Description
Strategic Planning In The Global Economic Crisis And Recession
Daši? G., Dr, Assistant professor,
Modern Business School, Beograd
Anufrijev A., Dr, Associate professor,
Business School of professional studies Cacak, Modern Business School,
Beograd
STRATEGIC PLANNING IN THE GLOBAL ECONOMIC CRISIS AND
RECESSION
The global economic crisis and recession, strategic planning is a necessity. New business environment
manifests a new approach to strategic planning and strategic thinking defines the activities with the
organizational aspects of the movements in the region has the greatest influence firm size. The financial
plan, the deficit of financial assets is a condition that requires new forms of adjustment to market conditions.
The recession and the Serbian go hand in hand and the lack of funds, the impact of economic crisis and
economic recession are conditions that require urgent and strategic action planning.
Introduction. Strategic management positions is one of the initial concepts of
strategic management. This concept belongs to the so-called. ranking management
systems. The most applicable when it comes to business and enterprise development,
but in terms of discontinuity which are known or predictable. In this way provides
the enterprise management by anticipating change. The environment, however the
company provides opportunities to explore the predictability of threats and
opportunities for the further successful development. The strategic position of
companies includes firms in the market position against competitors. This means that
the strategic position should correspond to the level of turbulence and turmoil in the
market.
The tendency of strategic planning. The issue of strategic planning has
become increasingly popular 60's of last century, primarily by works of Andrews and
Ansoff and their rational, strategic analytical models.[1] The events of the 70s and
80s of the last century (First and second oil crisis, etc.), pointed to one important fact:
prescriptive approaches to strategic planning have little practical application in terms
neizvesnog and highly turbulent business environment. A special contribution in
compiling with the practice of strategic planning is considered to have originated
when the made the difference between the anticipated strategy and the strategy of
surprise. In the 90's, under the influence of information-technology boom, the
Internet and globalization, there has been a change in business environment, which
are manifested on a different approach to strategic planning and strategic
management. In their works, a large group of authors, leading by Mintzberg, in
strategic management theory introduces the notion of strategic thinking and
analytical approach to the real distinction between the activities of strategic thinking
and strategic planning activities.[2]
The terminology in the field of strategic management often can be a contentious
[3], in the sense that different authors use similar terminology in different ways in an
effort to present their ideas as fresh and new. This is the case with strategic thinking
and differentiating strategic thinking from strategic planning. efines strategic
thinking as a way of solving strategic problems at the individual and institutional
level, combining rational and generative thought process. [4] In the process of
strategic thinking - thinking and action can be: the overlap, linear or something in
between. [5]
Strategic planning in practice, really strategic programming, the articulation and
elaboration of the strategic vision that already exist. [6] Strategic planning is a label
that should be rejected because the strategic planning prevents strategic thinking.
Strategic planning is focused on the analysis (decomposition of the goal into steps or
stages, the realization of each of the steps or phases and estimate the expected results
of each step or phase). Strategic thinking focuses on the synthesis, ie. use of intuition
and creativity in formulating an integrated perspective, ie. vision, where the
organization should be heading. Proponents believe that strategic planning involves
the synthesis analysis, and that the best practice, strategic planning, strategic
development strategy thinking are synonyms. This opinion is based on the
assumption that the prediction is possible and the process of developing a strategy
can be formalized.
Opponents of the argument agree that some changes (eg, seasonal) can be easily
predicted, but prediction of discontinuities, such as technological innovation or the
current global economic crisis, it is extremely difficult. The essence of strategy is a
learning process, based on the action. Formal systems can never acquire, understand,
and synthesize quantitative information. Strategies can be developed and
inadvertently, without conscious awareness of senior management, often through the
learning process. Proponents of this idea, strategic planning practices are seen as
strategic programming articulation and development strategies that already exist.
According to them, only when managers understand the difference between planning
and strategic thinking, it is possible to make the return process to the point where the
strategy should be shaping what managers learn from all sources (both from his own
experience or the experience of others in the organization, and the quantitative data
such as market research, etc.), and then synthesizing the vision of the direction of
learning in which an organization needs to continue operations.
For most companies strategically respond to the recession are extremely
complicated and complex. [7] An important assumption in terms of recession
environment is defined strategic action in large and small organizations, because
their way of organizing requires different approaches to strategic planning. In a
numerous literature in management and entrepreneurship, there is no agreement
concerning the connection between the size of the company and respond to changes
in the environment [8]. However, there is agreement that the company response is
mostly determined by the competitive advantages and distinctive competencies that
are available to them.
