Chapter 6

http://www.canada.com/business/fp/Creative+destruction+times+recession/1621114/story.html

Summary

To battle the economic recession in the United States, Coach Inc. has reacted swiftly to impose tough new measures in order to survive this period of a downturn of customer demand. These measures include investing in new and cheaper products, shutting down stores and factories, and reducing employees. They also renegotiated contracts to bring down leasing costs, insurance rates, and advertising expenses. Like many other companies, Coach had to be aggressive in reshaping the company’s policies in these harsh economic times in order to avoid moving into a “victim mode”. Nevertheless, Coach’s president Jerry Stritzke believes that companies who have the courage to go through these steps will ultimately emerge even stronger out of this economic recession.

Connections

Chapter six discusses cash, internal control systems for companies, and short-term investments. For Coach, these aspects of business are the keys for survival in the current economic recession. First and foremost, Coach needs to make sure that they have enough cash on hand to handle whatever emergency that may arise. Next, they need to make sure that their internal policies are up to date with the recession and that they will ensure maximum possible profits and least possible expenditures. Accurate accounting procedures are also necessary to keep the company’s operations running smoothly. Finally, short-term investments are critical because Coach needs to meet new customer demands by designing more affordable products.

Reflection

Coach’s strategies for survival just illustrate how “survival of the fittest” is true for our economic recession. Similar to many other companies, Coach had decided to issue tough new measures to fight against the global economic crisis and it is not afraid to reduce employee numbers and to freeze salaries and bonuses. To ordinary workers, these would feel harsh because they have a greater chance of becoming unemployed. However, like Coach’s president Stritzke, I feel that these are necessary steps because they will help Coach retain enough cash, earn an agreeable amount of profit, and keep money on hand to develop new products to meet current demands. If Coach is able to plan and act out its plans after careful thought, they will have a large potential of emerging out of the recession as an even stronger business.

Chapter 5

http://www.financialpost.com/most-popular/story.html?id=1427430

Summary
With the recent recession, businesses have felt the credit crunch, and the pressure of staying afloat amidst all the financial problems. Studies have recently shown that the small and medium businesses of Alberta have been the most pessimistic concerning future performance, while Newfound Land is the most optimistic. These results were posted in the Canadian Federation of Independent Business barometer. Although the overall optimism percentage has gone up, it is still far below the historical average. This lack of optimism is backed up by the fact that only 20% of businesses are financially doing better than they did a year ago.

Connection
With much less cash flow around the world due to the market failures in the US, small businesses should most definitely on the look out for how much to supply of a product, in comparison to the demand for it. This means the operating activities of a business' cash flow should be much more monitered, because chances are, demand will be lower, which should be counteracted through minimizing the amount of purchased inventory and expenses used. For most businesses in Canada, the indirect approach of recording the cashflow in the cashflow statement, rather than the direct approach.

Reflection
Although Canada is not in as bad of a financial situation as the US is in due to the conservative and high regulatory banking system, there should still be no room for unneccesary spending from small businesses. At this point in time, it would not be the best of interests for anyone to start a business. With over 80% of businesses doing worse than they did a year ago, consumer demand is much too low to make a good profit through this recessionary period. For those who already own a business, not all is bad; with the interest rates for bank loans and credit card fees being lowered, spending is not a costly as it was months ago

Overview of Financial Crisis

http://www.theglobeandmail.com/globe-investor/fiat-runs-into-host-of-unforeseen-problems-at-chrysler/article1290461/

Summary

During the summer Fiat Spa obtained bankrupted Chrysler, but never knowing how many unpredicted setbacks would slow down reconstruct of this product line. There was a very dried out line of cars. Nothing to the extent that would blow the car industry. First purchasing 80 per cent of Chrysler from Germany's Daimler, Fiat was on a ``no money down deal``. Fiat estimated profit made per year on sales are 5.5-6 million. The hard road starts for this new owner for Chrysler. Although saying that he is in Europe because no European auto factory has shut down in the past year. Which might lead to another 10 years of reduced come back.

Connections

In this particular article, we can see that financial issues in Chrysler has improved because of the new owner with goals that are hard to reach. For example, the article has showed that Fiat is going through a strong plan for reconstructing Chrysler. Which has the goal of earning 5.5 - 6 million a year. This making potential investors in increasing the shares. Making the company researching other ways to make a successful car corporation. In this messy crisis Company owner Fiat  would face many obstacles like employing too many people because it's such a high-profile industry. When featuring these key points, the company is very vital to success.

Reflection

Reading this article I have found myself that nothing is impossible. Being of one person like Fiat trying to change the recession Canada has been having. By purchasing one of the few bankrupt Car corporations, this really made a difference. I am have given appreciation for Fiat`s new exploration of making an new coming victory selling firm. This would increase the potential stockholders to increase in their research of newer technology for their company.