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An economic recession generally refers to a period of negative economic growth, which plunges economies into chaos. For instance, the last global recession instigated widespread adverse economic impacts across the world with only a handful of countries escaping its scathing effects (Sum et al., 2009, pp. 2). The global business environment turned hostile forcing many businesses out of operation.
With the threat of bankruptcy at hand, business organizations implemented cautionary measures aimed at sustaining their operations. Business process management (BPM), which became popular in the wake of the recession, is one of such remedial measures. This essay explores the reasons behind the widespread application of BPM in the wake of the last global recession in a bid to decipher the link between the recession and BPM.
In order to achieve this feat, it is imperative to understand the economic impacts caused by a recession. In the light of this knowledge, the implications of those impacts on the business scene become easy to understand and relate to the measures that businesses take to mitigate the adversities of a recession. In this case, the adverse effects of the last recession are explored while simultaneously investigating how they influence the widespread application of BPM across the world.
Economic recessions are characterized by difficult economic times for both individuals and businesses (Sum et al., 2009, pp. 1). The typical reaction to such circumstances is that businesses strive to increase sales in order to maintain their profitability whereas individuals strive to spend less since there is a reduction in disposable income. As a result, most people only spend when it is necessary and, when they do, they ensure that they get the real value for the money spent.
The implication of this development for businesses is that they are compelled to eliminate all inefficiencies from their operation circles in order to exceed customer expectations and demands with minimal resources. Enhancing business efficiency may call for strategies such as BPM.
Moreover, when customers become extra cautious with their money, competition among businesses tightens up since every business strives to maintain its profitability or at least avoid bankruptcy (Sum et al., 2009, pp. 2). The primary aim of every business is to make a profit. However, when the economic scene becomes volatile, businesses shift their focus to survival. Thus, a recession plunges businesses into a state of desperation where they implement every available measure to ensure sustainability. As a result, businesses can easily implement BPM as one of the pro-sustainability strategies.
In the larger picture, a recession can lead to a credit crunch in the economy of a country (Sum et al., 2009, pp. 5). Unfortunately, most businesses rely heavily on credit facilities to keep their liquidity at acceptable levels. Consequently, when the lender community limits the ability of the business community to access credit facilities, businesses are bound to experience liquidity problems that can easily bring them to a state of bankruptcy.
It is worth noting that a recession generally affects the entire economy, but in most cases, a specific sector takes the biggest blow (Sum et al., 2009, pp. 5). If the sector in question turns out to be the financial sector, financial institutions become the first to experience liquidity problems thereby plunging the economy into a financial crisis. In order to survive in such conditions, businesses have to use their financial resources sparingly but effectively. This need again pitches BPM as the best way out since it involves the optimization of every business process (Zairi, 1997, pp. 64).
Apparently, the relationship between a recession and BPM is such that it (BPM) is considered by many businesses as the panacea for the numerous woes instigated by the recession (Zairi, 1997, pp. 65). BPM gives businesses hope in the face of the uncertainty that is typical for recessions since it provides a platform upon which all business processes undergo an evaluation to stamp out all causes of inefficiency. Thus, the widespread application of BPM in the wake of the recent global economic downturn is because it proved invaluable in the recovery process.
Sum, A., Khatiwada, I. and Mclaughlin, J. 2009. ‘The economic recession of 2007-2009: A comparative perspective on its duration and the severity of its labor market impacts’, Northeastern University, vol. 2, no. 4, pp. 1-25.
Zairi, M. 1997. ‘Business process management: a boundaryless approach to modern competitiveness’, Business Process Management Journal, vol. 3, no.1, pp. 64-80.