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How to survive recession Renaud

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How to survive recession Renaud Powered By Docstoc
					Banishing Bad Thoughts (1958)
In Kankakee, Illinois, USA, members of the Chamber of
Commerce staged a mock execution of "Old Man Gloom",
as part of an effort to rally local spirits.

                                                        How to survive a
                                                          recession
Dig the well before you are thirsty.
Chinese proverb




                        Dig the well before you are thirsty
                        Chinese proverb
                   Workshop Objective
What it is:                     What it’s not:
•   Provide key learning on     •   Economist view
    Recessions, case studies,
    research, examples and      •   Bankers view (BNR)
    practical tips              •   Not recent as of yesterday
•   How to survive difficult    •   Recession expert’s view
    economic climate while      •   Predictive
    optimizing the business
•   USA focused because of
    historical data
•   Walk out with few ideas
•   Interactive
•   Optimistic
      Table of Contents
Step 1: Stop talking about it !
           Recession 101
           Historical data
           Trends to consider
           Romania survey and findings
           Recession 101: Key Learning
Step 2: Businesses that do well
           Industries in high demand through a
           recession
           Jobs in high demand through a recession
Step 3: Cut costs with a scalpel, not a chainsaw
           Other cost cutting strategies
Step 4: Perfect time to plan
           Segment Management
           Ideas and trends for your customers
Step 5: Over communicate
End in sight - Significant events, milestones
Outlook
                                                       Bank institutions searching
     World liquidity
                                                        for return on investments
        excess



                                          Relaxation of
             Abundant credit                                              Outburst of debt
                                           loan terms                   assignment by banks



                        Quick development of
                          ‘subprime’ credit


                                                  Accumulation of
Resale with profit possible                    financial market risks
   Real estate market turns
  in case of loan default
     around for the worst



              More and more subprime                             Market recognizes presence
                   loans default                                  of loans being assigned



                                         Confidence void



                                       Liquidity crisis, banks
                                        are no longer giving
                                        loans between them
                           ‘subprime’ credit


                                                   Accumulation of
                                                financial market risks
Real estate market turns
 around for the worst



           More and more subprime                                 Market recognizes presence
                loans default                                      of loans being assigned



                                          Confidence void



                                        Liquidity crisis, banks
                                         are no longer giving
                                         loans between them




                                               Banks ailing



                                         Assets depreciation



                                               Bank losses



                                          Financial Crisis
                           Financial Crisis




                       Economy slowing down

                                                                           Increasing of liquidity
Households having                                                                problems
                          United States
payment difficulties      stimulus
                                                 Interest
                                                 rate fall


                                                                            Refining problems

                         Expansionist budget
   Household
   payments
                               policy
                                                             Liquidities
   guarantee                                                  injection

                        More flexible monetary
                                policy


                         Improved (attractive)
                             fiscal policy




                       Increasing losses for banks
Interbank loan                Increasing losses for banks
guarantees,
Paulson Plan




                               Confidence being further
                                       eroded


                              Stock market collapse


 Households are                                                            Bankruptcy or near-
 more and more                                                            bankruptcy of financial
    worried                          Speculation
                                                                               institutions
                                                   Stopping stock
                                                   market collapse
                                                                     Capital injection,
                 Deposit                                             nationalizations
                  guarantee
                                 Coordinated monetary
                                        policy




                                   State intervention



                                      Recession
                   Step 1: Stop talking about it !
                           Recession 101
Definition                                        USA Vs. Romania

Recession is loosely defined as two consecutive   •    Q. Is USA in a recession? A. Yes
quarters of decline in GDP output.                •    Q. Is Romania in a recession?
National Bureau of Economic Research(NBER,        Not yet technically, but discussion of
    USA)
                                                  ‘Criza’ has stifled everything since:
extensive definition: four main
                                                  1)   BNR reduced debt /income ratio from
factors as the most important for determining          70% to 30%
the state of the economy:                         2)   Purchase of homes added VAT
•   Employment                                    3)   Banks changing policies on loans
•   Personal income                               4)   Sub Prime effect in USA affecting global
                                                       banks and world markets
•   Sales volume in manufacturing and retail
    sectors
•   Industrial production
                                    Recession 101
Business cycle is made up of four different periods of activity extended over several years.
These phases can differ substantially in duration, but are all closely intertwined in the overall economy




                                                           Peak At its peak, the economy is running at
                                                           full steam.
                                                           Employment is at or near maximum levels,
                                                           gross domestic product (GDP) at its upper
                                                           limit, income levels are increasing. prices tend
                                                           to increase due to inflation; Businesses
                                                           investors are enjoying prosperous time




       Recession “What goes up must come down" applies. After experiencing great deal of growth
  success, income and employment begin to decline. As wages, prices of goods in the economy are
  inflexible to change, they likely remain near the same level as in the peak period unless the recession is
  prolonged. The result is negative growth in the economy.
                             Recession 101
Expansion/Recovery - In a recovery, economy is growing once again, moving away from bottoms
experienced at the trough. Employment, production and income all undergo a period of growth, overall
climate is good.



                                                Trough - sometimes referred to as a depression,
                                                depending upon the duration of the trough, this is
                                                the section of the business cycle when output and
                                                employment bottom out and remain in waiting for
                                                the next phase of the cycle to begin




          So where are we?                                 Romania

                                                                         USA
                                  Historical data




Current recession is one of longest downturns since the Great Depression of 1930's.
Last two recessions (1990-1991 and 2001) lasted eight months.
                          Trends to consider
U.S. Recession
   As chart indicates, the U.S. budget deficit is expanding at its fastest rate in the post-war era.
   Obama’s proposed fiscal stimulus will add to this deficit. This aggressive fiscal response is meant
   to offset a sharp contraction in GDP.
                                             Trends to consider




Source: 2009 Outlook – Council on Foreign Relations, November 2008




      •The unemployment rate initially increased at a rate consistent with past recessions.
      •However the latest data suggest a worse than typical environment for employment.
      •2009 will start to reveal how much worse the employment situation will be.
      • Unemployment, now at 4.9%, is just 0.9% higher than the 4% level that economists
      consider "full employment" (meaning that everyone who wants a job has one).
                                                                                            •Auto sales typically fall by 20% in a
                                                                                            recession

                                                                                            •This time around they have fallen 30%.




Source: 2009 Outlook – Council on Foreign Relations, November 2008




                                                                                            •Consumer sentiment starts falling before
                                                                                            the recession begins, but turns around
                                                                                            soon after.

                                                                                            •However, pessimism seems particularly
                                                                                            strong this time around.




                       Source: 2009 Outlook – Council on Foreign Relations, November 2008
                                                B2B payments
             Payment delays lasted between 18 and 24 months

%              First oil           Second oil               USA               Internet bubble      Subprime
                crisis               crisis               Recession               and 9/11           crisis
8                                                                                                                200

7                                                                                                                180
                                                                                                                 160
6
                                                                                                                 140
5                                                                                                                120
4                                                                                                                100

3                                                                                                                80
                                                                                                                 60
2
                                                                                                                 40
1                                                                                                                20
0                                                                                                                0
        1970
        1971
        1972
        1973
        1974
        1975
        1976
        1977
        1978
        1979
        1980
        1981
        1982
        1983
        1984
        1985
        1986
        1987
        1988
        1989
        1990
        1991
        1992
        1993
        1994
        1995
        1996
        1997
        1998
        1999
        2000
        2001
        2002
        2003
        2004
        2005
        2006
        2007
     2008 (e)
     2009 (p)
           World economic growth                       Payment incidences index (base100= world average 1995-2000)



    Source: Loan Risk Administration, Coface Romania
                                                                Payment difficulty index
                                                                                    2008 evolution


                                                                              First 11 months. yoy

                                                         United States                                   66%

                                                        Great Britain                                   64%
                                                                    Spain                                                           131%

                                                                    Ireland                                70%
                                                           World level                           47%

                                                                              0%               50%                  100%                150%
                                                                              MAJOR RISK                                                                                   MAJOR RISK


                                                                           D                                                                                              D        Automotive Ind.
                                                                      C-Textile                                                                                     C-
  Western Europe                                           C                                                North America                                       C        Textile
                                                       C+ Automotive Ind / Construction                                                                    C+   Constructions / Air transportation

                                                 B-    Paper / IT
                                                                                                                                                B-
                                      B     Electronic parts / Air transportation                                                        B            IT

                           B+ / Equipment Ind / Telecommunication (equipment)
                            Retail                                                                                               B+       Retail

                A-    Steel / Pharma / Chemical                                                                      A-          Telecommunication (equipment) / Equipment Ind.
                                                                                                                                 / Electronic parts
          A    Telecommunication   (suppliers)                                                                 A
                                                                                                                     Telecommunication (suppliers) / Steel / Paper / Pharma / Chemical
    A+                                                                                                   A+
MINIMUM RISK                        2008 rating fall                                                 MINIMUM RISK                      2008 rating fall




  Source: Loan Risk Administration, Coface Romania
                          Financial crisis in Romania


•    High ticket consumer goods sales fell 10-30% in Nov/Dec 2008 vs 2007
•    Dacia sales fell 16,7% in 2008 and 55% in Dec 2008 compared with Dec 2007
•    Real estate transactions fell 70% in 2008 vs 2007
•    Exports fell 17% in December 2008 Vs. Dec 2007
•    Large dismissals forecast for H109. Dismissed employees at end of 2008 will lead to
     a possible 8% unemployment rate in 2009
•    Most affected industries: construction, metallurgie, automobile,, petrochimie Detail
     (Electronique et biens durables)




Source: Loan Risk Administration, Coface Romania


                                                                                            18
                                  Loan risk new vision
•    Client credit can no longer be overlooked
•    Vital to have most recent information about each
     client
•    Accounts receivables becomes priority over sales
     growth
•    Any negative information about a client must be
     analyzed carefully
•    Quick reactions imperative regarding any payment
     delays or negative information
•    Company’s financial health no longer enough to grant
     commercial credit
•    Traditional business relationship no longer a security
     element
•    In times of crisis no company can be considered a
     good payer

Source: Loan Risk Administration, Coface Romania
                              What needs to be done?