Large companies their competitive advantage can derive from economies of
scale, economies of scope and learning effects. [9] These competitive advantages
allow large companies to "cope" with the changing environment, such as legislative
changes and globalization. This theory implies the small company in precarious
conditions laid in the turbulent changes in the environment. By their nature, smaller
or start-up companies do not have the volume that would reduce the fixed costs of
production and limited production and geographical framework, and deficit in the
institutional infrastructure that can provide the benefits of learning effect and the
accumulation of knowledge.
However, some authors argue that the smaller, entrepreneurial firms may have a
unique competitive advantage. [10] According to them, entrepreneurial firms may
possess a competitive advantage because, hypothetically, they are closer to the
market and their customers and bring their business to changing market needs. The
main reason for the increased vulnerability of small firms to changes in the
environment is the lack of financial resources. [11] Lack of resources to small firms
reduces the maneuver space in the evolving environment and reduces the choice of
available strategies. Consequently, it can be concluded that the smaller firms more
sensitive to changes in the environment, as opposed to large companies often will not
respond to changes.
Small companies, unlike large companies, often do not implement formal
planning processes, so that when faced with threats from the environment, are not
forced to follow routines that would otherwise have to follow when formulating
policy responses. [12] Competitive advantage of small firms lies in their adaptability,
they are not burdened by a numerous bureaucracy, which is often the case in large
companies. [13] Therefore, small firms can potentially have a competitive advantage,
which stems from their sensitivity to changes in the environment and their ability to
timely and promptly respond.
Impact of economic recession on small, entrepreneurial company was not
subject to any special interest experts in this field. [14]
Small businesses and large companies differ in the way they perceive the effects
of the recession, and therefore differ in their responses to recession. [15] The results
of the research, reveal that while a larger companies respond by cutting costs, smaller
firms are focused on the tactics of market segmentation, which is led the author to
conclude that "finally, this article shows that small companies is different enough
from large companies and that require special attention to the business policy
makers.[16] Iinvestments in sales and marketing during the recession period can
positively affect business performance improvement. This means that small
entrepreneurial firms can better protect yourself from the recession continued
investment, than by reducing investment in the periods before or during the
recession. Two-stage study was based on interviews with managers of small firms in
the UK, and conducted, shows that for small firms that have advanced during the
recession in common the following: long-term capital structure, building long-term
close relationships with clients and proactive approach to strategic planning. [17]
In a study of 110 different manufacturing companies from different industrial sectors,
related the strategy applied during the economic recession with the performance,
especially with the ROE - Return On Equity and net revenues from sales. [18] The
study reveals several important factors that positively and negatively influence the
final effect. The companies whose balance sheet structure is dominated by long-term
loans, and they are focused on developing new products and flexible manufacturing
processes (lean manufacturing) have achieved a higher return on capital. They also
found a similar correlation between the strategies that were applied during the
recession and the performance measured by changes in cash flow from sales.
Companies that produce cheaper products have achieved better business
performance. In addition, companies that their intention was to expand distribution to
another, developed geographic areas have shown a better cash flow to sales.
However, the study authors caution that the organizations in which managers rely too
much on cost reduction strategies, there is a tendency of declining cash flow to sales.
The debate on the impact of firm size on the strategic activities of the recession is
continuing, especially if the size of firms can serve as an important indicator of how
you will react in a recession.
Generally, when a connection size of the company and its strategic response to
the recessionary trends, the experts in this field provide two divergent strategic
direction. On the one hand, proponents of traditional strategic management (which
draws its roots from the industrial organization), assume that the size of the company
provides a competitive advantage arising from economies of scale, economy
framework and learning effects. [19] On the other side are advocates of the opinion
that the less that is. entrepreneurial companies can use their flexible organizational
structure and processes when responding to recessionary tendencies in their
environment. [20]
Both theoretical approaches have received sufficient validation through
empirical support, leading to two sets of diametrically opposed opinions about the
impact on the size of the company a strategic response to the recession changes in the
environment.
Where to focus the strategic action. The first problem that has crystallized in a
crisis is reducing the financial liquidity of the global market. While one group of
experts as the problem is virtual money, the other problem of liquidity is defined as a
technical. However, although the problem is solved, even partially, problematic
consequences that is "survived" is that the availability of credit conditions have
become difficult. The financial sector is to first recover the insurance sector. On the
one hand, the advanced economies or developed economies is the premise for the
growth and development of the insurance sector, while the other side of the insurance
sector has no impact on credit availability. Advanced economies does not suppress
the real economic sector. However, with premium revenue from $ 1.753 billion,
Europe was the leading region in 2008. (The year in which the crisis has escalated).
