Juxtaposition or just the norm?

It speaks volumes about the world we live in when in the same paper, on the same page we hear that our economy has bounced back to pre-crisis heights but that 27 FTSE 100 businesses have issuing profit warnings.

Both articles appeared in the Sunday Times at the weekend. The first, written by Ben Laurence, is a tale of celebration; our economy is back on track, unemployment has dropped again and wages are finally outstripping inflation. The second article, also written by Ben Laurence tells a slightly more woeful tale. More than a quarter of Britain’s FTSE 100 companies have alerted their investors that earnings targets are unlikely to be met. 38 warnings have been issued in total, far exceeding the figure of 26, reported at the peak of the financial crisis in 2008.

So how is it that two such disparate tales can co-exist within the same market? As with anything as complex as an economy there is never a singular or clear cut answer but there are some factors which may have influenced this current juxtaposition of success and failure.

Since the recession, many have attributed our economic recovery to the rise of the small business or SME. These organisations have been established and (for the main part) flourished in some of the toughest times imaginable, putting them in an ideal position to develop products, structures and strategies that complement the challenges of a struggling economy.

In addition, many of these businesses are locally rather than globally focused meaning they can source and supply within markets similar to their own. This removes a lot of the challenges faced by their far larger, FTSE counterparts.

Moving onto the FTSE, we should remember that most are massive, international organisations. As a result they have had to adapt and respond to the challenges of a global market such as fluctuating oil prices, unfavourable exchange rates and geopolitics. Unlike the SME, a FTSE company also has a lot more to factor in when it comes to responding to change. Their size, something which used to give them power and freedom may now even be a disability. After all, it’s far easier to make changes to your structure, your culture or your workforce if you’re operating at a headcount of ten rather than ten thousand.

The challenges these organisations face are unlikely to disappear, but those that embrace the current market and find new and better ways to adapt will be the ones that endure. In the meantime it seems we may have achieved economic success with relying on multinational enterprises to pave the way. The UK economy has been re-built on lots of small but sturdy bricks rather than a few large ones – ensuring we can withstand the pressure without falling over should a crisis come knocking on our door again.

About the Author

Helen Harling

Office and Marketing Manager for both Procurement Heads and sister brand HR Heads. Graduating with a marketing degree, Helen has continued her passion by leading our marketing function forward. You will see her blogging, tweeting, posting, videoing about Procurement Heads. You can see this on our LinkedIn, Facebook, Twitter, Google+ and Instagram page.

Visit Website

Comments are closed.