Professional Documents
Culture Documents
Table of Contents
Table of Contents...................................................................................................1
ABSTRACT.............................................................................................................. 5
CHAPTER 1 - INTRODUCTION.................................................................................6
1.1 BACKGROUND...............................................................................................6
1.2 JOHNSON ARABIA........................................................................................11
1.3 OBJECTIVE...................................................................................................13
1.4 PROJECT AIM...............................................................................................13
1.5 RESEARCH QUESTIONS...............................................................................13
1.6 SCOPE.........................................................................................................14
CHAPTER 2: LITERATURE REVIEW........................................................................15
2.1 INTRODUCTION...........................................................................................15
2.4.1 Employment.........................................................................................21
2.4.2 Output..................................................................................................21
CHAPTER 5: CONCLUSION....................................................................................69
5.1 SUGGESTIONS FOR FURTHER RESEARCH...................................................72
LIST OF REFERENCES...........................................................................................74
APPENDIX I - SURVEY QUESTIONNAIRE................................................................80
APPENDIX II – FINANCIAL ANALYSIS.....................................................................88
APPENDIX III - SURVEY FINDINGS.........................................................................92
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ABSTRACT
The research was conducted to identify the implications of the recent global economic
recession on Johnson Arabia LLC and to evaluate the measures taken by the company in light
of the recession through primary and secondary research. Through the implementation of a
survey questionnaire and analysis of financial reports, it was observed that the recession has
had serious implications on Dubai and that while Johnson Arabia LLC has realized the
presence of the recession but has not managed to bring counter-measures to a significant
position. There is a need for Johnson Arabia LLC to focus efforts on internal matters so that
CHAPTER 1 - INTRODUCTION
1.1 BACKGROUND
The UAE, when considered in a broad perspective, can be considered as an open economy
known for functioning with a high per capita income. The Emirate of Dubai is also known for
its extensive economic diversification that has allowed it to decrease its reliance on oil and
gas to as low as 25% of its GDP (The World Factbook 2010). There is no doubt in the fact
that oil and gas still holds a profound position in the transformation that the UAE has
undergone. The UAE government is known for giving attention to creating jobs and
expanding infrastructure. Dubai’s Free Trade Zones attract investors from across the world
Dubai's GDP is composed of the primary, secondary and secondary sector. During the early
2000s, Dubai’s reliance on the secondary sector of the manufacturing industries experienced
stability while reliance on the primary sector experienced a decline in face of an increasing
reliance on tertiary sector. The active tertiary sector observed significant growths in the
communication, real estate, financial services, and real estate, storage, transport, hotel and
increase in the availability of labor was observed alongside a decline in labor productivity.
increase in capital productivity where the construction sector produced nearly four units of
output per every unit of input. During the same time, the construction industry in Dubai
became one of the eight essential sectors contributing to the development of the Dubai
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economy. By 2003, the construction industry, alongside the mining, handicrafts and trade
sectors, had become the industry providing the highest returns on investment. The
construction industry was going through a favorable boom at this point. The sectors of
education, hotel and finance were accounted as the sectors with the least return with surveys
by the Dubai Municipality recording returns as low as thirty percent. The GDP was observing
an average annual growth rate of nearly eight percent while the capital spending on fixed
assets was growing by an average annual growth rate of almost half of that. Also, government
revenues acquired from the oil and gas sector, profits from public enterprises and other
sectors accounted for over eighty percent of the government's non-tax revenue.
The early 2000s saw an average annual growth rate of twenty seven percent in the total
exports of goods while total imports showed an average annual growth rate of nearly eighteen
percent. Trade in services showed eleven percent average annual growth rate in imports as
well as in exports.
Dubai's economy is one that is built so that reliance on oil for GDP growth decreases with
time so the non-oil products can acquire the concentration required in order to develop. Major
economic sectors in this regard remain construction, services and trade. Labor and capital
have been brought into use to make up for deficiencies in other factors of production.
Over the years, growth in Dubai has been observed as one that is fundamentally driven by
investment. Production processes for Dubai generally rely heavily on imported capital goods
and while risk taking does not provide a significant amount of incentive, activities such as
short term rent seeking and wealth play significant roles as drivers of the economy.
