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WHITE PAPER: The impact of economic recession on strategy planning in UK companies |CIMA

The UK economy recently emerged from a long period of economic recession. National statistics and surveys provide generalised findings of the current state of business during and after recession but fail to offer insights into howUK based businesses made (or failed to make) strategic responses, during the period of recession and subsequently.
Against such a backdrop, this project is concerned with the strategic responses made by a small but varied sample of
businesses in response to stringent economic conditions resulting from economic recession.

The key findings from this research were:
• There is very little optimism about the prospects for the UK economy in the short
to medium-term.
• There is quite a degree of optimism from companies about their own commercial
future based on a combination of factors such as: accessing overseas markets,
improving the way they do things, better customer relations, product innovation
etc.
• Businesses recognise the importance of having a robust business strategy to guide
them through a recessionary period. However, what was done in response to the
recession largely conforms to the emergent theory of strategy formulation discussed
within.
• Although there have clearly been in-depth discussions and analysis about
how existing business strategies might change, the changes made were largely
amendments to existing strategies, with changes of emphasis, focus, timing etc.
• Most companies seem to be applying many aspects of a retrenchment approach
to business strategy (e.g. reduced fixed costs, narrower product offerings, reduced
staffing) but there are also some aspects of an investment approach which can be
observed. However, the potential for these investment approaches is conditioned by
concerns about getting access to capital finance.
• Both in terms of liquidity support and access to capital finance, there are concerns
about the attitude of UK banks in relation to small to medium businesses.
• Companies have identified several managerial areas where they felt the robustness
and quality of the approaches being applied had been allowed to decline in recent
years. As a consequence of the challenges of a recession, urgent improvements have
had to be or need to be made.

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