The recovery from recession and the challenges facing businesses by Kieran O' Brien
Author: Kieran O'Brien
Last Updated: 9/9/2010 6:38:19 PM
Summary
It looks like the long awaited recovery will continue with recent reports providing further evidence that the Manufacturing Sector is slowly leading the UK out of recession.
Article
The expectation is that over the next few months a recovering
manufacturing sector will also drag the services sector along in
its wake bolstering the UK's economic recovery.
A major threat to this outcome are Government stimulus packages
put in place to minimise the impact of the recession will
inevitably be cut back over the next months. Severe cutbacks in
public spending are on the cards and this could also have an
negative effect on the recovery. The hope though is that the
manufacturing sector will continue to strengthen and taking
advantage of recent support and economic trends, grow sales via
exports and compensate for inevitable cutbacks in the public
sector. A number of assumptions underpin the view that
manufacturing can pick up the slack
•Sterling is expected to remain weak giving UK exporters a
competitive edge
•Asian Economies will continuing to grow
•China will increase internal consumption and increase value
of its imports
•UK Government support for innovation and exports will
continue
On the down side the required growth is expected to come mainly
from within the SME community and they will have to adjust to new
operating environments: i.e.
•be open to overseas requirements for products both
regulatory and cultural
•be willing to modify their offerings to meet specific market
requirements
•invest time and effort to build relationships with over seas
clients
•be committed to diversifying and expanding into new
markets
The good news is that there will still be funding & support
accessible for companies looking to expand into new markets, and
cost effective resource management solutions and expertise
available to manage each stage of the new market entry process.
e.g.
•Market Research
•R&D for product variants customised for overseas
markets
•Product testing and certification for overseas technical
& legal requirements
•Implementation of robust product lifecycle management
processes and systems
Therefore while it is certain that economic factors may support
the recovery, the success and timing may depend on the capabilities
SMEs acquire to implement their plans, and their ability to manage
multiple supplier and partner relationships. I,e government
agencies, product designers, testing and certification
organisations and consultants.
SMEs can choose to do this work in house, with the management
team taking on the additional workload while balancing the
implementation of export plans against day to day business needs.
While this may work in theory in reality unless additional
resources become available the additional burden will fall on
Technical and Sales Directors who are already fully committed with
day to day operational activities and export plans will be
postponed.
An alternative is for companies to seek outside assistance and
outsource the project management of new market entry until
sufficient revenue is generated from overseas sales to justify
bringing the work back in house. One advantage of this approach
would be that while the initial costs may be higher they could be
offset by grants, while the disruption to daily operations would
also be eliminated. Once sales revenue has grown sufficiently, this
option could be phased out and external expertise replaced by less
expensive operational staff with the recruitment of new staff
bundled within the outsourcing arrangements. The best option may be
a combination of approaches though this will naturally depend on
individual circumstances. Any questions or comments should be
directed towards the author.
About the Author
Kieran O'Brien B.Eng MBA kobrien@denovoconsult.com. The author is a
business consultant and owner manger of DenovOConsulting Ltd which provides
consulting and interim management services to medium sized and
owner managed enterprises mainly across the West Midlands.
He has degrees in engineering and business and has worked
with manufacturers and service providers for over 15 years in the
UK and Asia, launching products/services in overseas markets,
setting up and managing new enterprises, and turning around
failing business.
He speaks Japanese, graduated with an MBA from
Aston University in 2006 and now lives in Warwick with wife
and son. He is a new member of Coventry & Warwickshire
First and has recently been asked to serve on Aston University's
standing committee of convocation and to join Coventry
University's panel of mentors to help young entrepreneurs.