Drawing on current business publications and using the openi

Drawing on current business publications and using the opening case of Chapter 11 as a guide, discuss how the slow economic recovery in 2011 and 2012 has affected the current strategies of firms other than those mentioned in the case.

Solution

During the slow economic recovery in 2011 and 2012, the companies have adopted several strategies in order to maintain a positive balance sheet and not being hit by the slowdown in the economy. The strategies adopted by a few companies in order to survive the slowdown have been discussed in the following paragraphs. Southwest Airlines Co., adopted strategies of low cost flying and hedged fuel costs in order to maintain itself and not laying off its workers. The airline advertised itself as being a low cost airline and made use of the fuel from the hedge that it had bought earlier. Another example of surviving recession was shown by McDonalds and Starbucks Corp. to encounter the recession, the companies closed down a few outlets where they were not making substantial profit and added a few items to their menu in order to make more money during the slowdown. McDonalds were not only able to boost its cash holding by 18% but also paid dividend of $24billion.

            Watson Pharmaceutical Inc., moved half of the manufacturing to India and closed down the plants in North America. The production was cheaper in India, the revenue never declined for the company and the company even hired during the slowdown. Union Pacific Corp stayed clear of the economic slowdown, by focusing on the customers and reviving their strategies of the supply chain. These companies adopted strategies of low cost, hedging the inputs, closing down a few stores and even acquiring overseas manufacturing in order to survive the slowdown and were effective in doing so.