McKinsey Quarterly has come-up with a study where they looked at the financial performance of US companies in the last 4 recessions and then analyzed how different sectors enter and emerge from recessions at different times. This is an interesting study for those who are actively involved in the strategy formulation of an organization and/or plain students of strategy. Here are some of their key observations:
1. Similar beginnings: All 4 recessions started with a dip in consumer discretionary sector and spread through the economy.
2. Variable magnitude: The size of the dip in EBITA varies across sectors
3. Speed of decline and recovery: Sectors contracted much more quickly than they recovered
4. Share price performance: Share prices tend to decline before or just after the recessions starts and tend to rise near the end of recession and in either case the actual financial performace of the organization reflects the share prices, with a lag.
Entire report is available here (registration is needed and is free).
Thank you very much,
RamP!
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