The GDP dropped by almost 4% in 2009 when oil prices fell and asset prices deflated as a
result of credit tightening. The Central Bank and relevant authorities attempted to soften the
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blow caused by the recession by encouraging liquidity growth in the banking sector. The
Dubai real estate market and construction industry in particular experienced a considerable
decline in business volumes. Foreign investors become concerned for the solvency that Dubai
holds when it was revealed that there was a deficiency of cash in meeting debt obligations
(The World Factbook 2010). It came as no surprise that Dubai chose to take large scale
measures to solve its debt problem through a multibillion dollar bond program that was
soften the blow dealt by the recession. Proof of this can be witnessed in the fact that Dubai
has to be allotted an additional loan of $10 billion in late 2009 by Abu Dhabi. Efforts were
made to further decrease the reliance of GDP growth on oil and gas as well as on a large
The recession is not one that has had implications on any specific industry in Dubai. The fact
of the matter is that the implications of the recession are multilateral and have affected
Oil prices saw a significant drop and banks began to become hesitant in their lending
operations (Shostak 2008). The oil profit based economy began to show some of its first
signs of the implications of the global recession in the form of plummeting stocks in the
Dubai stock market by June of 2008 (Worth 2008). As a direct result of the recession, Dubai
began putting construction projects on hold while others were considered for cancellation in
cases where funding had not already been lined up (Elliott and Stewart 2009). This is because
of the fact that expatriate and investor confidence began to drop and people began to pull out
their money from the Dubai stock market, making development projects run out of financial
resources (Singh 2009). Although the recession that hit Dubai is not one that can be
considered to be the same in its severity as has been observed in the case of the United States
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and other European economies, it comes as a significant blow to the Dubai economy and the
growth to which it had become accustomed to and known around the world for (Heyer 2009).
"In the U.S., the challenge is about keeping the banks going, [In Dubai] the economy has
been overheated, a correction is needed, and it's about making sure the slowdown happens in
Around October 2008, Dubai was announcing plans to build new structures and to engage in
rapid development plans. The projections and forecasts were ones based on optimism and
there was very little concern if any at all for the potential implications of the global recession
(Hunters 2008). However by the end of the same year, the global recession had far more
devastating consequences on Dubai’s economy than had been expected. Layoffs had to be put
into place in order to cut losses in a desperate attempt to cut costs (Dubai Chronicle 2009).
The layoffs caused massive delays in construction and development projects in the region and
extensive loss of man power as a result and while some of the unemployed struggled to
acquire new jobs, many of those from abroad headed back home. Development plans as
expansive as the Burj Dubai experienced share prices plummet by as much as 80% as a direct
Banking and Financial Institutions dealing in Islamic Banking and Financing managed to
survive the immediate and more harsh repercussions of the recession through the fact that
Islamic Banking does not incorporate mortgage based banked securities and credit-default
swapping, both of which have been identified and established as primary reasons that led to
Islamic Banking and Financing therefore comes across as more safer and ethical when
considered in light of the fact that conventional banking tends to give an advantage to the
seller while Islamic Banking tends to keep a just balance between the buyer's and the seller's
While institutions engaged in Islamic Banking and Financing did not suffer as much from the
recent recession, the fact remains that Dubai has been far from impervious from the
The tourism industry has plummeted and foreign investment has decelerated significantly.
Dubai is known for its exquisite high end and posh hotel industry that thrives upon a strong
tourism industry. The global recession has reduced tourism and has therefore brought
consumers to a point where they refrain from spending too much of their disposable income.
As a result, hotels in Dubai are being forced to invest in aggressive marketing and
the hotel industry in Dubai is experiencing its lowest booking rates at a time when it is
The Dubai tourism industry experiences its peak season during the first quarter due to its mild
winter climate that appeals to Western European, Russian and Scandinavian tourists amongst
many others (HSBC Bank Middle East 1998). It is necessary to highlight at this point that by
the end of the previous decade, the Dubai hostelling industry was entering a maturity phase
and the provided facilities were being subjected to expansion, up-gradation and development
The recession in Dubai holds a considerable degree of relevance when considered in light of
the fact that Dubai comes across as a ground where investment from the West and a major
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part of the East comes in. Investors from Iran, Saudi Arabia, Iraq, the US, Europe and other
regions can be expected to come to Dubai to invest aggressively in development projects. The
tax concessions that Dubai offers make Dubai the ideal investment ground for investors
It is apparent therefore that the implications of the global recession have had an extensive
impact on multiple areas of the Dubai economy and that these implications are not ones that
can be subjected to an underestimation. The recession has put a stop to the acceleration with
which the Dubai economy was developing and it comes as no surprise that almost every
Johnson Arabia's foundations date back to 1976 in South Africa where the establishment of
Johnson Crane Hire brought forth a company that has developed through decades of
experience with the provision of offshore lifting solutions to a diverse variety of projects.
