Business models help a business execute a strategy. Strategy is the foundation on which a business model sits. No amount of window dressing to the front end can help a business survive a recession.
Therefore, a business must look at its strategy and make changes that will enable it to maintain a competitive advantage even in difficult times.
Let us explore this concept further. In a recession, discretionary spend is reduced to the minimum. Businesses in the discretionary spend segment like hotels and hospitality, restaurants, electronic goods, and automobiles are likely to get impacted most in deep recessionary times.
I do not, though, envisage that the impending recession in the US and Europe will be deep. It will be a shallow and short recession. Excess liquidity in these economies is being drained out by Central Banks steadily, and interest rates are being raised rapidly. These measures will tamp down inflation and force the economies into a recession.
Geopolitical changes are leading to the disruption of settled supply chains, and new supply chains are simultaneously getting created. The twin facts of excess liquidity and supply chain disruptions will force North America, Europe, and parts of Asia into a shallow recession.
Businesses must prepare themselves for this impending steady drop in demand for discretionary goods and services. You do that by a series of measures. Workforce levels will be brought down. Big corporations like Google, Microsoft, and others have publicly stated their intent to pare down staff. I also suspect that a cut in research expenditure will also take place. Cost cutting, paring down debt, and reduction in M&A activity are other measures that are likely to gain prominence.
In summary, strategic shifts will help businesses prepare for a recession.
Professional Credentials: