Try to Count How Many Mistakes You Made During the Crisis

The market crisis leads to unwanted business turns, and chaos accelerates the panic-driven making of wrong decisions for the wrong reasons.

Managerial decisions during a crisis are often not the result of thoughtful and carefully planned strategies, but rather the consequence of resorting to short-term tactics to solve newly arisen problems. Companies should prepare for times of crisis during periods of growth, and during a crisis, they should continue to care for the important values of the company so as not to erode the core of the business. In turbulent times, one must be cautious of market shocks, but also quickly seize sudden and unexpected opportunities. Business today requires both knowledge and skills, and with nostalgia, we can remember the 1990s when a grain of luck and a good feeling were necessary for success.

Strategies and tactics that were created for growing markets cannot function well during a recession. The longer it lasts, the crisis results in cautious consumer behavior as they try to spend their budget wisely. At the same time, companies in crisis often abandon their core principles, as they cannot predict market movements or anticipate consumer behavior. It is precisely then that a lethal combination of market shocks and the absence of an appropriate strategy arises. A crisis in the business world generally shows how successful or unsuccessful managerial reactions are. In practice, serious managerial mistakes occur under the influence of fear. This often involves cutting costs in important segments, laying off the most qualified employees, reducing all risks, saving on innovations, as well as on the development of products and services.

Wrong Decisions

· Leading during a crisis should not undermine the long-standing development strategy of the company. Measured and thoughtful actions must replace quick decision-making driven by fear and panic.

· Investing in the development of a marketing strategy is never an expense, especially not during a crisis. It is about creating strategies that manage demand, and thus also consumer behavior. The crisis should not affect the relationship with consumers built over the years, the atmosphere at the point of sale, or the feeling that customers have during the sales conversation.

· Reducing the number of sales team members and lowering prices leads to decreased revenue, but also profit, which prevents further development and recovery of the company when the time comes. Managers often consciously enter a vicious circle. For example, Starbucks considered the possibility of lowering prices. They would offer customers a 10% discount, but that would mean they would have to sell about 50% more items to achieve the same profit. For this reason, companies must carefully consider what price reductions bring and what their long-term goals are for such policies.

· Cutting costs associated with sales will be felt in the quality of service, and consumers will sense the cost-cutting and insufficient care for them. With aggressive competitor behavior, an opportunity is created for them to turn to others to satisfy their desires and needs.

· Reducing investment in employee training and motivation is one of the most common mistakes in management. In times of crisis, employees need support and the feeling that by strengthening their skills, they can contribute to development and increased sales.

Conservative Behavior

When considering all of the above, it is also important to emphasize that it is natural for companies in crisis to behave somewhat more conservatively than in times of growth and development. However, if such behavior persists, the company must know that it will not be able to recover at the same speed as somewhat more creative and flexible competitors.

dr. sc. Elvira Mlivić Budeš, consultant for business skills development at Filaks
[email protected]