•    Restrict credit limits
•    Previous credit limits need to be adjusted with today’s market situation
•    Focus on most recent data about your clients
•    Seek additional quality information for new customers: industry trends, receipts and
     payments, lines of credit, guarantees and assets.
•    Exchange information between industry players (Vodafone/Orange)
•    Be attentive to negative information: slow or no payment incidences, payment
     ultimatums, State dues.
•    Good financial standing no longer a guarantee, industry wide risks need to be
     considered.
•    Coface suggests companies to not rely on one two major clients. Suggests smaller,
     frequent sales amounts, shorter credit terms, portfolio diversification .



Source: Loan Risk Administration, Coface Romania
                                                    Romania Survey and Findings

           Successful organizations Increased marketing expenses during recessions!
           Do this effectively, taking into account customer needs, expectations and market information. The
           Financial CrisisMeter* (Mercury Research) enables Romanian companies to anticipate effects of
           crisis.
Research Findings – issued on 14th of January 2009 (continued during February – July 2009):
1) Romanians are highly exposed to mass media information about the crisis: 63% declared they watched
      either occasionally, or constantly information about the crisis and only 4% did not hear about a
      financial crisis. Bucharest residents and higher educated people pay more attention to crisis related
      news than other categories investigated.
2) Survey confirms a strong pessimism during this time: more than half of respondents (53%) slightly more
       concerned about current personal financial situation compared with six months ago.

                         Exposure/                                                                                                Overall concern of
                                                                             Direct relation
                    information degree                                                                                              Romanians

3) There is lot of uncertainty about what it might happen. Romanians show high concerns for: income
      decrease, making debts, not being able to pay them, not able to maintain same life style (34%).
*Continuous tracking (17 November – 10 December 2008; 18 – 31 January 2009; 18 – 31 March 2009; 17 - 30 June 2009) of two categories of indicators: Personal money management
           and potential concerns and Trust in the Romanian financial industry. Find out what adults from Romania – people aged 18 + - feel and plan during the current economic
           context – from a national representative sample of 1100 respondents (high accuracy level – max sampling error ±2.9%), interviewed through face-to-face methodology in
           Mercury Omnibus.
                              Romania Survey and Findings

Research Findings – issued on 14th of January 2009 (Continued during February – July 2009):
4) However, direct effects of crisis are better acknowledged by more informed respondents. Higher degree
      of information, the higher the concerns about:

                                       Being unable to save/                Being unable to pay
          Losing the job
                                       invest as much as usual              the loan installments




      Are Romanians going to adjust family budget? If economical situation worsens, people probably
      reduce expenses for main categories in family budget: food (Retailers – should pay attention to
      merchandising to weather the recession), clothing and shoes (higher demand for used clothing?),
      house expenses. Also, level of income and education are important differentiators when it comes to
      budget adjustment strategies.
                          Recession 101: Key Learning

                                                             Can we compare to great depression??

                                                             •   Ben Bernanke, Chairman of the Board of
•   Average length of ten recessions since World War II          Governors US Federal Reserve, a scholar on the
    = 10.4 months, with range of 6 months in 1980                Great Depression, said the Fed has learned from
    recession to 16 months in 1981-82,.Ntural                    errors policymakers made in that era.
    "placeholder" time frame for the end of this
    recession would appear to be mid 2009.
                                                             •   Fed made two critical mistakes in 1930s -
                                                                 maintaining overly tight monetary policy and
•   However, given that recession is now 15 months               allowing financial system to collapse. Fed
    old, not approaching its trough yet, raises distinct         proactively reduced rates from 5.25% in
    prospect that it will exceed the length of the 1973-75       September 2007 to its current historic low and
    and 1981-82 recessions (both at 16 months),                  injected unprecedented amounts of liquidity into
                                                                 the financial system.

•   Critical question: What kind of recovery is likely to
    follow? Answer: probably a gradual one, unlike the       •   Absence of bank deposit insurance at time
    more typical pattern of past recessions roaring              caused catastrophic erosion to household wealth
    ahead, propelled by pent-up consumer demand                  and consumption. Today, FDIC insurance (
                                                                 recently elevated limit to $250,000) provides
                                                                 significant cushion; Response of economic
                                                                 policymakers is immeasurably faster and more
                                                                 aggressive now
                          Recession 101: Key Learning
                                                                    •    Romanians are:
•   The ultimate cure of a recession is letting it run its
    course."                                                               –   Consumers
•   The financial media often takes on a "sky is                           –   Have traditionally been savers
    falling" mentality when it comes to recession.
                                                                           –   Relatively debt free vs. West Europeans
    Bottom line is that recession is a normal part of
                                                                               and North Americans
    the business cycle
                                                                           –   Can more easily persevere the effects of a
                                                                               recession
    Weekly good news stories
    • Foreign investors’ stakes in companies operating on the Romanian financial market tripled in October 2008, foreign
    capital flow on financial market reaching EUR 4 bln.

    • Pirelli: Assemblies plant Bumbesti Jiu, estimated to open Q1 of 2009. In Q408, Pirelli announced it would add EUR
    250 million to current investments in Romania, develop industrial hub in automotive industry. By 2011, the total
    investments will reach EUR 500 million.

    • Financial chain Millennium Bank started planned expansion in Romania for 2009 with new branch opened in Suceava.
    Bank plans to open branches in 9 cities H109.

    • Carrefour exceeded the EUR 1 billion threshold in sales in Romania in 08, 37.4% more sales over previous year, to
    EUR 1.19 billion.

    • Axa Group has put EUR 6.2 million into a residential compound of 33 luxury apartments in the Baneasa area,
    planned to start March 09.

    •Jan. 03, 2009 Procter&Gamble will invest €100 million in second factory in Romania (hair care products) in Urlati,
    Prahova County. One few Greenfield projects in Romania.
               Personal approach to the Recession

In a downsizing economy, the best return on investment for your career may be to focus on your current
job. How?
1)   Think of ways to generate revenues or cut costs. Concentrate on finding places to pinch pennies, or
     identifying cheap new sources of revenue. Or both.
2)   Be visible. This isn't the moment to take an extended vacation. Your position could be eliminated while
     you're gone. Do not come ‘rolling in at ten o'clock’. Figure a way to stand out and distinguish yourself. If
     you're in sales, get your numbers up. Nobody will be laying off star salespeople.
3)   Talk up your contributions. Make sure you're adding value at work by going above and beyond your basic
     job responsibilities..
4)   Keep a broad perspective. Don't get a reputation as someone who only does what he or she is told to do.
     Pick your head up, look around, and get in on the action. Volunteer for crucial responsibilities, including
     tasks for which your boss is responsible.
5)   Get your skills up to date. Companies get rid of people whose skills are obsolete and replace them with
     people who are already trained. Join trade organizations and prove you're plugged in. Consider going back
     to school, show your employer you're serious about your career and performance.
6)   No whining allowed. Attitude does count – a lot. Management wants people who can boost morale during
     tough times. Happy workers are less likely to get laid off than people who dislike what they do. If you
     grumble about your job all the time, then maybe giving you the sack would really be doing you a favor.
Step 2: Businesses that do well

                Contrary to popular belief, some
                companies do well and even better
                during a recession
             Industries in high demand during a recession

1) Food retailers. The Food industry less affected in recessions because people have to eat i.e. Maslow’s fundamental
need # 2. Consumers may cut back on luxury food items but in times of continuous financial
pressure, people might spoil themselves by buying food items little more expensive to’ forget about life for
a while” Wal-Mart whose sales rose 3.4 percent in November ‘08, is a big beneficiary of consumers' downscaling..
Wal-Mart drives for more Mass. grocery business, The Boston Globe, February 10, 2009



2) Entertainment. One axiom that grew out of the Depression was that, in bad times, people go to the movies Box
office data from more recent downturns show conflicting signs on ticket sales: rose in the recession in the early 1980s.



