The next economic downturn is coming. It’s just a question of when. Economists aren’t able to predict the timing and severity of an impending economic slowdown, but that shouldn’t prevent companies from preparing for one. In this report, experts from the Boston Consulting Group’s Henderson Institute provide practical, evidence-based recommendations for how businesses can not only survive economic downturns but come out stronger than before. Business leaders will appreciate the authors’ encouraging advice on how to turn adversity into a competitive advantage.
Economic downturns present opportunities for companies to pull ahead of the competition.
During the last four economic downturns, an average of 14% of companies succeeded at increasing their sales growth rate and EBIT margin (the ratio of Earnings Before Interest and Taxes to net revenue earned), while 44% of companies saw those metrics decline. With proper foresight and strategic planning, companies can indeed take advantage of various downturn-related developments that will allow them to emerge from a downturn stronger than before.
Greater competitive volatility, for example, can present openings for companies to pull ahead of the competition. Slowdowns also provide opportunities for investing in operational improvements or acquisitions. Companies with considerable cash reserves may look to purchase or merge with a struggling...
Martin Reeves, David Rhodes, Christian Ketels and Kevin Whitaker are managing directors and economists at the Boston Consulting Group’s Henderson Institute.
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