Final exam

Confronting Risks in a Risky Economy

Business is riskier when the economy is stormy. In such times, technology firms often have a particularly difficult time. But there have been bright stars among tech companies. Many of them were identified in the Business 2.0 list of the 100 fastest-growing tech companies. Based on an analysis of what these companies had in common, here is a summary of the actions they have taken to stay afloat during the downturn in the tech business cycle:

1. Do one thing well. If you do one thing better than anyone else, in a downturn your customers will dump everyone else first.
2. Watch your wallet. In a rough market, protecting cash flow is everyone’s responsibility.
3. Keep innovating. While others protect gains in a slow economy, top performers continue to spend on continually improving and inventing new products.
4. Buy smart. Acquisitions need to be purposeful, that is, aimed at helping companies become better at what they already do.
5. Supply the suppliers. Sell to those companies that are working hard to strike it rich. They need things to keep working.
6. Hitch your wagon to a star. Some winning companies maintain relationships with the powerful; others make contracts with the federal government, which is all but immune to the business cycle.
7. Have a backup plan. In unpredictable times, you have to be prepared to scramble.

Source: Thomas, O. 2002. Seven Secrets of Success. Business 2.0, October, p. 87.

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DISCUSSION QUESTIONS:

1. How might the suggestions made in the example above be applied to your personal career planning and efforts?  
2. How can I avoid taking on too much debt?
3. How can I start investing?