Beyond Europe, the amount of premium income, there were North America with
total income in 2008. of $ 1.356 billion and Asia, with 933 billion. The most
developed four countries in the insurance sector accounted for more than ½ the
premium, while the U.S. and Japan viewed together account for 40% of the total
assets of insurance.[21]
Series of bankruptcies of large financial organizations in the United States
prompted an increase in systemic risk. Against systemic risk financial markets do not
provide any insurance. According to the analysis of the extraordinary volumes
Economic Outlook OECD, financial crisis originated in the United States expanded
to the whole world has turned it into a big drop in the loan approval. Recapitalizated
banks by state money, now do not want to re-acquire non-performing and doubtful
debts and assets held for fulfillment of obligations. [22] When it comes to emerging
market economies, they were at the end of 2008. faced with the outflow of foreign
capital and experienced a weakening of local currencies in double-digit percentages.
Another clearly identified problem refers to the social aspect and the increase in
unemployment. The problem is the impact on each country's macroeconomic
stability. Analyzing the U.S. unemployment rate in the period between 2006-2008.
can be concluded that ranged between 4.5% and 5%. Due to the strong impact of the
global economic crisis, which in March 2009. and transferred to the real sector of the
economy, appeared the tide of layoffs. In the G8 countries, the unemployment rate in
2009. recorded the highest percentage since World War II. In the United States 3.2
million people have lost their jobs during 2009. or 7.2%. In Canada, the
unemployment rate was 6.6% or 0.1 million workers lost their jobs. In the EU, rates
range from 8.2% in France (0.2 million in personnel) to 6% in the UK. In Japan, the
unemployment rate was 3.1%, in same time in Russia unemployment rate was 6.1%.
The highest unemployment rate recorded in China where unemployment was 9.4% in
cities, due to the fact that 10 million migrant workers lost their jobs.
OECD in November of 2010. in semi-annual report concluded that the low
recovery uslad U.S. economy slows down global economic recovery. [23] The same
report notes that several factors indicate that the forecasts could be further reduced
due to currency tensions and possible debt crisis in Europe. OECD report predicts
that world growth in 2011. slow to 4.2% from 4.6% which was in 2010. and that the
value from the 2010. reach only 2012. In comparison, the forecast in May of 2010.
expect the global growth of 4.6% in 2010. and 4.5% in 2011, while the forecast for
2012. was not published. The same report predicts that the U.S. economy is expected
to grow by 2.7% in 2010. 2.2% in 2011. and 3.1% in 2012. Only six months earlier
OECD predicts that the world's largest economy recover from a deep recession in
2009. with growth of 3.2% in 2010. and 2011. [24]. As for the Eurozone, the OECD
expects it the 2010th and 2011.god. achieve economic growth by 1.7%, while the
local governments are trying to reduce government spending, and states such as
Greece and Ireland to fight against indebtedness.
Table 1.
The performance of the U.S. and Europe financial markets, in 2009.
- - - - - - - - - - - % market share - - - - -- - - - - - - -
Sectors Markets
2008 2009 Europe USA Japan Rest of
Asia
Rest of
world
Banking
Investment banking revenue
Commercial banking, assets
Cross-border bank lending
$bn
$ trillion
$ trillion
58.9
31.2
96.4
66.3
30.0
95.5
33
65
53
50
10
14
-
8
10
6
16
12
16
11
7
Insurance
Insurance, global premiums
Marine insurance
$bn
$bn
4220
23.4
4066
22.9
40
59
28
9
12
10
9
1
8
13
Fund mgt.
Pension assets
Mutual funds assets
Assets of high net worth
individuals
Hedge funds
Private equity
$ trillion
$ trillion
$ trillion
$bn
$bn
25.9
18.9
32.8
1500
181
28.8
23.0
39.0
1700
91
21
33
24
23
15
63
48
27
68
67
4
3
-
-
-
5
25
6
15
17
12
11
24
3
3
Securities
Equity market turnover
Domestic bonds
Int. bonds
New equity issues
$ trillion
$ trillion
$ trillion
$ trillion
114
59.3
27
1010
81
65.1
25.6
1054
16
29
24
33
58
38
59
23
5
18
1
6
8
2
19
3
4
7
15
19
Derivatives
OTC derivatives $bn 2173 2698 65 24 2 - 5
Forex
Foreign exch. turnover $bn 4281 5056 56 18 6 13 2
Izvor: IFS (http://www.thecityuk.com/assets/Uploads/Global-Financial-Markets-Regional-Trends-2010.pdf)
The financial sector in a mature economy is characterized by the fact that
transfers are risky since the nineties of the twentieth century were encouraged
through investment funds, either in equity or in speculation. They needed ever higher
profits, because their investors voracity which progressively increased appetite and
have lost the brakes and bounds. No doubt, shy, they were encouraged pension funds,
which the demographics favored. The hypothesis of neoliberal economics in finance,
said this: "All are equal in the economy, but the financial sector "more equal" than
others."
