Part 1: Recession or No Recession?

Find one news article published in the last three months predicting an imminent recession and another advocating that the economy is flourishing without any signs of recession. Summarize each argument in a single paragraph, highlighting the data and evidence cited to support their claims. Please add the URL of the online article or attach a copy of the article to your submission. Ensure you provide a concise overview of the reasoning behind both perspectives, outlining the key data points used by each article to substantiate their positions.

Part 2 Evaluate your client company’s contingency plan

Review the contingency plan provided by your client company.

Using the lessons from Chapter 7, analyze the effectiveness of the plan. In your evaluation, address the following:

  1. How well does the plan align with the best practices discussed in Chapter 7?

  2. Are there any gaps or areas for improvement?

  3. What specific recommendations would you make to enhance the plan?

Business response to the questionnaire

Question to the businesses Please, discuss your contingency plan for dealing with recession, if you have one.

Response from businesses

Business Response from Business
Graponne

Our contingency plan include:

  1. Tighter control of our inventory levels
  2. Managing our cash. Making sure we have enough liquid reserves to get us through the downturn
  3. Limiting discretionary expenses. Including delaying intensive capital type projects.
  4. Keeping our team members fully engaged
  5. Making sure we have available credit (to finance cars that are not selling as well as lines to draw down for working capital).
Bank of New Hampshire As previously mentioned, we build loan loss reserves and carefully monitor for signs of economic stress that may impact our business. We have sources of emergency liquidity available, and other similar tools to ensure the viability of the bank through a very severe downturn. Furthermore, we stress test our loan portfolios and entire balance sheet to determine how the bank would perform in various economic scenarios. This allows us to determine is additional reserves, liquidity, etc. are needed.
Comptus We do not have a contingency plan for an extended recession.
GDS Link

Focus on Collecting Client Payables: Clients pay GDS each month to license our software. Our business is often generous with the timing we allow our clients to pay. Some don’t pay on time each month, but we don’t dispute. We want to keep good client relationships. If we do see recession signals, our collections team will be more proactive collecting all revenue as close to the due dates as possible. GDS can also add penalty fees agreed in the contract, but seldom enforced.

Reduce Expenses: All discretionary expenses will be reviewed by the leadership. Travel, entertainment and even spot bonus programs could be suspended to preserve our cash.

Cross-sell Recession Friendly Product to Our Current Client Base: GDS’s most popular product is a system configured to evaluate new applicants coming to our clients for loans. In a recession, fewer applicants are getting approved, so the value of that system can decline. As our client’s current borrowers experience their own stress from a recession, the GDS collections products become more valuable. Our collections products help our clients prioritize efforts and offer distressed borrowers emergency terms that help the client to control potential losses from defaults (borrowers stop paying).