Page 119 - Accelerating out of the Great Recession

ACCELERATING OUT OF THE GREAT RECESSION

the company opened new factories in the United States and
Europe and undertook joint ventures with Shell, Elf, and
AkzoNobel to capitalize on their capabilities in the manufac-
turing process. By 2003, Shin-Etsu’s profit level and market
capitalization (indexed to 1991) were, respectively, 50 and 168
percent greater than the average for the specialty chemical
industry.
Shin-Etsu’s success was the result of a sustained focus on
protecting business fundamentals. There is nothing particularly
profound about Shin-Etsu’s individual actions, and they are
things that any company can do. What is most noteworthy, per-
haps, is not only the resolve with which Shin-Etsu’s leaders
acted but also the way, while playing a strong defense, that they
prepared a potent offense.
Drive Down Costs

Nearly all companies took some easy, short-term measures to
cut costs during the Great Recession, but few companies are
now taking long-term actions. While 77 percent of the respon-
dents to our survey said that their companies had cut adminis-
trative expenses in 2009, fewer than half took long-term actions
to address production—such as reducing capacity, improving
efficiency, or doing more outsourcing. But slow economic
growth means that it is increasingly important to look toward
longer-term cost-reduction strategies. Chrysler’s decision to
achieve significant production efficiencies during the Great
Depression shows how effective timely action can be in driving
advantage.
Although cost cutting is most effective when pursued early in
a downturn, it is never too late. Two successful Japanese com-
panies in the Lost Decade demonstrate this point: Takeda, a

■ 98 ■