One of the major causes of the crisis also were problems in corporate
governance. The assumptions are, in the case of the current crisis, it is not just a mere
expropriation of shareholders and the classical weak government oversight, but the
problem is reflected in the limited understanding of complex and geographically all
the increased business, which inevitably led to the wrong strategic choices. Numerous
studies have shown that there are clear patterns of behavior that are repeated and
which have significantly contributed to the deepening crisis occurs. These models
include: a long director of the mandate, the asymmetry and concentration of power in
the hands of an executive director who is also chairman of the board, passive non-
executive directors and inexplicably low level of financial expertise on the boards of
the most complex financial institutions in the world. These features analyzed
managing boards are certainly contributing to poor risk management and poor
supervision of the administration. [25]
The necessity of a strategy from the perspective of Serbia. Serbia is the world
economic crisis faced in the maelstrom of their own crisis in the economic, social and
political sphere. In other words, the local and the global crisis were crossed and
poured into the obscure and potentially disastrous course. The strategic plans should
aim to have a recovery should not be neglected dramatic economic indicators. To
illustrate, here are a few. GDP growth in the 2010. was 1.5%, and it is estimated that
in 2011. growth be 3%. Industrial production in 2009. reduced by about 12% in 2009.
and was about 15.5% lower than in 1998. In 2010. its growth was 2.9%. In the same
year compared to last year as the company recorded sales growth in retail trade at
current prices increased by 6.8% in constant prices decreased by 1.2%. Of the 16
transition countries of Central and Southeastern Europe, Serbia is the competition on
the penultimate 15th place. There has been an absolute decline in the competitiveness
of grade point average from 3.9% in 2008. to 3.84% in 2010., and the relative
decline, as it fell to the list of countries with 13th place in 2008. 15th place in 2010.
The actual sale of Telekom Srbija could be only a link in a series of errors, because
the state lost sales revenue of one billion euros of Telekom, and also, the sale would
negatively affect the development of domestic industry. Compared to the previous
year in the fall of 2010. planted by 0.6% less wheat in relation to the ten-year average
autumn sowing (2000-2009) surface is less by 16.2%. In 2010. was achieved budget
deficit amounting to 107.7 billion dinars. Revenue amounted to HRK 662.0 billion,
while expenditures were made in the amount of 769.7 billion dinars. In December,
the deficit amounted to 12.0 billion dinars. Serbia's debt at the end of January 2011.
year was 12.13 billion Euros, up 38 percent of gross domestic product (GDP). In
Serbia, in 2010. According to the Agency for Bankruptcy Supervision were 691
active bankruptcy proceedings, and of that number 375 is a state-owned enterprises
and 316 private. Through the log that is synchronized since 2005. when he made the
bankruptcy reform law passed in 1447, a total bankruptcy cases. The number of poor
persons is about 700,000 people and is growing. Bearing in mind that the number of
unemployed increases, that the pensions and salaries of a large number of persons
frozen and that inflation was high - standard of living for the huge number of people
is reduced.
We believe that the economic but also social crisis in Serbia will not exceed new
borrowing. Serbia on the basis of the previously stated above, we need long-term
strategy of economic development and social reform, and such a strategy in addition
to the unquestionable national interest, and must be of national and / or institutional
in nature.
Conclusion. We analyzed changes in the business environment was carried out
by the impact of strategic planning at three levels. At the most general level,
instability and unpredictability of technological, economic and political environment
significantly affects the flexibility and the way companies react. Second, this
development has forced companies worldwide to review existing strategies and find
new strategic solutions. For example, China's rapid industrialization and information-
telekomunkacionog sector in India has encouraged the spread of outsourcing
production to China and use of business services in India. The expansion of the
telecommunications market, entertainment, computers and computer equipment and
consumer electronics, requires the companies in these sectors to plan strategies to
compete on a much larger market area. Finally, the new realities of the 21st century
the need for a completely new approach to strategic planning and the nature of the
business strategy and the increased role and responsibilities of company management.
Without any doubt the impact of the crisis will be far less favorable than you at first
assumed. The situation in Serbia is far from optimistic, because the crisis in Serbia
synergy of national and local crisis. Crises are an integral part of the economic cycle
and based on previous experience, we can assume that we are in a time of
transformation into a new social order, and he will force the creation of new models
of strategic management.
