Analyze the data for your client company’s industry and answer the following questions.
How much have sales in the industry declined in the recession? What’s the worst that has happened in the past? During the recession the bank of New Hampshire was behind the decline, for them their economy had dropped much faster and steeper than when it had did during the 2008 recession. In 2012 the Bank of New Hampshire had lost a 2% total amount in growth which was their biggest drop during their second quarter.
Does the industry go into recession before, at the same time, or after the national economy goes into recession? If earlier or later, how many months of difference is there? The Bank of New Hampshire had gone into a recession later than the national economy. Their recession had started around 9 months behind the national economy which is why when we look at the chart during their fourth quarter in 2008 their numbers had dropped drastically, and the finally hit its lowest point during the third quarter in the year 2009.
Does the industry recover from recession before, at the same time, or after the national economy? Again, what’s the difference in months? The Bank of New Hampshire was struggling to recover from the recession. They were falling behind the national economy. It took half a year before the Bank of New Hampshire to finally start making progress with coming back to where the national economy was.
How long does the industry typically take to recover from a recession? In the industry it typically took a year for the Bank of New Hampshire to start recovering from the recession. When looking at the graph you can see that a year after the big recession is when the Bank of New Hampshire had finally started to see a more positive growth with-in their numbers.
Read the client’s response to the questionnaire. How can your client build flexibility into the business? Refer back to the textbook, if necessary. For the future to help create a stronger structure with flexibility the Bank of Hew Hampshire needs to create a plan so that they can get behind the recession and not get stuck with-in it. With the advancement of technology it would be a smart investment for the banks to put in automatic systems like an ATM. With more ATM’s if there is a recession their is possibility for not as much money to be lost from the bank due to being able to let go of employee’s while still having a cash flow come in. The less employee’s the Bank of New Hampshire needs to work while also maintaining the same amount of agency will benefit from going bankrupt in the long run.
| Question | Response from the company |
|---|---|
Recessions raise the risk of bankruptcy. Even less severe downturns can limit the company's growth prospects for several years. How does your company plan for a downturn? |
Our liquidity is a major focus when we are preparing for a downturn as well as our inventory levels. Cash is king in terms of getting through a downturn. You also need great relationships with your lenders – you hope they will stick with you when times get tough. |
| Question | Response from the company |
|---|---|
Recessions raise the risk of bankruptcy. Even less severe downturns can limit the company's growth prospects for several years. How does your company plan for a downturn? |
The bank builds up loss reserves, conducts expense reviews, tries to maximize yield on assets, looks to sell less profitable assets, e.g. low yielding loans. The bank also conducts various annual stress tests and scenario analyses to identify potential problems that could arise during an adverse economic event. Corrective action is taken to mitigate these risks if the exposure is outside of acceptable ranges. |
| Question | Response from the company |
|---|---|
Recessions raise the risk of bankruptcy. Even less severe downturns can limit the company's growth prospects for several years. How does your company plan for a downturn? |
Our staffing is very light, and we utilize outsourcing when we are busy. In a downturn we can return to in house production. |