One of the most recent expansions by Johnson Crane Hire came in 2004 in the form of
Johnson Arabia in the Middle East which comes as a direct result of a joint venture between
Murray and Roberts and the Kanoo Group. The purpose of the expansion of Johnson Crane
Hire into Johnson Arabia was to allow Johnson Crane Hire to relieve its reliance on the South
African Market through enhanced activities in crane trading and to capitalize on the
development opportunities that came forth as a result of the venture underlying the
expansion.
With its head quarters in Dubai, Johnson's Arabia provides cranes and Aerial Work Platforms
for lifting jobs that may pertain to fixing, cleaning or construction tasks. Johnson started
functioning with hiring out only crane. Through their dedication and commitment in 2004
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they launched their Aerial work platform department. Today Johnson has almost over 100
cranes and over 300 aerial work platforms with the total number of employees exceeding
250.
Johnson Arabia has taken part in projects such as the Mall of Emirates, the Burjuman Centre
Extension, the Ibn Batuta Shopping Mall, and the Hatta Prison amongst others. Projects such
as the Dubai Mall, the expansion of the Dubai International Airport, the Emirates Hangers
and the Palm Jumeriah are only a few of the ongoing projects in which Johnsons Arabia is
engaged in.
Major competitors of Johnson Arabia include Al Faris Cranes, Al Jaber Cranes and Rapid
Access. Apart from the rivalry part because of the trust and faith customers have in Johnson
At Johnson customer satisfaction is priceless and it strives to provide its customers value
added lifting solutions which are aligned with safety, maintenance, availability, reliability and
cost effectiveness. Johnson Arabia vision is to be the best and leading lifting solutions service
provider and keeping in mind their progress it’s not far away.
The organizational structure for Johnson Arabia is one that follows a relatively simple
hierarchical. The structure starts from the General Manager of the company, and branches out
to the Finance and Administration Director. The Finance and Administration Directors
although on a broader level, hold the same relevance as the heads of sales and operation
departments for Cranes and Access Work Platforms. It is imperative to highlight that each of
the Crane and Access Work Platform areas comprises of a Sales and Operations department
of its own. The operations departments for Cranes then branches out further into the
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Workshop department and the Operators division for Cranes while the Operations department
1.3 OBJECTIVE
The objective of the research is to develop a clear comprehension of the implications of the
global recession on Dubai and subsequently on Johnson Arabia LLC in order to establish
upon the measures that were taken and their utility to Johnson Arabia LLC. This analysis
shall allow the research to reach conclusions in the form of recommendations for Johnson
Arabia LLC to sustain its performance in the Middle East and to continue capitalizing on its
new venture.
recession on a thriving and well established economy. Johnson Arabia LLC, for this purpose,
has been considered as an example of a well established company operating in the East that
The research shall be carried out to explore and answer the following questions:
• How did the recession have an influence on the Dubai economy and what were the
implications?
• What measures did Johnson Arabia LLC take to deal with the recession?
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• How adequate were the measures when considered in comparison to measures taken
• What is the current standing of Johnson Arabia LLC when considered in light of the
• What alternate measures could have been taken by Johnson Arabia LLC in response
to the recession?
• What further measures can be taken by Johnson Arabia LLC to sustain and develop its
1.6 SCOPE
The scope of the research is defined through the fact that the research aims to develop an
analysis of the measures taken by Johnson Arabia LLC in response to the recession and their
effectiveness. The scope shall therefore be limited to the effectiveness of these measures and
to the formulation of alternate measures that could have been taken to respond to the
recession.
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2.1 INTRODUCTION
Carrying out a research on the implications of a recession would be injustice to the objectives
of the research and the effort made in lieu of the research. However, when attempting to
define the exact definition of a recession, there are numerous definitions available, each of
Knoop (2004) defines recession as two or more successive quarters of negative GDP growth
quarters of negative GDP growth which means that an expansion in the economy would
result if there would be two or more consecutive quarters of positive GDP growth.
This means that the peak of an expansion is that point at which the level of GDP of that
particular economy reaches its ceiling point after which it starts to decline. Hence the peak of
recession is the point at which the GDP falls to its lowest point after which it starts to
increase again.
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them recession is nothing more than a significant extensive decline in economic activity that
Frank and Bernanke (2006) define a recession as “a period in which the economy is growing
at a rate significantly below normal is called a recession or a contraction” (p. 701). This
definition can be observed as one that is similar to one given by Downing and Clark (2003)
recession” (p. 432) and Gwartney, Stroup, Sobel, and MacPherson (2006) who establish a
recession as “a downturn in economic activity characterized by declining real GDP and rising
Nordhaus (2005) when he defines a recession as the “recurring period of decline in total
output, income and employment, usually lasting from 6 months to a year and marked by
widespread contractions in many sectors of the economy” (p. 468). Similarly, Godin (2001)
recession is a period in the economic cycle when business activity and spending are receding.
