Showing posts with label Crisis. Show all posts
Showing posts with label Crisis. Show all posts
2013-04-21
2013-03-30
What would be the immediate consequences if Portugal decide to leave the Euro?
At the day
of that decision, it is expected that all financial transactions in Portugal
would be suspended including deposits retrievals, except of small amounts for
daily needs.
The new Portuguese currency would suffer an immediate devaluation, comparing with the Euro or Dollar, which means that the Portuguese workers’ salaries would also suffer a real devaluation.
Therefore the living cost in Portugal would increase a lot in just 24 hours.
The new reality will generate some chaos because many people, would run to stores as fast as possible to buy everything they can, trying to avoid the huge price inflation expected in result of their country leaving the Eurozone.
The decision of leaving the Eurozone will generate social unrest and can even occur some riots.
This outcome is expected if this decision is made in countries as Portugal, Spain or Greece due to their current financial situation, and this opinion is shared among many economists.
The new Portuguese currency would suffer an immediate devaluation, comparing with the Euro or Dollar, which means that the Portuguese workers’ salaries would also suffer a real devaluation.
Therefore the living cost in Portugal would increase a lot in just 24 hours.
The new reality will generate some chaos because many people, would run to stores as fast as possible to buy everything they can, trying to avoid the huge price inflation expected in result of their country leaving the Eurozone.
The decision of leaving the Eurozone will generate social unrest and can even occur some riots.
This outcome is expected if this decision is made in countries as Portugal, Spain or Greece due to their current financial situation, and this opinion is shared among many economists.
2008-09-28
What measures should small businesses take to weather this economic downturn?
I believe that the answer for small and also to bigger businesses is:
1) Increase their Market Orientation skills
2) Review their Costs Structure
1)Increase their Market Orientation skills
Many businesses fail to acknowledge of where the market is heading, and also don’t realize that economy is not frozen in time, and the value bubbles through the Production->Market Chain are constantly changing result of macro and micro factors.
So, before investing, Managers should analyze better if their expectations meets the market trend.
2) Review their Costs Structure
Considering two types of costs:
Variable costs – Which increase or decrease, according to the increase or decrease of business volume (or in another word, of “sales”)
Fixed costs – Which remain the same, even if the business volume decrease.
Companies usually increase their fixed costs, when the “economic weather” is good, and forget that all economies evolve in cycles, and economic storms will happen.
Like Romans use to say, “In time of peace, we prepare for war”, in economics, the sentence is also applied as “in time of good economic periods, we should prepare for harsh economic periods.”
So, all businesses should invest more in solutions (human, technological, infrastructure) that will allow accomplishing two goals:
a) Increase their performance and efficiency.
b) Decrease the weight of fixed costs, on the company cost structure. By doing that, companies will perform better with “good economic weather” and will cruise through “economic storms”.
1) Increase their Market Orientation skills
2) Review their Costs Structure
1)Increase their Market Orientation skills
Many businesses fail to acknowledge of where the market is heading, and also don’t realize that economy is not frozen in time, and the value bubbles through the Production->Market Chain are constantly changing result of macro and micro factors.
So, before investing, Managers should analyze better if their expectations meets the market trend.
2) Review their Costs Structure
Considering two types of costs:
Variable costs – Which increase or decrease, according to the increase or decrease of business volume (or in another word, of “sales”)
Fixed costs – Which remain the same, even if the business volume decrease.
Companies usually increase their fixed costs, when the “economic weather” is good, and forget that all economies evolve in cycles, and economic storms will happen.
Like Romans use to say, “In time of peace, we prepare for war”, in economics, the sentence is also applied as “in time of good economic periods, we should prepare for harsh economic periods.”
So, all businesses should invest more in solutions (human, technological, infrastructure) that will allow accomplishing two goals:
a) Increase their performance and efficiency.
b) Decrease the weight of fixed costs, on the company cost structure. By doing that, companies will perform better with “good economic weather” and will cruise through “economic storms”.
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