New tactics required as MCA survey finds that the majority of businesses will not grow in the next 12 months and profit margins will be eroded….
A Management Consultancies Association (MCA) survey released today (31st December 2008), finds that the majority (82 per cent) of businesses have not positioned themselves adequately to fight the recession. The MCA survey warns that businesses have not invested anywhere near enough time or money in planning and economic forecasting, or improving their products and services in order to keep customers during the bad times.
The MCA survey, based on consultants who work with 90 of the FTSE100, also found that two thirds of businesses did not see the downturn coming.
The MCA says that while a significant minority of businesses have been taking a strategic stance, re-appraising their strategy and looking to seize the opportunities a downturn brings, most are using tactics which helped them through past recessions, ignoring the increased competition and complexity of their markets.
The MCA survey also found that two thirds of businesses may be using economic uncertainty to make long overdue operational changes, but these may not be enough as we enter a recession.
Alan Leaman, Chief Executive of the MCA, said:
“Despite lack of preparation, the temptation to cut costs across the board should be resisted. Our research shows that senior executives must invest more in planning and re-shaping their strategy and staying open-minded to new ideas and opportunity. Improving productivity will obviously be important in the coming months, but so, too, will looking after suppliers, customers and employees so that organisations are in a strong position to exploit the recovery when it arrives.”
Globalisation is helping
Nearly half (45 per cent) of respondents said that businesses with overseas markets and operations will be cushioned from recession in the West. However, the extent to which organisations fully exploit this opportunity is questionable.
Lack of collaboration with suppliers
The MCA survey also found that although almost three quarters (70 per cent) of respondents believe that businesses increasingly complex supply chains will make it hard for them to cut costs in isolation, no one sees businesses taking substantial steps to collaborate with their suppliers to improve productivity.
Alan Leaman, Chief Executive of the MCA, concluded:
“Whilst globalisation of our economy creates opportunities it also means that there is no hiding place. The increasing complexity of supply chains will require a very sophisticated approach and careful reputation management. This is often very difficult when times are tough.”
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About the Management Consultancies Association
The MCA was formed in 1956 to represent the consultancy industry to its clients, the media and government. Management consultancy is an increasingly important industry for the UK economy with management consultancy revenues for 2007 estimated at around £8bn. MCA members represent around 70% of the UK consulting sector, employ around 30,000 consultants and work with most of the FTSE100 and all government departments. Eight of the top ten UK-based consulting firms (by consulting fee income) are members.
The MCA supports its member firms with a range of services including events, publications, interest groups and public relations. The Association also works with its members to attract the top talent into the industry. The MCA provides advice on the selection and use of management consultants and is the main source of data on the UK market.