3) Chocolate: Recession-proof. "In volume terms, growth in the premium chocolate segment has slowed somewhat in
recent months as a result of the global economic crisis. However, in value terms, this category is still growing," said
Josiane Kremer of Switzerland-based Barry Callebaut. “Brands that have the highest quality and offer superior taste
[that] are backed by strong brands already will probably have an advantage,"



4) Many US lotteries across the USA are experiencing record sales, driven by intense marketing, people who trying to
turn a lottery ticket into a ticket out of hard times. “When people view themselves as doing worse financially, they
purchase lottery tickets,” Emily Haisley, Yale School of Management who published research paper on lotteries in The
Journal of Behavioral Decision Making. The Gambling industry (casinos, sports betting etc) might be resilient to the
current crisis in Romania despite some well known casinos have announced important losses lately.
                    Industries in high demand during a recession
5) Video Games: Goldman Sachs forecast report predicted unlikely winner among media choices.“Video game sales are
in the home and, frankly, video games are perhaps the cheapest forms of entertainment on a dollar per hour basis
”Nintendo seems to have bucked the recession. Japanese video game manufacturer doubled November sales of the Wii
in the U.S. from a year ago, according to latest release on gaming sales.
Wii over a latte. “Solid middle class going to make substitutions to buy games. Now it’s buy a Wii and don’t eat out for a
month, or don’t take that ski trip,” “Or cut out Starbucks.”. “ Regardless of downturns, consumers pursue something fun,"
Mineo Koda , Nintendo said in an interview with The Korea Herald.




 6) Buyer and Seller of Used Office Computer Equipment, ( see ITLiquidators.com)
    cartridge refill companies
 7) Alcohol sellers.

 8) Auto Repair and Recycling

 9) Office Liquidators
                    Industries in high demand during a recession
10) Used Clothing

11) Bankruptcy Attorneys

12) Jewelry re-sale. Virginia-based company Goldrush has kiosks in malls asking customers to sell them gold and
silver – at a fraction of its value – so they can melt it down and resell it.

13) The Concert Business grossed under $4 billion worldwide in 2008, most ever for a year up almost 13 percent over
last year, according to Billboard magazine. "Overall, it's been a pretty good year for touring," said Ray Waddell, who
covers industry Billboard. "I'd never say it's recession-proof, but it's resilient."


 14) Indoor sports facilities. Developers say a number of factors make them confident . When families cut back on
vacations, they're likely to keep their children busy during school breaks with activities like indoor soccer camps . People
cut back on luxury trips and going to a fancy restaurant, but as far as youth sports, it's something people want to do for
as long as possible,"

15) Big-ticket luxury items will suffer, especially in the consumer electronics space. The exception will be so-called
"smart phones”.

16) Notebooks. Computer industry ships more portable computers than desktops, and part of the mix will be mini-
notebook computers, known as notebooks. Computer makers will sell more than 11 million notebooks worldwide in
2008, up from one million in ’07. Stripped-down portables (no DVD drive, less processing power) have stripped-down
price. Market leaders ASUS and Acer offer sub-$300 notebooks, and well as Dell and HP .Affordability of notebooks
makes them an ideal solution in emerging markets,.


17) Cloud services/computing. Software-as-a-service (SaaS) companies have long promoted themselves as more
capital-efficient alternatives to installed software solutions. Instead of financing big software purchases and installation,
companies can "pay as they go" under the cloud services model. Ex. Salesforce.com
                Industries in high demand during a recession

18) Virtualization. Helps companies reduce cost of operating machines such as servers. Technology allows single
piece of hardware to run systems or applications that previously had run on multiple machines – essentially allowing
companies to squeeze more out of existing hardware and even defer new purchases.
19) Broadband. American consumers are unlikely to part with their broadband connections, an Accenture study found.
They are more likely to get rid of cable television channels (once considered practically a utility) or their mobile phones
than their high-speed Internet connections. "It is absolutely recession-proof,"
20) Residential trade contractors                                      32) Process and logistics consulting services

21) Medicinal & biological products                                    33) Veterinary services

22) Medical equipment                                                  34) Security guards and armored car services

23) Pet and pet supply stores                                          35) Elementary and secondary schools, Universities

24) Passenger transportation                                           36) Ambulatory health care services

25) Consumer lending                                                   37) Physicians, Dentists, Specialty therapists

26) Financial transaction processing and clearing                      38) Outpatient care centers and Medical laboratories

27) Portfolio management Services                                      39) Blood Banks

28) Investment advice                                                  40) Homes for the elderly / Child care

29) Direct health and medical insurance                                41) Sports agents

30) Self-storage centers                                               42) Zoos and natural parks

31) Tax preparation services                                           43) Nail salons

                                                                       44) Local government administration
                    More industries in high demand

 Property companies Buying good-quality assets at distressed prices. Kept powder dry by staying in
cash last year and now out to exploit opportunities thrown by current downturn.

 Pawnbrokers (Amanet). Hard-up consumers are selling jewellery for cash and pawnbrokers act as
alternative credit source in absence of bank lending. Well-placed to benefit from tight credit conditions
and economic contraction pawnbrokers continue to report strong trading and customer growth.

 Funeral director is one type of company that will definitely not run out of customers in hard times like
the ones that we are facing.

 Specialist health and social care recruiter supplies nurses, pharmacists and specialist medical staff
to the NHS and other health care organizations doing well during a recession - health care sector
naturally resistant to recession – people still get ill in a downturn.

 Restaurant Group. This type of company could benefit from consumers' tendency to "trade down" in
a recession. The outlets tend to be in retail parks, which are popular with families at weekends. Many
people cut down on trips to expensive restaurants in lean times but will take their family out to see a film
and a meal.
                    More industries in high demand


 Companies which supplies individuals' credit histories to lenders are doing well because
knowing what your credit rating is has never been so important (coming soon in Romania).

 Door-to-door credit company. More borrowers are being turned down by mainstream lenders
and forced to look further afield (Provident Financial Romania).

 Insurance companies. Global shortage of capital in the insurance industry, as a result of the
credit crunch. Absence of new competitors puts established players with access to reliable pools of
capital .

 Company specialized in online trading services for retail, professional and institutional
customers. Market volatility creates more interest in such a market, so demand is high.
Industries in high demand through a
              recession
       Product /services revenue growth, last 12 months
No.                          Industry                         Sales Growth
1           Farm Product Raw Material Wholesalers               21.70%
2                 Support Activities for Mining                 17.76%
3     Remediation and Other Waste Management Services           14.85%
      Navigational, Measuring, Electromedical and Control
4                                                               14.80%
                 Instrumesnts Manufacutring
5                     Software Publisher                        14.18%
6                   Beverage Manufacturing                      13.69%
7                  Other Telecommunications                     13.46%
8         Support Activities for Agriculture and Forestry       13.44%       Industries from US
 9                      Waste Collection                        13.34%       that have experienced
10                Direct Selling Establishments                 13.33%
                                                                             significant sales growth
11            Medical and Diagnostic Laboratories               13.12%
12                 Other Food Manufacturing                     12.41%
                                                                              in the last 12 months
13      Medical Equipments and Supplies Manufacturing           12.26%       (2008) - privately
      Accounting, Tax Preparation, Bookkeeping, and Payroll                  owned companies
14                                                              11.87%
                            Services                                         only.
15                    Employment Services                       11.54%
16                      Security Services                       11.23%
17                   Outpatient Care Centers                    11.08%
18         Electrical and Electronic Goods Wholesalers          11.04%
19                          Bakeries                            10.84%
20                  Business Support Services                   10.81%
21         Management of Companies and Enterprises              10.78%       Source: Sageworks, Inc. Sageworks,
                                                                             Inc.
22       Computer Systems Design and Related Services           10.77%
23                    Special Food Services                     10.18%
24     Metal and Mineral (except Petroleum) Wholesalers         10.18%
            Local Headlines: Industries in high demand

Food retailers
Carrefour, Metro have made investment commitments in last few months to build more stores in Romania.

Selgros Cash&Carry chain, plans to invest some €30-40 million this year in two new stores, create 600 jobs.    Business
Standard, February 10, 2009

Trident hypermarket, supermarket networks will recruit 550 persons in 09 part of expansion plan, including Bucharest
market. Business Standard, February 4, 2009

Mega Image supermarket chain, continue expansion strategy, speed up the introduction of own branded products in
stores, create 360 new jobs in 2009 Business Standard, February 6, 2009

The Profi discount retailer, posted a 49 % annual rise in sales in January, most significant increase on first-price
product segment, surged 150 percent year-on-year. Business Standard, January 24, 2009

Carrefour posted a 12 percent annual increase in sales of own brand products in January, considering orientation of
clients towards less expensive products, own brands, and promotions. Business Standard, February 27, 2009

Travel industry
Happy Tour Romania, the largest local travel agency, focus its strategy on maintaining its corporate client portfolio.
“For 2009, we will focus on large, corporate clients, on maintaining and consolidating our client portfolio, and even
expanding this.
This is a year of crisis, and now, more than ever, people will want to get away from the stress and pressure of their
jobs and day-to-day problems
                          Jobs in demand through a recession
       The folks at Cisco want to hear from you. A survey commissioned by Cisco in July 2008 shows there will be a
 shortage of 60,000 of these workers through 2011


 1) Networking and Systems Administration. Movement towards online systems integration has trended upwards
 over time. As hackers continue to create new ways to compromise integrity of systems they attack, increasingly
 important for networks to be iron-clad-secure,maintain user trust and apositive public image.


