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Home » Blogs » Management & Strategy » Looking to the Past to Strengthen Your Position Today

Looking to the Past to Strengthen Your Position Today

By    Lindsay  Young 
October 8, 2008
More about:  Management/Strategy
I decided to take a look back in the MDM Archives at the advice that was being offered up the last time the U.S. was dealing with a downturn. Here's what I found:
 
David Gordon and Neil Gillespie in November 2002 provided perspective from GE CEO Jeffrey Immelt: 


  • Prepare for five years of slow growth. Plan accordingly.


  • Price pressures will continue.


  • Innovate now. Your basic strategies in a scenario of slow growth with never-ending price pressures are either cut prices or innovate with technology solutions for customers.


  • Hit singles as well as home runs. Focus on smaller frequent innovations.
    ...
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I decided to take a look back in the MDM Archives at the advice that was being offered up the last time the U.S. was dealing with a downturn. Here's what I found:
 
David Gordon and Neil Gillespie in November 2002 provided perspective from GE CEO Jeffrey Immelt: 


  • Prepare for five years of slow growth. Plan accordingly.


  • Price pressures will continue.


  • Innovate now. Your basic strategies in a scenario of slow growth with never-ending price pressures are either cut prices or innovate with technology solutions for customers.


  • Hit singles as well as home runs. Focus on smaller frequent innovations.


  • Look everywhere for talent. 


And a suggestion from Gordon and Gillespie: Consider alternate pricing models. Avoid giving away value for nothing.
 
Here's Bruce Merrifield, in the Oct. 10, 2002, issue:


  • Identify and deal with big-volume, high trade credit customers for which margins are thin, profits are non-existent and the customers themselves are bankruptcy candidates.


  • Buy some commodity inventory in smaller quantities, when possible, to increase turns and fill rates more than the gross margin drops from paying a higher price.


  • Help all employees be part of the solutions for productivity, profitability and balance sheet liquidity improvement -instead of part of the dead-weight problem.


  • Reduce distribution capacity and competitive intensity on a local market basis.


In a quarterly report in February 2002, MDM's Tom Gale writes:
"This is a trench time for most managers as the numbers aren't coming up as hoped for. … There is a lot of discounting going on to get market share or playing customer games to get the business. That's both ironic and dangerous when a primary concern across the channel is maintaining profit margins. It may be a strategic necessity to discount with one or two key or high-potential customers, but it can suck the life out of your profit margins and take years to repair the damage."
 
More valuable perspective on strategies in a downturn is available in the MDM Archives. Simply search in the top left corner of this Web page for the topic you are interested in. Seven years of MDM Archives are available free to subscribers of MDM's premium content.
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