Abstract
M.Com. (Business Management)
Statistics have shown that 227 companies and close corporations were liquidated during 1993. In addition 386 private persons, sole proprietors and partnerships were adjudged insolvent. These liquidations and insolvencies came about in all industries.
By making use of ratio analysis, management can identify early danger signs and determine the presence of weaknesses in their business. There are some other critical factors and aspects that become evident from everyday trading activities that also point to danger signs. Management should be mindful and become aware of the danger signs at an early stage so that corrective action may be taken during a recessionary period.
Numerous management aids in the field of financial discipline are at the disposal of management when applying corrective action. The core principles of effective asset management covering cash flow management, credit control, stock control and asset control should be employed to ensure survival during difficult times. Furthermore it is of critical importance that management makes use of the correct sources of financing and knows where to obtain it.
It is also important that management addresses the other functional disciplines within the business. Management should continue the function of marketing and selling its products. Checklists containing useful questions should be applied to generate maximum sales. Production and sales should, however, be synchronised. Effective production management aids should be applied to create this harmony. It is also necessary that products be continually developed and that research into new areas be conducted.
Management should handle labour relations and political and legal aspects with
great sensitivity during recessionary periods. All employees deserve fair treatment and should be respected for their convictions. Appropriate general management principles should be applied at all times including effective leadership, motivation, communication and company philosophy.
By making use of the proposed management aids, management can considerably
improve the chances of the undertaking to survive a recession.