 2) Business Analysis, Software Implementation. Professionals work with companies to figure out which software
 best suits their needs. install the software and teach staff.

 3) Accounting and audit jobs: Tax work, auditing, preparing company's quarterly reports still goes on, tough
 economy or not.

 4) Health care. Half of the 30 fastest growing jobs over the next 8 years will be in the medical field

 5) Administrative Assistant

 6) Tracking Accounts Receivable

 7) Business Analysis, Research

 8) Software Design and Development

 9) Nursing

10) Finance Staff
                    Jobs in demand through a recession (2)
11) Helping Commercial Borrowers: companies help buyers of commercial real estate — multifamily apartments,
office buildings and shopping centers — who want to take over the sellers’ mortgages, rather than get new loans.
Buyers may now have no other financing choice than to assume or take over the sellers’ mortgages.

12) Liquidating Machinery and Inventory: Banks dealing with troubled companies, need to liquidate business
property acquired through foreclosures. Monitoring declining asset values of companies that had pledged their
inventories and accounts receivable as security for loans. Auctioneers who travel the country, get 12 percent
commission for selling off business assets. Even in a soft market, there is always a buyer.

13) Advising Troubled Companies, restructuring advisers, are directly countercyclical to economy. Financial distress,
both before and after bankruptcy, ex. liquidity problems, expenses outpacing revenues; exhausting credit at financial
institutions; or creditors, once lenient in a tight cycle, may now be demanding payment. “Maintaining liquidity is probably
the most important thing you can do.”

14) Green Energy/Global Warming. Specifically, battery technicians, wind, solar, CO2 emissions technology,
nanotechnology, materials sciences, natural gas exploration and infrastructure, and nuclear.

15) Sales representatives and account/customer support. Companies view current economic slowdown as
opportunity to steal market share as competitors cut back, when the economy emerges to come out stronger than
ever. To do this, they need right talent to interact with external world.

16) Actuaries
As pension funds are hit by the volatile markets, trustees are turning to their actuaries
and pension advisers to maintain the stability of their schemes.
                         Startups in a Downturn

Q. What does Cisco, Oracle and Google have in common?
A. They were started in the worse possible economical times.


Lessons learned:

1) Makes sense to do research and development counter-cyclically.

2) Recessions can be really useful strategic opportunities.

3) Everything is cheaper during downturn, including cost of labor, materials, office space.

4) There’s less competition, both from incumbents putting out their own fires and startups finding it
harder to raise money.

5) Tough times force entrepreneurs to work on business models earlier, end up reaching profitability
more quickly than when money comes cheap. “The companies are tougher because they were
tested during a tougher time”.

6) Lotus software - another survivor. Owner said “If a product meets an unmet need, it doesn’t
matter if the economy is bad”.
                     Case Studies - HP Hewlett-Packard

Summary. HP born in a Palo Alto garage at end of Great Depression, January 1, 1939. Electronic company, initially
supported by a mere $538 investment, has grown into first technology business exceeding $104 billion in revenue in 2007.
1939 - Revenue: $5369. Employees: 2




What they did during Recession. After resisting global recession for most of 2008, Hewlett-Packard reported profit
dropped 13 percent for the first quarter of 2009.
New cost-cutting measures, including trims in employee benefits, salary reductions range from 2.5 percent for hourly
workers to 20 percent of CEO's base pay.
Some of money could be returned in bonuses for all employees, depending on the company's performance.
CEO vowed to keep profits up by continuing to cut costs. September cut nearly 25,000 jobs, or 6 percent of its work force,
over the next three years, to eliminate redundant positions from EDS.
Expects to save $1 billion in operating costs through layoffs, other expense reductions in 2009. however, number of
engineers working in R&D increased. "We're not cutting the critical innovation or sales resources," .Company would
continue to invest in "so we emerge from this recession in a more powerful position.




                                            Results Today
                                            • One billion customers in more than 170 countries on six continents.
                                            • HP has 321,000 employees worldwide.
                                            •HP's 2008 Fortune 500 ranking: No. 14
                                            •$1.9 billion in profit.
                             Case Studies - Vlasic
Summary. Vlasic Pickles grew out of Detroit creamery, fresh pickle business begun by Croatian immigrant Franko
Vlasic in 1920s. Vlasic's primary product, pickles packaged in glass jars, began production in 1942, during World War
II, and the business rapidly expanded in the post-war years, corresponding with growth in per capita pickle
consumption. Official website claims Vlasic was inventor of glass-packed, shelf stable pickle.




What they did During Recession. Slashed the
price of its products, it loaded them up into gallon jars and
sold the oversized products at Wal-mart for $2.97 - less
than the price of a quart of Vlasic sliced pickles found at
grocery stores.
Product worked for Wal-mart, garnered attention of
consumers. Big jar-o-pickles screamed value to Walmart’s
customers. Although, the fact that it was a jar of pickles
didn’t really matter. What mattered was that it was a big,
cheap jar of pickles!                                                   3 Dollar pickle jar…Thank you Walmart!
Vlasic was nothing more than in-store advertisement for
Wal-mart’s Everyday Low Prices. Gallon jar helped
company find its way to bankruptcy much more quickly. Its
earnings evaporated.
Price reductions do more than compromise earnings.                                      Results Today
They compromise customers’ perceived value of your
                                                                                         Today, Vlasic is owned by
products and services [your brand] which ultimately
                                                                                        Pinnacle Foods since its name
affects the long-term equity of the franchise.
                                                                                        change in 2001
                                Case Studies - Kraft

          Summary. “We’ve come along way since J.L.Kraft started selling cheese from a horse drawn wagon in 1903.
          Hard work, imagination and a commitment to bring the world its favorite foods



What they did During Recession.
1933, Kraft launched its iconic salad dressing/sandwich spread Miracle Whip - again, not in spite of the Depression, but
because of it.
This new miracle mayonnaise spread had instant appeal to Depression-weary consumers grown tired of the boring taste
of vegetables, salads, and sandwiches. Kraft Miracle Whip soon launched one of biggest food advertising campaigns to
ever grace the U.S. media -- from print to TV. Initial effort led to 22 weeks of almost non-stop advertising, including
weekly two hour radio show.

Not only was Miracle Whip a one-of-a-kind new product, it was relevant. Innovation is not a “good times only” exercise.
Innovation always matters. It must, however, be relevant to needs of the market. Within six months after initial launch, this
uniquely relevant new idea outsold all other brands of dressing and mayonnaise,went on to become a mainstay in
refrigerators across America.



Results Today. With revenues of $37 billion, Kraft Foods Inc. is one of the world’s largest food and beverage companies.
 Kraft products are present in more than 99% of U.S. households.
 Kraft markets many of the world’s leading food brands. Nine brands with revenues exceeding $1 billion and more than
50 additional brands with revenues greater than $100 million. More than 40 of brands are 100 years old.
 Bllion dollar brands include: Kraft, Jacobs, LU, Maxwell House, Milka, Nabisco, Oreo brand, Philadelphia, and Oscar
Mayer.
 103,000 employees worldwide, more than 180 manufacturing and processing facilities worldwide.
                               Case Studies - Apple
          Summary. Apple Inc. Designs and manufactures consumer electronics and software products, best-known
          products include Macintosh computers, the iPod and iPhone. Apple has established a unique reputation in the
          consumer electronics industry.



What they did During Recession. In 2003, Dow at historical lows over a 10-year period, Apple continued to invest.
When asked why he hadn’t reduced research and development spending when others in industry had experienced slow
down, Steve Jobs recalls: “What has happened in technology over the last few years has been about the downturn, not the
future of technology. A lot of companies have chosen to downsize, and maybe that was the right thing for them.
We chose a different path. Our belief was that if we kept putting great products in front of [customers], they would continue
to open their wallets.
That’s what we’ve done. We’ve been turning out more new products than ever before, and Apple is one of the only two
companies making money in the PC business. We’re not making a lot, but other than Dell, we’re the only one. Others are
losing money – a lot of money.”

Apple has history of remaining relevant during most difficult of times. Through innovation, Apple kept its pipeline robust, but
– more importantly has remained in front of customers.
Apple tells its story through new products.
New products are not only required to remain relevant, they are signs of hope to employees and to customers that your
company and your brand are valuable in their lives.

