Strategies and Plans Adopted by Businesses in the Recession
The long-term strategies and short-term plans adopted by businesses in the recession The recession has different impacts/effects on businesses/organizations as all businesses do not operate in the same market/sector. This causes the need for businesses to come up with strategies and plans for business survival.
Strategies and plans adopted by businesses are tactics developed by businesses to aid them reach a particular goal/target. Plans adopted by businesses help them look ahead, focus on key points and prepare for opportunities and problems.
Then strategies are developed to assist the aim of the plan to eliminate or reduce flaws to make sure the plan is carried out successfully. Burger King (BK) and McDonald’s (McD’s) although both operating in the restaurant/fast food market, they both dealt with the recession differently. BK planned to increase sales by drawing in more customers and survive through a pricing strategy change and investments.
They sold some of their products at a loss in order to cope with the recession as consumers were looking for cheaper value meals.
I think the purpose of this plan was to increase the profitability of the business. This forced competitors to sell their products at a loss to try and increase sales and stop BK from benefiting from the current recession as it has a well-known brand name which spelt trouble for smaller competitor businesses. BK’s low price strategy was heavily skewed towards poorer economic groups in the US who have been hit particularly badly by unemployment this made their prices reasonable and affordable by all income groups.
Focusing on customers from the poorer economic group might have helped boost sales as they and other customers not hit by unemployment would be able to make purchases without great concern.
As BK’s sales during the 2006 trading period was weak, they invested $3m to strengthen its UK operation and a marketing push has since paid off. Part of the investment was put towards the development of products which as a result Angus Burgers and the spiced up Angry Whopper were created.
A spokesman said these products have played well which means their strategy worked and the investment wasn’t in vain as they achieved a 13% rise in quarterly profits to $50. 2m (? 31. 7m) as stated by guardian.
co. uk. BK’s menu remains unchanged centred on burgers, fries and fizzy drinks trying to gain more sales from repeat customers. Being narrowly focused in the recession is not such a good idea as the whole economy is affected by the recession even though it has a greater impact on some groups. BK’s strategy is a dangerous strategy because they are relying heavily on old repeat customers.
If those customers changed their taste, it would have a huge impact on BK’s sales and solutions to their situation could be being used by Mcdonalds leaving BK with no room to improve their performance. The best way to go about a situation like this is to focus on a strategy that would benefit and target everyone bearing in mind the areas which have been heavily affected to assist in controlling price levels. Using the full potential of the business/extension strategies could help save a business from a recession. This could create a loss in the short run but the business can recoup its costs in the long run if successful.
However, McD’s approach to the current recession is different compared to the plans and strategies adopted by BK. BK is narrowly focused compared to McD’s as McD’s provides a variety of menus like the breakfast and the kids meal menu.
McD’s has diversified into salads, Panini’s and cappuccinos in the hope of satisfying so-called “soccer mums” which is a strategy to attracts more customers. By diversifying its products, McD’s is able to attract different types of customers like healthy eaters and regular caffeine takers.
This expansion of product range strategy widens their target customers range allowing them to increase sales and market share. British Airways (BA) operating in the airline market tackles the recession completely different from McD’s and BK. During the recession, according to BA’s first half (April – September) pre-tax profit and loss chart, their profits dropped dramatically from roughly ? 610m to ? 50m according to the chart given in the period 07/08 to 08/09 which is around the time the recession begun. They went on to make a further loss of ? 92 Million in the 09/10 period.
This sparked a cause for concern. BAA adopted a short-term plan which was heavily centred on the workforce as the airport’s operator was believed to be overstaffed. They decided to reduce the number of staffs and advice some workers to work for free in order to cut labour cost expenditure (inc. Bonuses and allowances) to reduce the loss their making to stay in the competition. Chief executive Willie Walsh and 800 workers agreed to work for nothing voluntary in the month of July to help the company survive and reduce expenditure.
This strategy although would help, it brings disadvantages.
From this plan, their employer name brand will be affected as a lot of the staff will be unsatisfied causing the union to get involve and also affecting BAA’s operations which in turn affects their customers as the airline will not be operating effectively and running smoothly causing disturbances and leaving customers displeased. The recession causes businesses to come up with plans and strategies in order to survive and stay in the competition.
BK, McD’s and BA all adapted different plans and strategies to survive. BK remained firmly rooted in their burgers, fries and fizzy drinks menu, reduced their pricing levels, invested in the launch of new products and marketing and also, targeted those hugely affected by the recession to gain sales by reducing their prices for some products for the population with a low income; charging both high and low prices in other words their pricing strategy was universal pricing (appealing to everyone upper, middle and lower class).
Their rivals adopted a different strategy and plan although they both operate in the same market.
McDonald’s diversified their products – introducing new products to target other types of consumers i. e. “soccer mums” as it already has menu’s which targets other consumers like children and healthy eaters. Also, they ran plenty of bargains and distributed gazillions of coupons which played a good part in their survival.
BA was making a huge loss so they reduced the amount of employees as a means of cutting expenditure to help them survive. This strategy caused complications for their operations which left customers dissatisfied during the crisis and also the trade union decided to get involved as some of BA’s staff disagreed to the changes that was to take place.