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doc_873387629.pdf
Strategic Planning In The Global Economic Crisis And Recession
Daši? G., Dr, Assistant professor,
Modern Business School, Beograd
Anufrijev A., Dr, Associate professor,
Business School of professional studies Cacak, Modern Business School,
Beograd
STRATEGIC PLANNING IN THE GLOBAL ECONOMIC CRISIS AND
RECESSION
The global economic crisis and recession, strategic planning is a necessity. New business environment
manifests a new approach to strategic planning and strategic thinking defines the activities with the
organizational aspects of the movements in the region has the greatest influence firm size. The financial
plan, the deficit of financial assets is a condition that requires new forms of adjustment to market conditions.
The recession and the Serbian go hand in hand and the lack of funds, the impact of economic crisis and
economic recession are conditions that require urgent and strategic action planning.
Introduction. Strategic management positions is one of the initial concepts of
strategic management. This concept belongs to the so-called. ranking management
systems. The most applicable when it comes to business and enterprise development,
but in terms of discontinuity which are known or predictable. In this way provides
the enterprise management by anticipating change. The environment, however the
company provides opportunities to explore the predictability of threats and
opportunities for the further successful development. The strategic position of
companies includes firms in the market position against competitors. This means that
the strategic position should correspond to the level of turbulence and turmoil in the
market.
The tendency of strategic planning. The issue of strategic planning has
become increasingly popular 60's of last century, primarily by works of Andrews and
Ansoff and their rational, strategic analytical models.[1] The events of the 70s and
80s of the last century (First and second oil crisis, etc.), pointed to one important fact:
prescriptive approaches to strategic planning have little practical application in terms
neizvesnog and highly turbulent business environment. A special contribution in
compiling with the practice of strategic planning is considered to have originated
when the made the difference between the anticipated strategy and the strategy of
surprise. In the 90's, under the influence of information-technology boom, the
Internet and globalization, there has been a change in business environment, which
are manifested on a different approach to strategic planning and strategic
management. In their works, a large group of authors, leading by Mintzberg, in
strategic management theory introduces the notion of strategic thinking and
analytical approach to the real distinction between the activities of strategic thinking
and strategic planning activities.[2]
The terminology in the field of strategic management often can be a contentious
[3], in the sense that different authors use similar terminology in different ways in an
effort to present their ideas as fresh and new. This is the case with strategic thinking
and differentiating strategic thinking from strategic planning. efines strategic
thinking as a way of solving strategic problems at the individual and institutional
level, combining rational and generative thought process. [4] In the process of
strategic thinking - thinking and action can be: the overlap, linear or something in
between. [5]
Strategic planning in practice, really strategic programming, the articulation and
elaboration of the strategic vision that already exist. [6] Strategic planning is a label
that should be rejected because the strategic planning prevents strategic thinking.
Strategic planning is focused on the analysis (decomposition of the goal into steps or
stages, the realization of each of the steps or phases and estimate the expected results
of each step or phase). Strategic thinking focuses on the synthesis, ie. use of intuition
and creativity in formulating an integrated perspective, ie. vision, where the
organization should be heading. Proponents believe that strategic planning involves
the synthesis analysis, and that the best practice, strategic planning, strategic
development strategy thinking are synonyms. This opinion is based on the
assumption that the prediction is possible and the process of developing a strategy
can be formalized.
Opponents of the argument agree that some changes (eg, seasonal) can be easily
predicted, but prediction of discontinuities, such as technological innovation or the
current global economic crisis, it is extremely difficult. The essence of strategy is a
learning process, based on the action. Formal systems can never acquire, understand,
and synthesize quantitative information. Strategies can be developed and
inadvertently, without conscious awareness of senior management, often through the
learning process. Proponents of this idea, strategic planning practices are seen as
strategic programming articulation and development strategies that already exist.
According to them, only when managers understand the difference between planning
and strategic thinking, it is possible to make the return process to the point where the
strategy should be shaping what managers learn from all sources (both from his own
experience or the experience of others in the organization, and the quantitative data
such as market research, etc.), and then synthesizing the vision of the direction of
learning in which an organization needs to continue operations.
For most companies strategically respond to the recession are extremely
complicated and complex. [7] An important assumption in terms of recession
environment is defined strategic action in large and small organizations, because
their way of organizing requires different approaches to strategic planning. In a
numerous literature in management and entrepreneurship, there is no agreement
concerning the connection between the size of the company and respond to changes
in the environment [8]. However, there is agreement that the company response is
mostly determined by the competitive advantages and distinctive competencies that
are available to them.
