Lecture Notes on Potential Recession and Business Strategies

Overview of Recession

Definition: A recession is a natural phase of economic, commercial, and technological growth where value decreases despite high productivity.
Signs: Decreasing revenues, lower profitability, overpaid labor, and correction of market values.
Frequency: They've occurred about 5-6 times in recent memory, with varying levels of severity.
Examples:
- 08-09 Prime real estate crisis
- 70s energy crisis (18% loan rates)
Current Situation: COVID has permanently affected global supply chains leading to a potentially decade-long recession.

Globalization Problems: Supply chains with no slack; over-optimism resembling Las Vegas gambling.
Technology Market: Venture Capital behavior focusing on potential rather than working prototypes.
Example: FTX crypto exchange operating like a casino with non-translatable value.

Higher Education: Universities producing graduates with abstract, non-practical skills.
- Graduates have theoretical knowledge but lack practical skills that the market demands.
- Practical skills (welding, carpentry, etc.) offer better employment prospects and pay.
- Immigrants often fare better because they focus on market needs and practical skills.

Customer Focus: Stay in close contact with customers to understand their fears, opportunities, and strengths.
- Use DOS analysis (Dangers, Opportunities, Strengths).
Recession-Proofing: Maintain high team morale and emerge stronger post-recession.
- Competitors are less active; opportunity to capture market share.
- Try out new ideas that were sidelined before.
Hiring and Training: Invest in training the workforce in practical skills. Immigrants and practical skill training often yield better workforce preparedness.

Positive Outcomes: Recessions create opportunities for growth and innovation.
- Example: Company's progress during COVID by hiring and innovating extensively.
Resilient Entrepreneurship: Viewing bad times as the best times for major advancements.