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Essay / Research Paper Abstract
This 4 page paper response to 3 questions set by the student concerning the way firms will need to change during a recession. The discussion includes the way that firms may innovate, the potential for a firm to act aggressively to limit competition and how the commercial marketplace may have changed.
Page Count:
4 pages (~225 words per page)
File: TS65_TErecquest.doc
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Unformatted sample text from the term paper:
to retain revenue. Strategies such as reducing prices and cutting costs are common place in a recession, however, this is unlikely to lead the firm to long-term benefits, it is
more than a survival strategy. A firm faced with a declining demand is likely to look for new demand, and as Ansoff has stated, there are four main strategies to
expanding sales, market penetration, selling more of the same products to the same people, market expansion which is finding new customers, product expansion which means selling new products the same
customers, or a strategy referred to suicide strategy, where a company seeks to develop new products to sell to new markets. During a recession may be difficult time to make
investments to develop new products, and as the market is thinning penetration strategy becomes non-viable. Therefore, the question becomes how a firm can attract new customers. During a recession, especially
in mature markets, the most likely source of new customers may be to attract those from competing firms. Strategies such as cost-cutting may help to gain more customers, especially where
the elasticity of a product indicates that a decreasing price may still result in an overall increase in revenue. Other strategies may include aggressive marketing and other types of promotion.
In many cases these will require investment. However, if a firm is sufficiently strong that it can significantly damage or eliminate competition, short-term costs, even if they include losses, may
be worth pursuing if it is when a stronger position with customers. It is for this reason many newly liberalised markets, such as telecoms markets, may see governing bodies placing
price restrictions on services to ensure the prices are maintained at a sufficient level to help support the new competition. If a company wishes to act extremely aggressively, and has
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