Results Today.
250 retail stores in nine countries and an online store where hardware and software products are sold.
 35,000 employees worldwide and annual sales of US$32.48 billion in its fiscal year ending Sept. 29, 2008.
 In 2008, Fortune magazine named Apple the most admired company in the United States.
 iPhone sales from that quarter surpassed RIM's BlackBerry sales of 5.2 million units. Up to September 30, 2008, the
iPhone represented 39 percent (US$4.6 billion) of the company's total quarterly revenues,
                        Case Studies - Gillette
Summary.
Gillette is a brand of Procter & Gamble currently used for safety razors among other personal hygiene
products. Gillette Company founded by King C. Gillette in 1901 as a safety razor manufacturer.
In 1999 Gillette as a company was worth US$43 billion and it was estimated that the brand value of
Gillette was worth US$16 billion. This equated to 37% of the company’s value, the same as
DaimlerChrysler.


What they did During Recession.
Innovation is a good cost. Gillette’s 1990 introduction of its Gillette Sensor brand of shaving products.
Launched in a recession, more than 8 billion Sensor razor blade cartridges and 400 million Sensors
razors have been sold.
By 1997, 49% of Gillette’s sales came from new products launched in the previous five years and R&D
spending had reached $212 million.




Results Today. P&G enhance its product performance and brand equity
between these disruptive innovations with meaningful product and design
initiatives every 12 to 18 months. In addition, they maintain a steady pace of
commercial innovation.
                           Case Studies
                   Paper products manufacturer
What they did During Recession
“Bad costs” involve investing in things such as fixed and working capital,
manufacturing, and general and administrative expenses. Investing in such
assets during recession - even though their presence is intended to yield cost
competitiveness or improve productivity often do just the opposite.

      A paper products manufacturer in UK invested in building a state-of-the-
art facility during the 1990s. The prevailing logic of the investment was that
new automation could replace employees working in their warehouses and
improve the efficiency in how they managed orders.

In reality, profits actually fell not only because of high depreciation charges, but
because of need to retain expensive consultants to “de-bug” the process,
software, and systems.

Customer service fell off dramatically as new system did not allow for flexibility
in prioritizing and re-prioritizing customer orders based on immediate needs
which led to a loss of business and a reduction in market share.

To compensate, the company reduced its prices in an attempt to win back
business only to see its margins erode even further.
                    So what…

 Your clients may have opportunities that you can discover/explore with them.

 Consider targeting some of these companies if you were not doing so in the past.

 Be creative by exploring different payment mechanisms instead of the typical supplier-client
relationship, ex. pay for success, pay in 3 months, bonus on cost cutting.

 Change the way you sell products. Developer who sells new homes is offering ability to ‘rent to own’
which is a fairly new concept in Romania. For a small deposit and reasonable monthly payments, you can
own your new home. At any time you can apply for a mortgage and pay the developer. Some conditions
apply:

Barter: If you can’t pay for something you can probably barter your services for other services and
products.

 Re-sale of products. Some fashion shops in New York are buying used brand name clothing and re-
selling after it was used only a few times. The Profit margins are good and customers get a sizeable
discount off designer clothes
Coffee break
        Step 3: Cut costs with a scalpel, not a
                      chainsaw.

Fortune magazine: 3 experts on how to cut costs:
An executive of low cost airline, SVP at medical supply
manufacturer and consultant at Bain & co:


Q1) How do I know where I am spending too much?
•   ‘Our team regularly goes each budget line by line. However cuts are made where there is the least
    impact on customers. We don’t take a chainsaw to cut costs – we prefer to be more surgical’.
•   Bring in third party groups that specialize in benchmarking. ‘We compare our supply chain with
    companies like Wall-Mart’. We look at our systems to see if we have redundancies.
•   Create a dedicated (cost cutting) team and have each person spends 50% of their time on it.
        Step 3: Cut costs with a scalpel, not a
                      chainsaw.
Q2. Are there cuts that are worth making?
•   Some will never be cut since it reinforces our corporate culture like bringing in customers into our
    head office to tell us how our products are doing.
•   Prioritize. Take on cuts that are large, easy to implement like consolidating suppliers. Be careful with
    changes that bring small savings but come at a big cost like cutting off coffee for staff which may
    lower morale.


Q3) What are some of the reductions that companies often overlook?
•   Some companies don’t look at creative ideas to avoid layoffs. To prevent overstaffing consider
    voluntary leave program without pay or flex time - keep their benefits and you get a reduced payroll
    while having access to trained, on demand staff.
•   50% of costs for most are associated with purchases. If you aim at your supply chain and those
    costs, you can avoid layoffs. It’s free money and easy to implement. Layoffs will cost you more in
    the long term when the market picks up again, and it will pick up again.
                      Other cost cutting strategies

1) Cash is King - liquidate assets and get rid of dead of stock. Start keeping some money aside in case the economy
does indeed get worse.

2) Good records - keep business records up to date to always know how you are faring. The more robust your records
the easier it will be to move faster in the case of a slump.

3) Batten down the hatches - When business is slow you have more time on your hands to look at ways of cutting costs.
Cut down on wastage and examine all your outgoings to Remove/ reduce all unnecessary expenses.

4) Speak to your lenders - Keep communication lines open with banks Discuss skipping payments (new in Romania.)
You are asking to capitalize interest to later date. This extends term of contract but cash flow will help you temporarily
Most Romanian banks are foreign owned, well known option in their home markets. Open talks with another lender just
in case your bank pulls the plug.

5) Examine your loans - in recession interest rates fall as government try harder to stimulate the economy - ideal time
to collate all your loans, possibly switch to longer payment terms and / or fixed rate loans. The European Central Bank
(ECB) has dropped interest rates by .5% to 2% and you could re-negotiate your Euribor loans to get better rates.


6) Negotiate harder with your suppliers - Ask for longer payment terms, demand quicker delivery times to require less
money tied up in stock. McKesson (generic drugs manufacturer) customers include big retailers under pressure to cut
costs as consumers grow stingier. For those retailers, negotiating significant cost reductions from suppliers of generic
drugs is tough, so McKesson offers them this proposition:
“Buy all your generics from us and redeploy your purchasing team to projects where it can achieve bigger savings”.
                          Other cost cutting strategies
 7) Improve your credit control - cash flow is king in recession so meet all customers especially delinquent. ones
 Send regular reminders and statements followed by a phone call the minute an invoice is overdue. Beware of clients
 faking payment problems. If you insist with the proper follow up you will be first in line to get paid.


 8) “Reduce the amount of credit extended to customers," says Scott Shane, professor of entrepreneurial studies at
 Case Western Reserve University and author of Illusions of Entrepreneurship. "Get the money fast by offering a discount"
 to those who pay up immediately.


 9) Videoconference instead of travel. Costco reduced in-person meeting costs with videoconferencing - 59 Managers
 that typically traveled began meeting virtually every other month. Savings: $750,000 US in 2008, $3-$5 million when
 they roll out nationwide. Consider using Skype.

10) Increase your Marketing – Yes increase! This is worst time to reduce your marketing budget. Goal: Keep, hopefully
increase your market share and the best time is in a recession. Best time to continually communicate to your customers
inexpensively (email and newsletter, appreciation letters, sending a brochure, loyalty program updates) and a perfect time
for you to get out of the office and talk to customers .
                                                                   McDonald’s has posted the best
                                                               financial results in its history. The stock
                                                              price has climbed handsomely in recent
                                                              years; it reached its highest point ever in
                                                              August: $67 a share. It closed last week
                                                                               at $60.07.
                              Despite the slow down BCR
                              has consistently
                              maintained their heavy
                              TV advertising weight
                Other cost cutting strategies

Cut across the board instead of cutting critical staff:
More benefits by cutting ‘across the board’ on expenses rather than shedding critical staff. You can
reduce salaries, pay no vacation and even cut back on expenses such as travel and mobiles
phones.

Examples:
Hewlett-Packard, cut 25,000 jobs following big acquisition, cut salaries by 2.5% to 20% and
reduced contributions to employee 401(k) plans (i.e. pension plans). HP asked employees to take
unpaid vacation days and extended a planned holiday shutdown to two weeks.

Test equipment maker Agilent Technologies taking similar approach. Linked portion of employees’
base pay to financial results, so costs fall automatically when profit declines. In December, 2008
Agilent trimmed salaries an additional 10%, eliminated 500 full-time positions, freeze hiring, limit
travel, cut temporary workers and mandate unpaid vacation.

Ask employees where to cut! Executives at Commercial Vehicle Group in US asked four
employees to devise plan to save additional $50,000 USD. The group identified $600,000 in
potential savings, including office supplies and cell phones, which it presented to CEO. “They went
after everything,” the CEO said.
         Substitute to marketing cost cutting
Creative marketing:
Case 1) Romanian large national retailer.
Low volume of customers visiting stores, approach was not to cut Marketing expenses but rather re-
direct them and try something different: Localized marketing; that is, communicate more effectively
to store’s catchment area or customers residing in vicinity (ex. flyers delivered through mail, Meshes or
Poster Boards, Promoters, etc) .



