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.