Need for speed: Recession management strategies for Finnish automotive industry

Abstract

The impact of Novel Coronavirus Pandemic (COVID-19) to the global economy has highlighted the importance of recession management strategies for individual companies: how understanding economic downturns has become crucial in the 21st century as the economy can crash overnight. However, despite of the effects that recessions have over the marketplace dynamics, managing business cycles and recessions for competitive advantage is regarded as one of the most neglected areas in all of management strategy both in academic research and in practice (Navarro, 2005).

Therefore, the objective of this research was to investigate how managers could plan ahead to improve their post-recession positioning in the marketplace in the context of Finnish automotive industry. More precisely, this study examines the key challenges that companies endure during recessions, investigates the key procedures to form management strategies for recessions and explores the key characteristics that make companies more resilient towards recessions.

Both secondary and primary research were used in this research. Firstly, a literature review was conducted to gather a comprehensive overview of the topic. Secondly, eight semi-structured interviews were conducted with high-level professionals in order to understand how managers in the Finnish automotive industry view recessions, how recessions impact to the Finnish automotive industry and how companies can be led during these economic downturns.

The findings of this research can be divided into three categories: 1) presentation of the key challenges companies face during recessions (external challenges, industrial challenges and challenges during previous recessions), 2) demonstration of the key procedures to form management strategies for recessions (corporate strategy, external audit and internal audit) and 3) demonstration of the key characteristics that make companies more resilient towards recessions (recession literacy, continuous cost-efficiency, long-term partnerships, ability to react fast, ability to be flexible, resource allocation and optimization, taking care of the employees, corporate social responsibility, enhancing innovations and ability to see the future beyond the recession).

Even though the research advanced the existing theory regarding recession management strategies and their implementation in the context of Finnish automotive industry, additional studies are welcomed concerning these topics. The opportunities for further research lie in additional enhancement of the recession strategy concept, the potential scale formation and further validation.