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- Despite extensive research and thus a vast amount of prior literature on the subject, there is still limited agreement over which course of action should be followed in order to allow firms to maximize performance both during recessions as well as in the recovery phase of recessions. The purpose of this thesis is therefore to utilize and add to prior literature by elaborating a set of recommended strategies for firms in the automobile industry to follow to ensure the best possible performance in periods of economic downturn and during the subsequent recovery periods. Six different strategies emerging from prior literature were identified as being capable of steering firms in the automobile industry into the direction of good performance and good recovery. These were then tested by considering case study data collected at three distinct automobile manufacturers in Belgium. In-depth interviews were conducted with the highest ranking member at the companies’ offices in Belgium. The results indicate that firms in the automobile industry seeking to maximize recessionary as well as post-recessionary performance should adopt the following strategies: Firstly, companies should seek diversification opportunities. With recessions come opportunities to make smart investments and enter into new market segments. Secondly, so as to mitigate risk and share the financial burden brought about by a recession, firms should seek external corporate development (through M&A’s or strategic alliances) provided that the partners are of cultural and strategic fit. Furthermore, aggressive expenditure in R&D should be maintained and the firms should continue to release new products. Improvements to an enterprise’s products and services must persist so as to avoid losing ground to rivals. New products catered specifically to consumer demands should continue to be released in order to stimulate demand during and after the recession. Lastly, firms with unique characteristics or products should emit signals that are susceptible to influence market valuation and thus financial performance. Market signalling allows a firm to send positive signals to potential investors and other stakeholders which can help maintain share price as high as possible in spite of the arduous economic climate in which the firm is in.
Citations
Abou Jaoude, M. (2018). Commercial Strategies To Follow In Periods Of Economic Downturn. https://dial-mem.test.bib.ucl.ac.be/handle/2078.2/6888