Large companies their competitive advantage can derive from economies of
scale, economies of scope and learning effects. [9] These competitive advantages
allow large companies to "cope" with the changing environment, such as legislative
changes and globalization. This theory implies the small company in precarious
conditions laid in the turbulent changes in the environment. By their nature, smaller
or start-up companies do not have the volume that would reduce the fixed costs of
production and limited production and geographical framework, and deficit in the
institutional infrastructure that can provide the benefits of learning effect and the
accumulation of knowledge.
However, some authors argue that the smaller, entrepreneurial firms may have a
unique competitive advantage. [10] According to them, entrepreneurial firms may
possess a competitive advantage because, hypothetically, they are closer to the
market and their customers and bring their business to changing market needs. The
main reason for the increased vulnerability of small firms to changes in the
environment is the lack of financial resources. [11] Lack of resources to small firms
reduces the maneuver space in the evolving environment and reduces the choice of
available strategies. Consequently, it can be concluded that the smaller firms more
sensitive to changes in the environment, as opposed to large companies often will not
respond to changes.
Small companies, unlike large companies, often do not implement formal
planning processes, so that when faced with threats from the environment, are not
forced to follow routines that would otherwise have to follow when formulating
policy responses. [12] Competitive advantage of small firms lies in their adaptability,
they are not burdened by a numerous bureaucracy, which is often the case in large
companies. [13] Therefore, small firms can potentially have a competitive advantage,
which stems from their sensitivity to changes in the environment and their ability to
timely and promptly respond.
Impact of economic recession on small, entrepreneurial company was not
subject to any special interest experts in this field. [14]
Small businesses and large companies differ in the way they perceive the effects
of the recession, and therefore differ in their responses to recession. [15] The results
of the research, reveal that while a larger companies respond by cutting costs, smaller
firms are focused on the tactics of market segmentation, which is led the author to
conclude that "finally, this article shows that small companies is different enough
from large companies and that require special attention to the business policy
makers.[16] Iinvestments in sales and marketing during the recession period can
positively affect business performance improvement. This means that small
entrepreneurial firms can better protect yourself from the recession continued
investment, than by reducing investment in the periods before or during the
recession. Two-stage study was based on interviews with managers of small firms in
the UK, and conducted, shows that for small firms that have advanced during the
recession in common the following: long-term capital structure, building long-term
close relationships with clients and proactive approach to strategic planning. [17]
In a study of 110 different manufacturing companies from different industrial sectors,
related the strategy applied during the economic recession with the performance,
especially with the ROE - Return On Equity and net revenues from sales. [18] The
study reveals several important factors that positively and negatively influence the
final effect. The companies whose balance sheet structure is dominated by long-term
loans, and they are focused on developing new products and flexible manufacturing
processes (lean manufacturing) have achieved a higher return on capital. They also
found a similar correlation between the strategies that were applied during the
recession and the performance measured by changes in cash flow from sales.
Companies that produce cheaper products have achieved better business
performance. In addition, companies that their intention was to expand distribution to
another, developed geographic areas have shown a better cash flow to sales.
However, the study authors caution that the organizations in which managers rely too
much on cost reduction strategies, there is a tendency of declining cash flow to sales.
The debate on the impact of firm size on the strategic activities of the recession is
continuing, especially if the size of firms can serve as an important indicator of how
you will react in a recession.
Generally, when a connection size of the company and its strategic response to
the recessionary trends, the experts in this field provide two divergent strategic
direction. On the one hand, proponents of traditional strategic management (which
draws its roots from the industrial organization), assume that the size of the company
provides a competitive advantage arising from economies of scale, economy
framework and learning effects. [19] On the other side are advocates of the opinion
that the less that is. entrepreneurial companies can use their flexible organizational
structure and processes when responding to recessionary tendencies in their
environment. [20]
Both theoretical approaches have received sufficient validation through
empirical support, leading to two sets of diametrically opposed opinions about the
impact on the size of the company a strategic response to the recession changes in the
environment.
Where to focus the strategic action. The first problem that has crystallized in a
crisis is reducing the financial liquidity of the global market. While one group of
experts as the problem is virtual money, the other problem of liquidity is defined as a
technical. However, although the problem is solved, even partially, problematic
consequences that is "survived" is that the availability of credit conditions have
become difficult. The financial sector is to first recover the insurance sector. On the
one hand, the advanced economies or developed economies is the premise for the
growth and development of the insurance sector, while the other side of the insurance
sector has no impact on credit availability. Advanced economies does not suppress
the real economic sector. However, with premium revenue from $ 1.753 billion,
Europe was the leading region in 2008. (The year in which the crisis has escalated).
