Navigating the downturn

Leading the Way is a column written by PricewaterhouseCoopers professional staff. It appears in the Business section of the Bangkok Post twice each month. The column provides specialised advice to corporate decision-makers in Thailand on global and local business trends.

This article appeared in the January 6, 2009 issue of the Bangkok Post.

By Vilaiporn Taweelappontong

This is the second instalment of a two-part article by PricewaterhouseCoopers that provides a checklist of key priorities and actions businesses need to act upon to survive the downturn and be better positioned to do well when the market improves. Part 1 on Dec 23 examined the first five priorities and today we look at how to survive the current environment, mitigate further risks and perhaps take advantage of the new environment to create a more durable and profitable business.

6. Reliable management information is key

Decision-making needs to be based upon reliable, accurate and timely management information. Moreover, clearly defined Key Performance Indicators are important to create value to customers and business and ensure initiative effectiveness.

Crucial questions to ask yourself:

• Which areas need to be monitored carefully?
• How often do you receive information on those critical areas?
• What degree of confidence do you have in the information that you receive? What are the key risk areas surrounding your business? How should you monitor your performance against these risk factors?
• Is your business focused on cash management? Is the senior management team updated frequently enough in order to make the right decisions?
• How can you get critical information more quickly, i.e. before it is actually out of date or irrelevant?
• Have you reviewed your reporting templates in light of recent changes in your business/the external environment? Does the information still make sense?
• Are you looking at the past? To what extent are your systems geared to providing useful information on the future?
• Thinking of the last big issue you had to deal with –could a more focused reporting of key risk areas have helped you identify or mitigate it earlier?

• How will your business be impacted by an extended economic downturn?
• What industry sectors and geographies does the company operate in? What are the likely repercussions for those sectors and geographies?
• To what extent have you stress-tested your forecasts to account for changes in performance and outlook? Have you stress-tested forecasts over different time periods
• How good are management reporting and information systems at highlighting potential issues? What areas need to be monitored carefully?

• How is the current economic environment affecting your people needs?
• How are you using your workforce differently to reflect changing revenue streams?
• How are you motivating and rewarding your workforce?
• What reward strategies are your employees telling you they value?
• Do your high-fliers know how much you value them and why?
• How are you using performance ratings to recognise employees’ contributions?
• When did you last communicate with your employees?

• Do you know who your key stakeholders are?
• Are you aware of recent changes in your stakeholder base?
• Are you aware of their agenda? How are you meeting their expectations? When did you last have a detailed update with them?
• Have you seen attitudes change recently? Are you keeping up–to-date with developments concerning your key stakeholders which may impact the business?
• Have you developed a well articulated communication plan both internally and externally to make sure that there is a consistent projection of the actions being undertaken?
• Have you considered the possible differing agendas and considered what the more likely areas of conflict could be?
• Are your people engaged in the overall strategy of the business and are they aware of the mitigating actions that you are seeking to undertake?

• Which parts of the business generate the highest return on capital, and which the lowest? Would they benefit from additional growth capital or productivity investments?
• Do I have a clear view of the portfolio of investment opportunities that I have in the pipeline, and an accurate assessment of their risk and reward profile?
• Is this an opportunity to re-engineer my business to stay productive under new conditions?
• Am I in a stronger position than my competitors to pursue step-change opportunities?
• Do I understand the landscape of assets I would be interested in buying?
• Do I know how competitors are being affected by the downturn and whether they would now be prepared to consider a merger?