logo image

Maintaining Profitability in a Recession

GHD is one of the top 50 companies in Australia with a bias in the services industry. Overall performance for the year 2008 was good with revenues up by 39 % and stakeholder expectations for the year 2009 are high despite recessionary effects being felt globally (GHD, 2007). The major challenges facing management are how to increase or at least maintain high profitability at a time of shrinking incomes (Hogan & Dean, 2008). Economic forecasts for the year 2009 show a likely downswing in all sectors of the global economy, with the services industry likely to be the hardest hit (Seager, 2008).

At the same time, rival companies are beginning to venture into areas that GHD held a virtual monopoly. Their entrance into the industry is causing ripples as they are able to undercut the company and entice reliable customers away. Startup companies with lower overheads are also giving the company stiff competition when it comes to levying fees. The founders of some of these companies have been former employees who took early retirement or were retrenched as part of the company’s cost saving measures. GHD’s strategy has been to provide superior services by employing the best brains in the industry.

This has meant that the salaries paid to company staff have been very attractive so as to retain top notch experts that can satisfy client’s requirements. With a poor economic future looming and budget cuts being made by most companies, the prospect of generating high profits without making drastic cuts in employment levels (or at least remuneration) seem bleak (Cohen, 2009). Clients in the emerging markets of Asia are developing their own pool of human resources while the African markets are largely underdeveloped such that they cannot adequately absorb the services GHD has to offer (APEC, 2009).

The dilemma facing management is further complicated by the development of regional trading blocs that encourage the abolition of tariffs and make the movement of resources across borders seamless. As a consequence, labor can easily migrate to any part of the world and offer their services cheaply. References APEC. (2009) Capacity Building Network. APEC website. Accessed on 19 January, 2009 from http://www. apec. org Cohen, A. (2009) EU Cuts 2009 Economic Outlook. The Wall Street Journal accessed on 19, January, 2009 from http://online. wsj. com/article/SB123235965001894597. html GHD.

(2007) Consolidated Financial Report for GHD Group Pty Ltd as at 30 June 2007 accessed on 19 January 2009 from www. ghd. com. au Hogan, W & Dean, K. (2008) Australian Outlook. ANZ Economic Outlook 15th October 2008. Accessed on 19 January 2009 from http://www. anz. com/aus/corporate/Economic-Research-And-Publications/Economic-Research/Economic-Outlook/default. asp Seager, A. (2008) Poor outlook for services sector raises likelihood of big interest rate cut. The Guardian, Thursday 4 December 2008 Accessed on 19 January 2009 from http://www. guardian. co. uk/business/2008/dec/04/bankofengland-credit-crunch-interest-rates-services-sector

Read full document

Can’t wait to take that assignment burden offyour shoulders?

Let us know what it is and we will show you how it can be done!
×
Sorry, but copying text is forbidden on this website. If you need this or any other sample, please register
Signup & Access Essays

Already on Businessays? Login here

No, thanks. I prefer suffering on my own
Sorry, but copying text is forbidden on this website. If you need this or any other sample register now and get a free access to all papers, carefully proofread and edited by our experts.
Sign in / Sign up
No, thanks. I prefer suffering on my own
Not quite the topic you need?
We would be happy to write it
Join and witness the magic
Service Open At All Times
|
Complete Buyer Protection
|
Plagiarism-Free Writing

Emily from Businessays

Hi there, would you like to get such a paper? How about receiving a customized one? Check it out https://goo.gl/chNgQy