Beyond Europe, the amount of premium income, there were North America with
total income in 2008. of $ 1.356 billion and Asia, with 933 billion. The most
developed four countries in the insurance sector accounted for more than ½ the
premium, while the U.S. and Japan viewed together account for 40% of the total
assets of insurance.[21]
Series of bankruptcies of large financial organizations in the United States
prompted an increase in systemic risk. Against systemic risk financial markets do not
provide any insurance. According to the analysis of the extraordinary volumes
Economic Outlook OECD, financial crisis originated in the United States expanded
to the whole world has turned it into a big drop in the loan approval. Recapitalizated
banks by state money, now do not want to re-acquire non-performing and doubtful
debts and assets held for fulfillment of obligations. [22] When it comes to emerging
market economies, they were at the end of 2008. faced with the outflow of foreign
capital and experienced a weakening of local currencies in double-digit percentages.
Another clearly identified problem refers to the social aspect and the increase in
unemployment. The problem is the impact on each country's macroeconomic
stability. Analyzing the U.S. unemployment rate in the period between 2006-2008.
can be concluded that ranged between 4.5% and 5%. Due to the strong impact of the
global economic crisis, which in March 2009. and transferred to the real sector of the
economy, appeared the tide of layoffs. In the G8 countries, the unemployment rate in
2009. recorded the highest percentage since World War II. In the United States 3.2
million people have lost their jobs during 2009. or 7.2%. In Canada, the
unemployment rate was 6.6% or 0.1 million workers lost their jobs. In the EU, rates
range from 8.2% in France (0.2 million in personnel) to 6% in the UK. In Japan, the
unemployment rate was 3.1%, in same time in Russia unemployment rate was 6.1%.
The highest unemployment rate recorded in China where unemployment was 9.4% in
cities, due to the fact that 10 million migrant workers lost their jobs.
OECD in November of 2010. in semi-annual report concluded that the low
recovery uslad U.S. economy slows down global economic recovery. [23] The same
report notes that several factors indicate that the forecasts could be further reduced
due to currency tensions and possible debt crisis in Europe. OECD report predicts
that world growth in 2011. slow to 4.2% from 4.6% which was in 2010. and that the
value from the 2010. reach only 2012. In comparison, the forecast in May of 2010.
expect the global growth of 4.6% in 2010. and 4.5% in 2011, while the forecast for
2012. was not published. The same report predicts that the U.S. economy is expected
to grow by 2.7% in 2010. 2.2% in 2011. and 3.1% in 2012. Only six months earlier
OECD predicts that the world's largest economy recover from a deep recession in
2009. with growth of 3.2% in 2010. and 2011. [24]. As for the Eurozone, the OECD
expects it the 2010th and 2011.god. achieve economic growth by 1.7%, while the
local governments are trying to reduce government spending, and states such as
Greece and Ireland to fight against indebtedness.
Table 1.
The performance of the U.S. and Europe financial markets, in 2009.
- - - - - - - - - - - % market share - - - - -- - - - - - - -
Sectors Markets
2008 2009 Europe USA Japan Rest of
Asia
Rest of
world
Banking
Investment banking revenue
Commercial banking, assets
Cross-border bank lending
$bn
$ trillion
$ trillion
58.9
31.2
96.4
66.3
30.0
95.5
33
65
53
50
10
14
-
8
10
6
16
12
16
11
7
Insurance
Insurance, global premiums
Marine insurance
$bn
$bn
4220
23.4
4066
22.9
40
59
28
9
12
10
9
1
8
13
Fund mgt.
Pension assets
Mutual funds assets
Assets of high net worth
individuals
Hedge funds
Private equity
$ trillion
$ trillion
$ trillion
$bn
$bn
25.9
18.9
32.8
1500
181
28.8
23.0
39.0
1700
91
21
33
24
23
15
63
48
27
68
67
4
3
-
-
-
5
25
6
15
17
12
11
24
3
3
Securities
Equity market turnover
Domestic bonds
Int. bonds
New equity issues
$ trillion
$ trillion
$ trillion
$ trillion
114
59.3
27
1010
81
65.1
25.6
1054
16
29
24
33
58
38
59
23
5
18
1
6
8
2
19
3
4
7
15
19
Derivatives
OTC derivatives $bn 2173 2698 65 24 2 - 5
Forex
Foreign exch. turnover $bn 4281 5056 56 18 6 13 2
Izvor: IFS (http://www.thecityuk.com/assets/Uploads/Global-Financial-Markets-Regional-Trends-2010.pdf)
The financial sector in a mature economy is characterized by the fact that
transfers are risky since the nineties of the twentieth century were encouraged
through investment funds, either in equity or in speculation. They needed ever higher
profits, because their investors voracity which progressively increased appetite and
have lost the brakes and bounds. No doubt, shy, they were encouraged pension funds,
which the demographics favored. The hypothesis of neoliberal economics in finance,
said this: "All are equal in the economy, but the financial sector "more equal" than
others."