Case 2) French car Manufacturer with low market presence cannot afford NOT to advertize. They
understand that you must keep advertising “ otherwise people will forget about us”.


Online shoppers defy recession!
In UK, Capgemini e-Retail Sales Index showed online spending increased 19% in January
2009,predicting monthly growth of 15% for online sales throughout 2009.
“People go online for choice, price transparency and ability to research prices. These advantages are
even more acute in environment where people are watching spending."
Message. Romania online shopping is exploding. Even conventional products can now be acquired
online in Romania. Inexpensive distribution channel and market timing could not be better!
• Most respondents are still
coping with the crisis by cutting
                                              McKinsey Global Survey Results
costs, many are making more use
of long-term tactics suggesting
that see global economic turmoil
as new normal.

• 40 % of respondents expect
upturn to begin by end of this
year. Many executives are betting
on the United States to lead that
upturn..

• Companies sticking to tactics
they identified last fall as helping
them manage global economic
turmoil.

• Higher proportion of companies
taking longer-term actions such
as restructuring, hiring talent,
leaving     markets    altogether,
indicating that more see turmoil
as creating long-term structural
changes.

• Only a fifth of respondents say
their companies are reducing
philanthropic spending as result
of global economic turmoil.                                                                     Economic conditions snapshot: February 2009
                                                                                                Survey, Jan. 27, 2009, to Feb. 2, 2009,1,820
                                                                                                executives from around the world and represented full
                                                                                                range of industries and functional specialties.



                                       Source: McKinsey Global Survey Results – Economic conditions snapshot: February 2009, February 2009
           Workshop:


What has your company done to cut
   costs or reduce expenses?
                         Step 4: Perfect time to plan
These difficult times forces us to become more creative. Take a step back and realize that there are a lot of areas that
need improvement and the time could not be better:

1. People planning
    Consider contingency plan for your key staff?
    Who are critical?
    Good time to test out future leaders ( new function, new department)
    Shift to other departments? How many would accept flex time, layoffs keeping them on the payroll long enough to
     qualify for retirement, medical or stock benefits.
    Critical part of core is continual development of employees. Yet remarkable how many businesses cut training and
     development in a downturn. The best never do.
    Just as most investment managers look like geniuses in a bull market, most employees can look like excellent
     performers in booming economy. Identify the impostors. Working hard at that task is important, because if you need
     to lay people off, as you well may, it's critical that you choose wisely.
    Subtler danger: When salaries, bonuses are reduced, you may be tempted to reduce them equally. Wrong message
     sent to best performers, who will feel they're being punished rather than rewarded for great work. Hay Group
     consulting survey of World's Most Admired Companies as ranked by Fortune, best companies take extra pains to
     reassure "most driven and focused employees," - ones most important to keep. Instead of spreading the pain, reward
     your best workers well, even in a recession.
    Make sure that pay arrangements don't encourage too much (or too little) risk. Deere incentives are based on
     economic profit, including capital costs, bonuses earned in any given year are paid out over four years; if performance
     falters, part of the bonuses can be canceled. The system encourages long-term thinking and seeing the recession as
     part of a larger cycle.
                   Step 4: Perfect time to plan

2. Product and service planning


 When this Recession is over, will your business be more competitive or less? Most
  successful companies never stop funding their most critical competencies - product
  innovation, customer service, or anything else. ‘We're protecting the innovation pipeline
  so we come out of this strong’
 Everyone would like to pay less, especially in recession; dangers of price chopping are
  greater than you may realize. McKinsey research finds that in a typical S&P 1500
  company, a price cut of 5% would have to generate increased sales volume of 19% in
  order to pay for itself - and that almost never happens..
 Reduce inventories, accelerate payments from customers, and delay payments to
  suppliers, all while making sure to keep cash on hand most bankruptcies are caused by
  firms running out of cash, not because of a hit to earnings.
 Companies should also take a good hard look at inefficiencies, restructure if necessary,
  says SVP at Booz Allen Hamilton. “A recession gives you good excuse for doing what
  you need to do anyway,". End of the day, recession can turn out to be useful for firms
  well-positioned to withstand it.
                  One page marketing plan


Complete Marketing plan requires weeks to prepare. In absence of time and
urgency to get results consider preparing a ‘one page marketing plan”.
Why?

1)   Drafting a plan implies setting a vision and direction.
2)   Weather competition and grim market news: “Stick to the plan”.
3)   You are the expert in your field.
4)   Forcing yourself to put on one page forces you to concentrate on priorities.
5)   Easier to remember when you wish to recall actions.
6)   Easier to communicate to staff and company.
7)   “Best part of having a plan...is that you can always change it”...
8)   “A company without a plan is like a ship without a rudder”
                   One page marketing plan - format

     Market review, regulatory framework, Competition.
     Market projections ‘05-‘10: ex. 960M Euros
     Internal environmental analysis

2)   Vision and Mission:
     Vision:     That ABC company will be recognised in Romania as a re-energised brand and
                 renowned for its progressiveness, value and service.
     Mission:    To create and fulfil demand for leading-edge data and voices services to all of Romania.

     Approach:               Reinforce family values
                             Seek new niches for products/promote new brands
                             Launch products faster .

     Assumptions:            Minimum company wide execution speed will take at least 2 years
                             Mobile penetration increase will erode ABC’s revenue/image and will
                             create mass churn. Re-balancing will further increase churn.

     Objectives:             Gain strong position in Business segments, 1) SME, 2) LA, 3) KA
                             Reduce churn. Launch New ADSL faster than competition.
                One page marketing plan - format
Market Segmentation: SME = Short term focus. Develop strategy for KA/LA

Products and Services: ADSL + ‘ADSL in a box’ for massive indirect channel take-up, VOIP.

Tariffs:         5% premium over closest competitor for voice and data products.
Distribution:    Direct: Implement ABC Look and Feel (shops). Improve product offering, POSM
                 Indirect: Encourage early adopters, reward well and communicate frequently.
                 Provide COOP and single out new players with major awareness campaigns.

Marcomms plan:        Brand values exercise. Implement next ‘Big idea’ for image.

PR, sponsorship:      1 major event every 6 months. Optimise COR relationship, find significant
                      sponsorship (football, Tennis); steal from competitors

Marketing budget:           7.3 M Euros
Marketing Organisation:     Find Subject Matter Experts for Trade Mktg, Segments, ADSL and Program
                            Management. Train, substitute, provide opportunities, push or relieve staff.

Action Plans:
1) Launch ADSL with huge campaign
2) Improve top of mind awareness of ABC and ADSL Brand by 20%
3) Plan bundling upon immediate billing system launch
4) Plan for wireless access and voice (mobile partner)
5) Improve all customer points of contact. Offer money Back guarantee
6) Steal staff from competitors
                Step 4: Perfect time to plan
3. Business planning - mergers and acquisitions.

   Recession is great time to buy assets cheap yet few companies do it. Merger activity
peaks when markets are at their height, while most companies see a recession as a time to
hoard resources until things improve. Companies are twice as likely to acquire businesses
in their major segments during an upturn as they are during a downturn, the opposite
of what makes sense.

 If can't follow Warren Buffett's dictum to be greedy when others are fearful, but you're
financially strong, this is your moment. McKesson says, "This is a great opportunity to pick
up small companies and their talent," for which he is scouting avidly.

BCR’s Business segment approach will consist of two major activities in 2009: Re-
financing of working capital loans and mergers and acquisitions

 TotalSoft, believes that the period ahead will be an opportune one for acquisitions on both
local and region market; €4.5 million will be allocated for company takeovers, with funds to
come from the company’s majority shareholder, the Global Finance investment fund.
           Tools Supporting Business Planning*

         In a recession, making the right decisions becomes vital to success of company.

        Decisions should be based on facts - less on assumptions, changes that might
        occur in relevant markets (competition, consumer habits), opportunities or threats
        that might arise.

        Ability to adapt to changes, act fast becomes critical to success. Some of the best
        “tools” that can back-up your decision making process, especially in recession
        periods, are BUSINESS INTELLIGENCE and MARKET RESEARCH services.




* Suggested by www.marketscope.ro
                     Tools Supporting Business Planning*
BUSINESS INTELLIGENCE and MARKET RESEARCH services.

    Suggested crisis /              Business                   Outputs supporting decision making
    recession actions             Intelligence &                     and business planning
                                Research Solutions
                                                             Thorough analysis of data, insights from key market
Assess crisis impact on        Syndicated / multiclient       participants to capture evolution of market sales,
market size and structure      sector studies                 competitors’ shares, market trends, structural changes
                                                              and scenario based forecasts.

