Slump changes game for firms

Smart companies will spot gaps and boost profits in the tough economic climate, according to research by New Zealand Trade and Enterprise.

The research focused primarily on 13 companies on the Global Fortune 500 list for at least the past three recessions as examples of organisations that had adapted and prospered.

New Zealand Trade and Enterprise chief executive Tim Gibson said the current recession was a game-changing event for businesses worldwide.

"The certainties of the last few years - easy credit, rising asset values and strong global demand for products and services have gone," Gibson said.

"All businesses need to adjust to this reality, but the clever and courageous ones are also spotting new gaps in their opponents' defences and making a break for it. The companies we looked at all increased growth and profitability during the recessions or the following recovery periods because of the choices they made when times were toughest."

The research identified seven factors as helping companies survive recessions - of which four related to dealing with the reality such as improving efficiency, and three with opportunities including acquisition.

Gareth Chaplin, director of strategy at NZ Trade and Enterprise, said: "The kind of slightly counter-intuitive things that came out were these companies actually increased their R&D spend, they also increased their marketing and these tend to be things that companies try and belt-tighten first."

Bruce Goldsworthy, of the Employers & Manufacturers Association Northern, said the association had sent information to companies highlighting things they should do.

"There are some losers there are some winners ... no doubt about that at the moment," Goldsworthy said.

"You do need to have another look at every cost efficiency, at your supply chain, you do need to concentrate on your very best customers, you do need to be working with your own staff to look at how you can improve things and to plan going forward ... you do need to be keeping your banker involved."

HOW TO SURVIVE A RECESSION

* Focus on the core business.
* Process and efficiency.
* Strategic divestment.
* Contingency planning.
* Acquisitions and strategic alliances.
* Increased advertising and marketing.
* Increased investment in R&D.