With US economy taking a big hit with subprime mortgage and credit crunch, concerns of oil and election not helping either, everyone in India is talking about what does US recession mean for them. A very timely piece from our guest contributor Ranjith Pavithran. Ranjith is founder of the web consulting firm Kapston. Read on ..
According to a majority of economists, the US economy has already fallen into a recession.
When recession grips US, it naturally worries all the businesses depending mainly on US consumers and economy. The recession 1.0 or the dot-com bubble did not really impact most of the “global” Indian companies, as they were either non-existent then or was in their early stages with no dependence on US. This may be the first time a majority of Indian companies are facing such a situation, head-on. Are they prepared for recession 2.0?
Opportunity or threat
It’s tougher to take the customer through the sales funnel from awareness to a buying decision during a recession. So when there is a slowdown, the top-line and bottom-line are both pressured. As normal operations cannot suffer and it is easier to cut advertisements than people, the ad budget takes the first and major jolt. Traditionally and unfortunately, the weaker and short sighted companies start the downward spiral during and after recessions. On the other hand, a quick look at the popular brands today reveals that they all got stronger during one or two recession periods.