Cost cuts / Optimisation of    Support in identifying and    Identification and screening of alternative suppliers
                                                              providing lower rates than the current suppliers, upon
supply chain                   assessing new suppliers        client’s specifications.
                                                             Building up-to-date databases with potential customers
                               Databases of potential         and effective direct marketing programmes
Sales-orientation (to          new customers / Sales         Profiling of key potential customers and sales lead
generate cash)                 leads generation / Direct      generation.
                               marketing                     Updated status of major ongoing / announced projects
                                                              that might generate sales opportunities.
                               Collection of distributor /
                               retail prices in the market   Reports on price levels, promotions in the market on
Price monitoring               for own and competitor         regular basis (monthly, quarterly)
                               products
Keep an eye on                 Competitive intelligence      Spot early, relevant moves of key competitors
competitive moves in the       tracking & quick industry /   Learn from competitors and get prepared to counteract
market                         company profiling              adequately




* Suggested by www.marketscope.ro
                        Tools Supporting Business Planning*
    Suggested crisis /         Business Intelligence          Outputs supporting decision making
    recession actions          & Research Solutions                 and business planning
                                                            Identify new consumption and purchasing habits of
                                                             individuals, corporate customers
                                                            Determine new consumption motivations that occur as
                                                             consumers/ corporate customers confront with crisis
                                                             constraints
  Identify changes in         Ad-hoc/multiclient usage      Monitor changes that might occur in brand perception
  consumer behavior           and attitudes studies (U&A)
                                                            Assess customer satisfaction, investigate lapsed
                                                             customers to quickly spot problems and keep current
                                                             customers
                                                            Identify switching patterns that might occur as brand
                                                             loyalty decreases
                              Ad-hoc/multiclient consumer
  Update positioning                                        Identify newly formed market segments and update
  strategies                  segmentation and               positioning strategy for your products/services if needed.
                              positioning studies
  New product                 Ad-hoc concept testing and    New product variations could be created to better meet
  development                 product design studies         needs of consumers in recession times.

  Design new advertising                                    In recession times, consumers could react to different
  strategies                  Ad-hoc advertising research    stimulus than usual therefore, different ways of
                                                             promotion, advertising messages might be needed.
                                                            Assess performance of sales and customer service
                                                             personnel
  Improve performance of      Repetitive mystery shopping   Identify communication problems and generate solutions
  own personnel and retail    and audits
                                                             to new problems (tensions tend to rise during hard times)
  partners                                                  Evaluate retail & distribution partners performance
                                                             (allocated shelf space, stock management,
                                                             merchandising etc.)


* Suggested by www.marketscope.ro
                 Segment Management

 Identifies and develops marketing programs, segment targeted campaigns, offers,
  inputs into products/pricing opportunities


 Identifies co-marketing programs, acquisition opportunities, up-sell opportunities,
  retention programs


 Prepares and manages marketing plan tailored to each segment to drive
  acquisition, up-sales/increase customer value, market penetration, minimizing
  churn, and building customer retention, and product mapping which translates into a
  comprehensive 12-month Roadmap to drive revenues and retention.
                Segment Management
                   TOUCH POINTS

                        Market Analysis
                            Sizing
                           Planning              Customer
  Retention                                     Acquisition


                          Customer
                        Experience and
                         Satisfaction          Product Development/
Competitive                                    Product Management
 Insights                                            Pricing
                                                     Delivery
                                   Programs
                                  Promotions
                Brand             Campaigns


: Direct Ownership      :            Cross Functional Alliance
      Segment Management in Practice
   Cross-Functional Teams for each Segment


                                       Focus of Cross-
CUSTOMER                 SEGMENT      Functional Teams:
  CARE                  MANAGEMENT

                                      Meet monthly
                                      Review cross-
            PERMANET                 functional ROADMAP
             CROSS-                   Flag and/or initiate
           FUNCTIONAL                key market actions
              TEAMS
                                      Adjust roadmap
                                     based on market and/or
                         PRODUCT
                                     internal needs
 SALES
                        MANAGEMENT    Drive the business
                                     Align key activities
                Ideas and trends for your customers

Fitness club: A free two-week membership
-.Customers must attend six supervised classes during the two weeks.
- They pay $25 upfront, and upon completion of the six sessions, they get the money back.
- "My belief that club and industry is recession-proof industry because the more stress people have, the more they need
a physical outlet for that stress,"

2) Zero revenue: Club will freeze accounts or let members downgrade their memberships if they stumble into hard times.
-"It shows our clients we understand the recession is here and it's going to stay for a while”
-“I'd rather have a member who's paying $10 a month that will continue to come to the club. In six months, maybe they'll
have a job and will resume their membership. Or maybe they'll decide they don't want to participate.
        Either way, we've kept that client for six more months”.


Creative home buying:
- Developers have cut apartment prices,
- offered free furniture, parking spaces,
- offered to pay notary fees or VAT,
- Pay rent or allow buyers to rent the apartments until they are able to secure loans to pay for them


 E-commerce market will continue to increase because
 in Romania in 2009 it is define as a very young market
 and during recession periods people are looking to cut
 time and budget in order to buy products and services.
 So whoever wants to buy online business, now it’s the
 time!
              Ideas and trends for your customers
New ways of leasing cars: Business Review, January 19
- Operational leasing is regarded as a solution: ensures reduced and predictable costs for the entire duration of the
leasing contract and provides solutions for the moment of sale.
- In Romania operational leasing accounts less than 2% of the new car market Vs. CE Europe it makes up 30% and in the
West around 60-70%.
-Why: Romanians are used to buying cars and not renting them, even if it is more efficient to rent them. Sixt closed last
year 200 short-term rental contracts, out of total car pool of 5000 units and for this year estimate about 7000 cars. They
estimate that they will sell 500 used cars this year because during this period of crisis people will buy second-hand cars
instead of new cars.


Inexpensive Marketing: Mobile Marketing is the new trend that Romanian specialized companies are trying to follow this
year. The market players estimates that mobile market will experience a real boom in 2009. The probability for this market
to reach EUR 4 million is very high due to important players support and the quantification which can be done in real time.




                                                                       All Night Sales (1958)
                                                                       In an effort to overcome declining auto sales,
                                                                       one of the hardest hit sectors of the slump, the
                                                                       Beyer DeSoto dealership of St. Louis,
                                                                       Missouri , USA put its salesmen on duty for 64
                                                                       hours straight, as part of a sell-a-thon that
                                                                       raised sales 73%.
          Ideas and trends for your customers

Online vouchers:
Number of online searches for retail discount vouchers jumped massive 143 per cent, final quarter 2008, while visits
to banking websites also increased as customers sought best deals to interest rate cuts. In recession, more and
more retailers turned to online discount vouchers to woo reluctant shoppers.

Director of research at Hitwise: "British consumers are turning to the internet to save money and get best deals as a
result of credit crisis.. Internet is being used to combat effects of recession and find latest banking deals, money off
coupons and financial advice..




Hyundai:
Last fall Hyundai began testing the idea of a return policy rather than simply piling more discounts onto its already
low-price vehicles. The guarantee covers the difference between the value of the car and the amount the buyer owes,
or negative equity, up to a maximum of $7,500.

Sales of the Hyundai Sonata, a full-size sedan that costs less than $20,000, surged 85 percent in January and one
reason for jump is Hyundai’s new marketing strategy of promising to let buyers return their vehicles, at no cost in
most cases and with no penalty to their credit rating, if they lose their job or income within a year.
To their credit, they struck at the core of what’s bothering people.
                             Step 5: Over communicate
                                Preliminary thoughts
   Observe how you behave these days Difficult times require you to sharpen your own skills. Take
    classes, read books and network with others in your industry, learn from them. Get out of the office
    and talk to people.
   Get involved in Business association. Look for joint venture opportunities. Determine priorities. Where
    should you be spending your time? Make your company bigger, better and stronger? Leave the
    worrying to your competitors and instead seek opportunities, stay positive. The right energy and focus
    into your business-despite the economy-the results can extraordinary.
   Most executives hunker down in uncertain times, keeping quiet until they believe they have some
    answers. That's the opposite of what's needed. In a recession all company's constituencies are
    nervous: Employees are worried they'll be fired, suppliers that they won't be paid, customers that
    quality will decline or prices rise, investors that the stock will tank, communities that operations will
    close down. Silence just makes them worry more.
    Good managers respond by communicating even more than usual. They find that they needn't have
    all the answers, but they do need to say what they're thinking and be honest about conditions.
    Julia Stewart, of IHOP restaurant chains, says, "It's important to assure your employees by making
    clear your vision, making sure they know that you care, and making sure that you're direct and
    honest. They just want the truth."
   John Hammergren, CEO pharmaceutical distributor McKesson, has been holding employee town
    halls, where his goal is "to give confidence that we're in a great industry, McKesson is in leadership
    position." Every good company has upbeat facts, even in a recession, and need to be repeated.
                    Step 5: Over communicate.
Staff
1)   Prepare a communications plan for staff. Including direct approach to what’s going on, your
     concerns as Leader and possible outcomes - good and bad. If this goes well, this may happen… If
     things get worse, yes some of us may lose our jobs.
2)    Be honest and sincere. People feel you hiding things and will respect you if you communicate
     without hesitation what contingency plans are available. By being direct, employees will stop the
     rumor mill . By the way, You need to communicate! Not your HR Director. Staff want to hear it
     from you.
3) Remain focused on the task at hand. Still need to sell, serve or create something. Employees need
   to be reminded that job has to get done. Remind them their individual contributions matter to
   organization.
4)   Be appreciative. Thank You goes a long way.
5) Be open to feedback. Encourage feedback. Listen but remembering the most fundamental rule of
   encouraging feedback: You have 2 ears and one mouth…use them accordingly. Listen,
   acknowledge and don’t defend the idea/feedback since this is counterproductive.
6)   Be consistent with your public messages. If you cut back on staff and approached by media or
     outside stakeholders, remember to keep in mind that any initiative will consider the impact on
     employees. This way you are consistent internally and externally.
                    Step 5: Over communicate.
Customers
1)   Communications plan to the public. What are the messages will be communicated by the team.
     Involve Marketing/PR team/agency involved in brainstorming, come up with key messages. Once
     messages are established, formalize them, convey to staff what external messages to give to
     customers when they call.
     Same messages from the CEO and Call center Rep will avoid damage control when it comes to
     dealing with customers, the public or media.
     Get market intelligence, validate what customers are saying lately about you and address it with a
     coherent communications plan.
2) Reassure your clients that we all feeling this recession but you want to remain close to customers,
   encourage their feedback. Encouraging them to speak to their sales representatives, re-looking at
   business practices to help them is a good idea and a CEO blog are only a few examples. Sending
   a thank you note for their business will go a long way.
3) Honesty goes a long way. In these difficult times, customers will remember what you communicate
   to them and if your firm was open and honest in your communications.
4) Use the Leader of the organization for all communications. Customers want to hear it from the
   leader , want to be reminded of your strength on the market and want reassurance that your
   company will be around in 6 months.
                    Step 5: Over communicate.
Customers – maintaining the link

