RECESSION AND BUSINESS

Recession and Business



Table of Content

Introduction3

The Impact of Recession4

Unemployment4

Busineses4

Social Effects4

The Implementation of 3 “I” s of Economics- the Solution For Businesses5

Innovation5

Steps Required Bringing Innovation5

Infrastructure6

Low Cost Infrastructure Solutions7

Outsourcing Services7

Intellect8

Improvement Approach9

Sales9

Pricing in Economic Recession9

Stock Levels Considerations10

Human Resource Considerations11

Promoting Entrepreneurial Culture11

Encouraging Development and Expansion12

Rational of the Solutions and Approaches12

Conclusion13

References14

Recession and Business

Introduction

This paper discusses the impact of recession on the business. The solutions and recovery approaches are also highlighted.

Recession refers to the slowdown in the economy. The macroeconomic indicators during recession vary in various ways, for instance, the production, GDP, spending, investment, employment and business profits fall during the recession. However, unemployment and bankruptcy increases. Recession occurs when there is an increase in the spending following the decrease in supply or bursting of the economic bubble. Government cope with recession by employing the expansionary measures, and policies for instance, increase in government spending, decrease in taxation and increase in money supply. Recession is a part of business cycle, however, one business cycle can trigger the ongoing unfavourable events. The global recession of 2008 and 2009 brought unrest in the business community. A significant attention is given to the investment strategies in order to avoid financial downturn. The global recession severely affected the economy of many countries. The governments and businesses suffered great set-backs and various government policies were implemented to recover from this situation. However, Businesses can respond to the adverse affects of recession in the form of innovation, training and improvement in HR practices, efficient use of human intellect and improving the business infrastructure (Hughes, 2010, 220).

The Impact of Recession

Unemployment

One of the significant affects of recession is the unemployment. People face layoffs because the businesses are bound to reduce their operating costs. The low skilled labours and young hires are most vulnerable to unemployment. It takes almost 5 to 6 years for unemployment to obtain its original level. It creates issues with the business as the employment discrimination claims increase during recession (Hughes, 2010, 220).

Busineses

Businesses face unproductively shock during the early stages of recession. It may also happen that gradually their productivity gets better if the weaker companies close. The recession brings pressure on cost reduction. There are many examples of mergers and acquisitions which took place as the result of lower productivity and financial crisis. The financially strong companies are in a better position to survive recession as compared to the others (Hughes, 2010, 222).

Social Effects

As the unemployment increases, it brings lower standard of living. The spending power of people goes down because of minimum salaries. On the other side, the loss of jobs has a negative impact on the families' stability (Hughes, 2010, 223).

The Implementation of 3 “I” s of Economics- the Solution For Businesses

The recession that had been prevalent for many years had adversely affected the businesses. Their productivity has gone down, investments on new projects are low, and many of them had to adopt the laying off strategy. Despite all the adversities, the business can avoid the aftereffects of recession by many ...