurts everyone, but the extent varies. Each company is unhappy in its own way. The world is no longer the big flat smiley dreamt of by Tom Friedman, but fast reverting to the lumpy, grumpy, pock-marked soccer ball that it used to be. Though the technology exists to create a flat world, we still aren’t there in terms of the governance, economic and geopolitical systems.
There are various factors that determine the impact of the current economic crunch on a firm. First, how dependent is the firm (or its customers) on credit? Any credit-oriented industry such as construction or automobiles will be more affected than others. Second, how much of the firm’s revenue is derived from countries with high exports? Export-oriented countries such as South Korea and Taiwan are likely to be more affected than India, where exports are just 25% of gross domestic product. Third, which industry is the firm in? According to research by McKinsey, in previous recessions, consumer staples have been among the least affected; consumer discretionary spending on goods such as clothes, home furnishings is the most affected; information technology is usually first-in, manufacturing is often last-out; while energy, utilities, and health care remain relatively unaffected. Contd...
Continue reading this article at Livemint.com to find out how a marketer could respond to the current economic downturn.
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