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An evaluation of financial strategies used by companies in the retail sector during recession period (2000-2010)

Author

Listed:
  • Nzaro Robert

    (Business Studies at Bindura University, Zimbabwe)

  • Njanike Kosmas

    (Business Studies at Bindura University, Zimbabwe)

Abstract

This paper analyses financial strategies for Zimbabwean companies in the retail sector industry in an economy characterized by recession from 2000 to 2010. The paper sought to meet the following objectives among others; to identify the various operating financial strategies available for companies operating in recession; assess the applicability of various short and medium term financial strategies for Zimbabwean companies and; provide a prescription to various stakeholders in the retail sector on evidence based operating financial strategies. Research findings showed that many companies ceased operations voluntarily and in most cases involuntarily. Others adopted a variety of financial strategies ranging from scaling down operations, streamlining business operations, being selective in service delivery to putting plants and machinery under care and maintenance. There was liquidity crunch in the market and as a result, companies failed to get funding; banks failed to attract meaningful deposits to provide companies with funding. Lack of operating finance was the chief cause why companies failed to reach pre-2000 operating levels. The study recommended companies to taking advantage of priority option in making payments as well as adopting a thorough recession management approach. Ignoring the impact of recession and its repercussions with the view that it would go away proved to exacerbate the problem. Key words: Recession Management, Capacity Utilization, Depression, Multi-Currency, Working Capital

Suggested Citation

  • Nzaro Robert & Njanike Kosmas, 2011. "An evaluation of financial strategies used by companies in the retail sector during recession period (2000-2010)," E3 Journal of Business Management and Economics., E3 Journals, vol. 2(1), pages 022-027.
    • Handle: RePEc:etr:series:v:2:y:2011:i:1:p:022-027
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    References listed on IDEAS

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