The business environment you operate in has a significant impact on your strategy in business. This is true whether your business is operating during a weak, strong, or recessionary economy. However, it is even more important to understand your business environment during a recession; which is a time when buyer power is stronger than ever, and business survival strategies need to be quickly developed and launched. Your business needs to change to survive; it can even thrive and grow during a recession providing your efforts are focused on recession marketing strategy planning. A strategic business plan is typically written for a 5 year period, with annual updates and adaptations. Most small business owners did not foresee the current global economic conditions (actually most large and mid-size business owners did not seeing these conditions coming); therefore, the strategic business plans that were written in a different economic climate are not useful in today’s recessionary economy. To survive a recession, re-visit your small business plan:
•Is your vision statement still relevant? Do you need to revise it for the future you see ahead (although remember that a vision statement is typically a view of the future you would want for your business in the years ahead – it might not change that much). •Re-define your priorities and re-develop your action plan. If you have available cash, this might be the time to buy new equipment that has been on your capital expenditures plan for two or three years in the future. It is likely that you will get a very good price on that equipment; you’re in a good negotiating position right now. If cash flow is a serious issue for your business; what can you do to conserve cash? Does it mean canceling plans to add a new location or launch a new product? Does it mean laying-off staff if you think the business is going to shrink substantially (and if there’s nothing you can do to turn it around)? Or consider whether now is the time to look for a partner, or merge with another business, or acquire a competitor? •Review your line of products or services. Are some of them unprofitable? Some products or services can be used as a loss leader; bringing in other, more profitable business. That can be an acceptable investment if the profitable business covers the cost of the losses, and more.
Can the products or services be re-developed to become income earners or is it time to ‘retire’ the product or service. •Review your business strategy: Are you a market leader, a follower or a market challenger? A market leader may be able to manage a recessionary environment if its cost structure is highly competitive and if the leader is the best-price option. A market follower might be able to ‘cherry pick’ the best orders by focusing on business that is most closely aligned to the follower’s strengths and uniqueness. A market challenger will likely find a recessionary environment the most difficult; it is expensive to challenge for better market position. •Reconsider your market strategy: This is the time to do a strengths, weaknesses, opportunities and threats (SWOT) analysis on your business. What impact will a recessionary economy have on your SWOT analysis? Can you capitalize on fragile competitors?
That’s an opportunity. What impact will swings in interest rates and/or dollar exchange rates have on your business? If it’s a negative impact, that’s a threat. Is your management structure strong? Do you have effective leaders in your organization? If yes, that is a strength; if no, that is a weakness. •Develop new marketing strategies; considering the four elements of marketing mix: product, price, promotion and place or distribution. •Make sure that you develop a daily ‘hot list’ of business performance measures (also known as key performance indicators or KPIs) because in today’s economy you need to know, more than ever, how your business is doing, and the only way to know, is to measure. Customize what you need to know for your business; this might include daily job estimates, daily orders or sales, receivables, inventory reports, supply purchases, number of calls incoming, gross profit margin by customer, and more.
Article Source: http://EzineArticles.com/1895831
FORTUNE — In what seems an admission that the Sears shopping experience continues to have about as much appeal as getting a root canal, Sears Holding Corporation has moved to expand partnerships over the last few months that allow competitors to sell its most storied brands. Craftsman tools and DieHard batteries have already escaped the big-box retail behemoth, and it’s probably only a matter of time before Kenmore makes a break for freedom as well. The move is an ingenious elixir for near-term earnings, providing incremental cash flow to the struggling corporate mash-up that Eddie Lampert built, and is a delightful added discomfort to Sears’ high-interest-paying shorts, who have watched the company’s float vanish thanks to Lampert’s aggressive stock buybacks. But critics worry that it could, in the end, just be digging the once omnipresent retailer a deeper grave. “It will have a short-term benefit, but long-term it will be a disaster,” predicts Howard Davidowitz, Chairman of Davidowitz & Associates, Inc., a national retail consulting and investment banking firm.
“Sears is in total collapse — earnings, sales, everything is tanking — so they embark on this strategy with their brands that fundamentally goes against what every retailer in the United States is doing, what every retailer is trying to accomplish, which is to differentiate themselves from their competitors.” Macy’s (M) keeps expanding exclusive sales arrangements with brands like Tommy Hilfiger, and J.C. Penney (JCP) recently went from an exclusive license of Liz Claiborne to an outright purchase of Liz Claiborne brands. Davidowitz says these are the types of deals that allow retailers to survive in a time with moribund consumers, rising bankruptcies and over-capacity in the retail industry, which still provides a whopping 43.6 square feet of retail selling space per capita in the country. Sears obviously sees the move differently, talking up the ability to extend brand reach by moving its products outside of Sears’ stores. Some shoppers have been able to buy Craftsman tools at Ace Hardware since last year, a deal that has now expanded from about ten hardware stores to almost 1,000.
But over the last month, Sears has also inked deals with Costco (COST) to sell the Craftsman brand and is allowing Meijer Inc., a Michigan-based retailer, to offer its well-known DieHard car batteries. In June, Sears reached an agreement with Dorcy International to sell DieHard-branded alkaline and rechargeable batteries. Last week, new reports suggested that Sears is planning to hire an agent who can license Craftsman, DieHard, and the Kenmore appliance brands to a host of other retailers. According to Bloomberg, any agreement would differ from some previous deals by being a pure licensing play; in some incarnations, Sears (SHLD) has sold its own products within competitors’ stores, collecting a percentage of the profit from sales. “[T]o grow the value of our proprietary brands, we evaluate all avenues including extending the brands into new markets and categories,” says Larry Costello, a Sears Holdings spokesman, in a prepared statement.
“As part of that evaluation, we consider a variety of partnership structures and consider both agency based and direct licensing relationships. The DieHard announcements with Dorcy and Meijer are both examples of direct licensing relationships.” Sears proper already has a curious relationship with its most profitable brands. In 2006, Sears Holdings securitized Kenmore, Crasftsman and DieHard, putting them into a separate special-purpose entity called KCD IP, which acts as a bankruptcy remote subsidiary. Sears pays a royalty fee to KCD, which uses the money to pay the interest on about $1 billion in bonds stuffed into a Sears insurance subsidiary. Theoretically, the move could protect these profitable brands from certain Sears’ bondholders. It also helps KCD gain better ratings and cheaper financing. It’s unclear how the move to license the brands outside Sears fits within the strategy for KCD, which has been a busy trademarker of late. Even Professor David Stowell, an expert in financial engineering at Northwestern University’s Kellogg School of Management, admits that, more generally, he’s “not sure what the endgame is.”
“I do think Lampert is trying to utilize his assets in the most efficient way, which is what people who run companies are supposed to do,” says Stowell, who has studied Sears structure under Lampert. He adds that the hedge fund guru has done better for shareholders than many will admit. “If you can maintain cash flow in the context of declining revenues, that is a pretty good outcome. I give him credit for generating a lot more shareholder value than would have been created in the absence of the Lampert ownership period.” Original investors in Lampert’s reorganized Kmart have done well enough, at least if they didn’t keep buying stock (as Lampert has), through the merger with Sears, Roebuck and Co. in 2005 and the other various inspired initiatives and management shakeups that followed.