‘Explore opportunities in times of crisis’:

Corporates need to be tough to face challenges

Anjana SAMARASINGHE

Corporates need to be tough in anticipation of tough times and explore opportunities in times of crisis. Director/COO, Richard Pieris and Company Pravir Samarasinghe said businesses today have to make tough decisions to survive in tough times. Corporates need to take hard decisions such as rationalizing their product portfolio.

Companies need to identify what businesses they should stay in and what areas they should move away from. Delays in execution of unprofitable businesses will have an adverse effect.

He was speaking at the Panel Discussion and presentation on “Tough Times-Tough Strategies” organized by MTI Consulting on Wednesday.

During the economic boom businesses diversify into various sectors without focusing on the profitability of the business. These businesses have to suffer during recession.

During recession companies need to focus on capital management and this will help organizations to change their cash flows and results can be achieved quickly. Working on the cost structure is important for companies when dealing with tough times. Companies can convert fixed cost into a variable nature where they could outsource some of their operations, he said.

In the economic downturn there will be uncertainty in the minds of employees and companies need to handle this carefully by being more transparent to the employees. Companies should educate employees on the current situation of the company, he said.

CEO MTI Consulting Hilmy Cader said the low fuel cost, end of the war and IMF intervention are some of the positive trends in these tough times. Companies could respond to these tough times by using the Chop and Cripple approach and Trim and Fit approach.

In “Chop and Cripple”, companies may adopt a wait and see approach and these companies will have a panic mood.

In the “Trim and Fit” approach the company will focus on what really went wrong and it will recognize ignorance. It will also seek opportunities to invest.

Senior management involvement and commitment is important in dealing with tough times. The Company also needs to focus on locking the high performers in the company through a performance based rewards system during tough times, he said.

CEO, DFCC Bank Nihal Fonseka said the recession period gives more time for Corporates to think on “what you could do to go through the tough time”. It will also give a great opportunity to get ready for the good times.

It is important for companies to identify what customers need during the recession and cater to those needs. Today in the local financial industry, customers are looking for a high degree of assurance on their capital unlike earlier when they looked for high returns on their investments, he said.

Chairman, Unilever Sri Lanka Amal Cabraal said, “We at Unilever follow the simple philosophy - business as usual is growth; business unusual is cost”. We are more into the “Trim and Fit” approach to respond to tough times. Being closer to the customer will help organisations to identify opportunities in the market.

We believe that bad times will not last long and we need to get ready for good times through managing the present time, he said.

Chairman, Hemas Holdings Lalith de Mel said in tough times customers cut their retail spending, such as dining at restaurants.