One of the major causes of the crisis also were problems in corporate
governance. The assumptions are, in the case of the current crisis, it is not just a mere
expropriation of shareholders and the classical weak government oversight, but the
problem is reflected in the limited understanding of complex and geographically all
the increased business, which inevitably led to the wrong strategic choices. Numerous
studies have shown that there are clear patterns of behavior that are repeated and
which have significantly contributed to the deepening crisis occurs. These models
include: a long director of the mandate, the asymmetry and concentration of power in
the hands of an executive director who is also chairman of the board, passive non-
executive directors and inexplicably low level of financial expertise on the boards of
the most complex financial institutions in the world. These features analyzed
managing boards are certainly contributing to poor risk management and poor
supervision of the administration. [25]
The necessity of a strategy from the perspective of Serbia. Serbia is the world
economic crisis faced in the maelstrom of their own crisis in the economic, social and
political sphere. In other words, the local and the global crisis were crossed and
poured into the obscure and potentially disastrous course. The strategic plans should
aim to have a recovery should not be neglected dramatic economic indicators. To
illustrate, here are a few. GDP growth in the 2010. was 1.5%, and it is estimated that
in 2011. growth be 3%. Industrial production in 2009. reduced by about 12% in 2009.
and was about 15.5% lower than in 1998. In 2010. its growth was 2.9%. In the same
year compared to last year as the company recorded sales growth in retail trade at
current prices increased by 6.8% in constant prices decreased by 1.2%. Of the 16
transition countries of Central and Southeastern Europe, Serbia is the competition on
the penultimate 15th place. There has been an absolute decline in the competitiveness
of grade point average from 3.9% in 2008. to 3.84% in 2010., and the relative
decline, as it fell to the list of countries with 13th place in 2008. 15th place in 2010.
The actual sale of Telekom Srbija could be only a link in a series of errors, because
the state lost sales revenue of one billion euros of Telekom, and also, the sale would
negatively affect the development of domestic industry. Compared to the previous
year in the fall of 2010. planted by 0.6% less wheat in relation to the ten-year average
autumn sowing (2000-2009) surface is less by 16.2%. In 2010. was achieved budget
deficit amounting to 107.7 billion dinars. Revenue amounted to HRK 662.0 billion,
while expenditures were made in the amount of 769.7 billion dinars. In December,
the deficit amounted to 12.0 billion dinars. Serbia's debt at the end of January 2011.
year was 12.13 billion Euros, up 38 percent of gross domestic product (GDP). In
Serbia, in 2010. According to the Agency for Bankruptcy Supervision were 691
active bankruptcy proceedings, and of that number 375 is a state-owned enterprises
and 316 private. Through the log that is synchronized since 2005. when he made the
bankruptcy reform law passed in 1447, a total bankruptcy cases. The number of poor
persons is about 700,000 people and is growing. Bearing in mind that the number of
unemployed increases, that the pensions and salaries of a large number of persons
frozen and that inflation was high - standard of living for the huge number of people
is reduced.
We believe that the economic but also social crisis in Serbia will not exceed new
borrowing. Serbia on the basis of the previously stated above, we need long-term
strategy of economic development and social reform, and such a strategy in addition
to the unquestionable national interest, and must be of national and / or institutional
in nature.
Conclusion. We analyzed changes in the business environment was carried out
by the impact of strategic planning at three levels. At the most general level,
instability and unpredictability of technological, economic and political environment
significantly affects the flexibility and the way companies react. Second, this
development has forced companies worldwide to review existing strategies and find
new strategic solutions. For example, China's rapid industrialization and information-
telekomunkacionog sector in India has encouraged the spread of outsourcing
production to China and use of business services in India. The expansion of the
telecommunications market, entertainment, computers and computer equipment and
consumer electronics, requires the companies in these sectors to plan strategies to
compete on a much larger market area. Finally, the new realities of the 21st century
the need for a completely new approach to strategic planning and the nature of the
business strategy and the increased role and responsibilities of company management.
Without any doubt the impact of the crisis will be far less favorable than you at first
assumed. The situation in Serbia is far from optimistic, because the crisis in Serbia
synergy of national and local crisis. Crises are an integral part of the economic cycle
and based on previous experience, we can assume that we are in a time of
transformation into a new social order, and he will force the creation of new models
of strategic management.
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