Michael Porter on the importance of long-term strategic thinking in a recession
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The first four minutes of this press conference with Prof Michael Porter make a really important point for students considering the issue of short-term actions versus long-term plans when it comes to business strategy in the recession.
Briefly:
- the recession in 2008/2009 was caused by a financial crisis built on too much debt
- the pressure in a downturn is on businesses to survive
- but to survive, a business has to be able to take actions for the long-term too
- short-term actions and plans can easily damage the long-term
- it is important not to over-react
- customers always become more price sensitive in a recession
- but the worst response is to cut back on quality, customer service - particularly for a business that has competitive advantages based things other than low-cost
- for a quoted company, ironically a business has more flexibility to invest for the long-term, since stock markets almost expect results to be poor.
Click on the video below to hear the great man explaining this in his own words!
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