The global economic crisis has wreaked havoc on the stability of most businesses. Many companies introduced good response strategies, but still could not address all difficulties. But, opportunities always come to companies which can see and grasp benefits even in the toughest time.
The first group is companies with very impressive financial balance sheets, with big cash reserves and no debts. The economic downturn opens up weaknesses in many of their competitors. These good companies will take advantage of this opportunity to attack their competitors and hit on their weaknesses. They are running at full speed on the freeway where they have left competitors far behind to secure industry leadership and reset the rankings of companies within their industries.
The second group is companies in certain trouble, caused by reduced purchasing power on the market. However, they quickly reassess every product, review every business field, and consider connectivity of value chains and the elasticity of suppliers, customers and the market to find out their strengths and weaknesses as well as opportunities and threats from the market and their competitors. They will identify the most powerful competitor and their reactions. Then, they will consider which part to be improved, which part to have expenses slashed, which part to be added values and where to take cheap resources to create products with lower costs and diversify monetary and customer risks. These in combination will help them have proper priority for short, medium and long-term plans. They are running, but at a slower pace than previously.
The third group is companies fuelled by policy stimulus and interest support from the Government. Although they have relieved borrowing cost pressures, the shrinking market demand and big fixed costs, resulted by large-scale investments, have posed a lot of difficulties for them. Nevertheless, with their acumen, they have quickly responded by reassessing their competencies, planning appropriate priorities, readying governance reform and apparatus streamlining, building the warning system and control system. They are ready to cope with unexpected things. These companies are going uphill and will pass it.
The fourth group is companies in difficulty because of moving far away from core competencies and expertises. They grasped every opportunity to take short-term profit, jumping into overheating markets like the real estate and stock markets in the previous years. Most of them were seriously hurt and suffered huge losses when the stock market plunged and the property market was frozen. But, they have returned to their core competencies and expertises soon enough and they are still making profits from their strengths. Or in other words, they still have income from key business fields. Stimulus policy adopted by the Government has fuelled them to go past the hill by enjoying reduced borrowing costs. Compared with companies classified into the third group, those in this group are exposed to more difficulties. The recovery of the real estate market and the stock market just helps them pass the hill more quickly. The most important factor for their success is their determination, bravery and above all the radical change in the thinking of their leadership towards business strategies and business philosophies. Specifically, if they want to develop sustainably, they must give priority and focus to developing core competencies and expertises.
The fifth group is companies leaving far apart their core competencies and expertises and investing in the real estate and stock markets with excessive money borrowed from banks. And now, they have to make a fresh start when they return to their core business fields. Or, they are companies investing in shares and real estate on borrowed money. Increasing interest costs amid no incomes force them to eat away savings. Unlike companies in the fourth group, the recovery time of the economy, the stock market and the real estate market are decisive to their destinies.
The sixth group is companies beaten by the economic crisis. They are falling and struggling to extend their existence. The best way forward for these companies is ending them to make another start.
In short, the grouping classification is relative. Many companies carry criteria of several groups.
No matter which group they belong to, in the time of crisis, they should review their strengths, weaknesses, opportunities and threats to work out best new strategies for the new circumstance.
Enterprises should also seek external advice for this work. Once setting new strategies for this phase, they must be resolute, concentrated and effective enough to generate long-term competitive advantages.
Do Thanh Nam
Vietnamese
