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[PDF] Beat the Crisis: 33 Quick Solutions for Your Company Read Full Ebook
Condition see all Condition. The lawnmower method may be effective with regard to implementation, but the risk of doing away with valuable activities is high. Selective approaches are superior, even during a crisis. Balancing short-term savings and long-term effects always remains difficult. It is generally inadvisable to cut back on expenditures that have a quick and quantifiable positive impact on sales and profits. However, even on the cost side, control is not complete. Cutbacks always affect people, be it employees or suppliers.
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UK W : You offer 33 quick solutions, and you divide them into subsets: those that help change customer needs; those that are for sales and the sales force; those that manage offers and prices; and those that are for service-oriented companies. Which moves do you consider most crucial in each of these areas?
Hermann Simon : First, I advise avoiding the most frequent and most dangerous mistake, which is to cut prices prematurely and too strongly. Companies do this to stabilize sales volume and employment. The reason is that consumers react less to price cuts, as outlined above. In addition, there is one big danger: competitive reaction. In the worst case, prices are down and sales volumes remain low. Even in markets that were considered inelastic, companies slashed prices. Recent figures from Spanish companies — for example, the tourism and retailing sectors — show that these activities helped contaminate company results and profits much more than mere volume cutbacks would have.
Instead of cutting prices, companies should reduce volume and capacity. The French Champagne producers have done this with great success. This is the most important action on the supply and price side. With regard to customer behavior, you have to deal with the increased fears and risk perception of your customers. Extended guarantees like the one given by Hyundai are an effective means to overcome fear of buying. This can include success-dependent fees, barter trade, or totally new business models where the vendor takes on a higher part of the business risk. On the sales side, you should increase the performance of your sales force.
Special incentives are an effective way to achieve this. Also, if you have direct sales, try to strengthen them. During a crisis, direct sales are invaluable. Services offer a lot of potential because they have typically been neglected in boom times. Extend your value chain through enhanced service offerings, change from product to systems provider, or shift your focus from the original market to the aftermarket. BMW has done the latter with great success.
Hermann Simon - Wikipedia
UK W : What are the components in the process of implementing these moves? Should companies be working with external consultants at this stage? How you communicate the action is another important part of the implementation process that can strongly affect its effectiveness. Outside consultants can add value to the tasks thanks, first of all, to their experience with other companies and other industries that faced similar challenges and have acted prior to a specific company.
What is transferable to this specific company? Also, consultants bring a working methodology and systematic, rigid approaches to analyzing the specific situation, drawing the right conclusions, and suggesting appropriate measures. Some companies, doing this on their own, suffer from the so-called not seeing the forest through the trees syndrome, or are simply not capable of doing this properly while managing the daily business.
UK W : What role does time-to-action play in the implementation of a plan and what impact does it have within a company? And why?
How can you avoid this? The clearest insight from these discussions is that those companies that reacted quickly fared much better than those that waited. It is definitely good advice to take time to think, to decide, and then to implement with consideration. But in situations involving danger and abrupt changes, you have to decide and act fast. Spontaneous actions, of course, carry a high risk potential. Therefore, a compromise should be found.
How to Save Your Company During a Crisis: A Conversation with Hermann Simon
In the book, I suggest a decision process that is adjusted to the crisis, some simple evaluation and decision tools. I think they will help avoid severe mistakes while at the same time guaranteeing sufficient speed. More and more often, we are competing against the Chinese, whose biggest strength is speed.
We must not risk being left behind. Hermann Simon : Of course, budget deficits are a very serious issue. And tax increases are a temptation. I am a strong supporter of consolidating budgets and reducing public debt. But this must be mostly — or almost exclusively — achieved through cutting spending. One of the more important and lasting effects of the crisis will be that the social-welfare state is cut back to a structure that can be financed on a sustainable basis.
This will require much higher spending cuts than currently envisaged or enacted. No state, no organization can permanently spend more money than it takes in. The planned tax increases add little to the solution of this fundamental problem. Tax increases are likely to impede the recovery.