Question

analyse the impact of economic changes in general on their specific business organisations

Answer 1

Strategic planning enables a business owner to allocate the human and financial resources of the company where they have the greatest potential to generate revenue and enhance profitability. An owner is not supposed to regard his corporate strategy as static something he prepares once a year. The economic environment in which the company operates is constantly changing, and significant changes over the course of the year in the direction of the economy may require the owner to change his strategies and how he allocates his marketing resources.

If the business owner sees signs of an economic slowdown, his response may be to introduce more aggressive marketing tactics to keep market share in the face of increasing demand. In order to stimulate sales, he can offer customers special offers such as buy-one-get-one-free promotions or cut prices or encourage price reductions through ads, social media or his website. An economic slowdown may cause the business owner to delay its strategy of expanding the company. He could postpone hiring new workers in the annual personnel forecast. In order to maintain cash when an economic downturn begins to affect its revenues, it may postpone acquisitions of machinery or other capital expenditures that were part of its long-range development strategy.

The business owner must place additional focus on attracting and maintaining existing customers when an economic downturn makes it difficult to acquire new customers due to prudent expenditure. He and his staff should review all aspects of their customer service strategy, including how customer complaints are handled by their staff and how quickly customer questions are answered. The small business owner also communicates directly with customers, giving them a chance to tell them what the company could do better to keep their business. Owners are hoping an economic downturn will be a natural part of the business cycle and will return to favorable conditions. The declining economy can, in some situations, be a sign of a structural shift that allows an owner to make strategic changes. A major plant closure in a small town could reduce the demand for retail companies in the area which included plant workers among their customs