Microsoft Dynamics CRM:

Assuming database of 10,000 clients, integrate the Excel files including customer data or paper form.
Interacts with all Office software.
CRM, it is completely scalable.
Cost: one server license + 2 user licenses plus 30 man days at integration =      12-15k Euros.

Implementing quick CRM solution to communicate promotions, loyalty program reminder or ‘Thank You” note will
ensure that customers keep you top of mind.

Proactive and consistent outbound communications to advertize and low price CRM, this will give you results now
when times are tough and when things start to improve.
                          Thank you letters

Benefits of “Thank you” letters:


•   Develop better, stronger interpersonal relationships with your customers.


•   Reduce, lower any buyer's remorse any customer or client feels after their purchase.


•   Gain free word-of-mouth advertising when customers tell everybody about
    unexpected "thank you" letter from your company, how good they feel about doing
    business with us.


•   Have an opportunity to resell more (or other) services or products. Promote this by
    including a special price or discount offer in the "thank you" letter.


•   Enhance your company ‘s image as consumer-oriented business.
           Thank you letters - Background
Loyalty Facts


•   68% of consumers change their place of business for little or no reason.
•   Costs between five and seven times more to find new customer than retain one.
•   A 5% reduction in lost customers can increase profits by up to 75%.
•   Only 3% of businesses have a 'lost customer' reactivation program.
•   Existing customers not as price sensitive as new ones, require less sales time, administration and
    advertising.
•   A first-time customer has a 30% chance of becoming a long-term profitable customer. If they buy
    three times relatively quickly, their chance of becoming long-term more than doubles to 67%.


Contact Tips


•   Birthdays and anniversaries are special time for everyone. These occasions are great opportunities
    to build customer relationships by writing to them, offering an exclusive offer that day.
•   Send a 'thank you' letter or incentive to customers who refer new customers to your company.
•   When a customer purchases a service, there is often certain period of time till they purchase again.
    Contact them then, when warranties are about to expire: offer a service agreement.
                  Thank you letters - summary
WHAT
•   Different „Thank you” letter types (New Subscriber Thank You Letter , How Did I/We Do? Letter,
    Happy Anniversary Letter , At Random, Customer Appreciation Letter , etc.)


WHO
•   Generally, “thank you” letters should be addressed to all your customers.
•   Depending on “Thank you” letters’ different purposes they should be addressed to different targets
    (e.g. new customers, loyal customers, potential churners, etc)


WHEN
•   Anytime, but on specific occasions (after the sale is closed; each year of subscription with your
    company)


WHY
•   Most inexpensive, effective way to thank customers for their continued business, remind them of
    your services. Simple gesture is a way to ensure that customers feel appreciated and will return to
    give us future business.


WHERE
•   Direct Mailing – either together with your invoice, or sent separately.
                     Step 5: Over communicate.

Investors
1)    Prepare a communications plan for the
     investors. Key messages should be simple,
     consistent and clear.
2)   Maintain a dialogue with them.
     Ownership structure will dictate who and
     when you should be communicating to,
     Don’t’ wait till the next board meeting for
     delivering key messages
     Be proactive, call them up and you may get
     some good advice on some reading they
     have made or peers they have in other
     businesses.
     That is after all one of their inherent duties
     as an owner.
                         Next steps…

1) Re-read these slides and share them with your team and management

2) Prepare a one page Marketing plan

3) Prioritize on what can be done quickly

4) Communicate:
    1) Company's current situation with staff,
    2) Help required by team
    3) First deliverables stemming out of the plan
    4) Messages to your customers and shareholders

5) Be part of the solution by inspiring confidence

6) Get ready for the recovery
         End in sight - Significant events,
                    milestones
Economy could begin to recover in April, claims
Gordon Brown

On April 2, the G20 world leaders, including Barack Obama, will
come to Britain to work towards a "global deal and grand bargain,"
Gordon Brown. The world could then "move towards recovery in the
next few months" if agreement was reached, because the trust and
confidence in the world economy need to be rebuild.

Gordon Brown, heavily criticized for introducing a £12 billion VAT
believes fiscal stimulus measures are best way of sparking
economic recovery because priority is people facing mortgages
problems, problems with jobs and problems with small business
finance.

Pressing hard to persuade other countries to adopt measures that
were adopted in Britain. Global problem can be solved only through
global action and international co-ordination.

March 13, 2009. First time in months that Dow Jones and Nasdaq
have 3 days of consecutive gains!
Procter&Gamble establishes a second factory in Romania
Source: Standard.ro, January 03, 2009


                                            Outlook

        Whole Foods Market CEO John Mackey says:

        "We have to manage the business differently." Economic growth used to be a tail
        wind that the company built into its business plans.
        “One of the leadership challenges I have is that that assumption is no longer true.
        " The new era "requires a different mindset - we have to be more frugal, to think
        about every expense, every capital investment - because we won't be bailed out by
        growth." .

         It's hard to be upbeat in a recession, but it truly is an opportunity. Marathoners and
         Tour de France racers will tell you that a race's hardest parts, the uphill stages, are
         where the lead changes hands.

         That's where we are.

         When this recession ends, when the road levels off and the world seems full of
         promises your position in competitive pack will depend on how skillfully you manage
         right now.
10 Reasons to Love a Recession
           Family Dinners

    Shorter Lines at the gas Pump

           Less Junk Mail

           More Discounts

            Free Fitness

           Bargain SUVs

    Business Startup Opportunities

        Growth in Gardening

         Musical Inspiration

          New Perspectives
Dig the well before you are thirsty.
Chinese proverb




             To have courage for whatever comes in life -
             everything lies in that.
             St. Teresa of Avila (1515-1582)
             Reformer
This mess started by a lack of confidence and
will end with renewed confidence
Paul Renaud
Business Coach
                         How we can help

Renaud Investments

   Renaud Investments is Romania’s leading Marketing Coach providing companies
   help on how to optimize the 4 P’s - Product, Price, Place and Promotion of your
   organization.

   We coach the CEO and management teams in areas such as:

   • Restructuring commercial teams
   • Business development tools and activities to complement your database of clients
   • Interim management in Marketing communications, Market research,
   Segmentation, Product development, Sales and Customer Care.
   • Marketing plan development and rollout
   • Strategic plan elaboration, rollout and management team alignment

   Our clients:
   Renaud Investments have Coached and provided effective solutions to both Fortune
   500 and Small and Medium size (SME) companies.
Suggested reading

Comprehensive program based on developing an awareness of how
perceptions and assumptions hinder success---in business as well as
personal relationships.

Broaden your way of thinking and lead to greater opportunities and effective
problem solving.

1) Be Pro-Active
2) Begin with an End in Mind: Start with a clear destination to understand
where you are now, where you're going and what you value most.
3) Put First Things First: Manage yourself. Organize and execute around
priorities.
4) Think Win/Win: See life as a cooperative, not a comprehensive arena
where success is not achieved at expense or exclusion of success of others.
5) Seek First to Understand: Understand then be understood to build the
skills of empathetic listening that inspires openness and trust.
6)Synergize: Apply principles of cooperative creativity and value differences.
7) Renewal: Sharpen the saw. Preserving and enhancing your greatest
asset, yourself, by renewing the physical, spiritual, mental and
social/emotional dimensions of your nature.

				
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