The strength of the economy is on a downhill side, and people are feeling a bit uneasy about
their prospects” (p. 24). The most comprehensive definition of a recession however was
observed to be one given by Tucker (2010) when he defines a recession as “a downturn in the
business cycle during which real GDP declines, business profits fall, the percentage of the
workforce without jobs rises, and production capacity is underutilized. A general rule is that a
recession consists of two consecutive quarters in which there is a decline in real GDP" (p.
150).
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The question arise that why recession occurs, the answer to the question have been provided
by two main schools of thoughts that is the monetary economist and the Keynesian
economist. The monetary economist or more famously known as the neo classical economist
believes that large decrease in the money supply usually results in recession. The explanation
given in this regard is that unexpected and sudden decline in the money supply will decrease
the spending power of the public and hence resulting in recession. On the other hand the neo-
Keynes economist believes that when there is a tendency in people to save more than
consumption spending the result would be a decrease in total spending and the economy
wouldn’t have funds to circulate in the market and hence recession would occur (Wessels
2006).
Economic analysts summarize all these factors and jot them into three Ds’ for a slowdown to
1. Duration
2. Depth
3. Diffusion.
By duration it means that the slowdown period should be considerably long, depth means it
should have a substantial decline in the economic activity and diffusion means that the
slowdown effect should be visible on all the sectors of the economy rather than on just a
Usually all these events are recorded by the National Bureau of Economic Research NBER
and every member of the committee must exchange their thoughts on the various aspects of
However, Farago (2002) perceives that a recession occurs after a high point in the level of
economic activity and ends as the economy reaches its trough. What is evident till now is that
the economy runs in a cycle where it goes into expansion when the economics conditions are
at its peak and consequently goes into recession if there are any abnormalities in the economy
(Farago 2002).
To have a better understanding the definition and basic concept of recession a very good
1. Bubble
2. Buzz
3. Bust
4. Bandage
The origins of a recession can be tracked to the formation of a bubble. The bubble therefore
represents the foundation of the recession. Farago (2002) says that bubble means tentative
excess in the economy causes certain sectors of the economy to grow at a very unhealthy rate
means growing at a rate which is not normal. This expansion could be because of
overproducing, overtrading, overspending etc and that is why it is called excess. History of
recession tells us that the major factor that causes the bubble was the unhealthy demand of
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buying commodities for resale rather than for personal use. A classic example can be given of
the real estate bubble that occurred in the early 1990s’ when the prices of land became quiet
cheap and most of the people started buying real estate to generate profit through reselling.
The problem came when there were too many people that invested in the same commodity
with the same purpose of making profit which left the market without buyers. A similar kind
of scenario developed with the IT industry it happened so unexpectedly that everyone started
investing the IT sector which created a bubble and eventually that bubble busted.
The second one is the Buzz in the market, as the name suggests buzz is what the people are
talking about in the market also the speculations that are being created about a particular
sector or stock which they believe is booming becoming hot. Farago (2002) believes that the
impact of this buzz can be very decisive and it can lead to various changes in the economy.
For example if a buzz is created in an unstable economy what would be the general reaction
of the people that the public would start to pull out their money from the market.
The third B is the burst of that bubble which in fact is the recession. One thing that should be
kept in mind is that a bubble in a single sector of market is most unlikely to cause a recession
(Mochizuki 1995). What is recommended is that the consumers should keep an eye on the
bubble and should be aware of their spending in that particular sector (Calverley 2004). What
generally results after the burst is that productivity goes down and unemployment elevates.
The last and the final phase of the recession is the bandage, as it’s very much understood by
the name that bandage is the post recession stage where steps are taken by the government
and other policy making authorities to bring the economy back on track.
To summarize it briefly it could be said that recession is that state of an economy in which
the rate of output decreases to a level that is relatively lower than what it would have been in
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normal circumstances. A boom is a condition in which output is growing at a very swift rate.
The beginning of a recession is called the peak and the ending point is known as the trough.
Economic instability causes recession and expansion and it’s hard to predict their severity
and length. They have widespread impact and in some cases it can go global affecting most
of the similar industries. Unemployment rises very sharply during recession as the bubble is
busted there in no demand of certain products and hence organizations have no other option
then job cuts. Apart from that an obvious reaction to recession is the increase in inflation
(Frank 2006).
One thing that has been common till now is that recession is nothing more than a contraction
the basis of which recession could be measured economist judge recession in terms of the
behavior of the GDP how it’s reacting and fluctuating in the economy, whereas the general
public evaluates the recession by the pattern of unemployment (Gittins 2009). Normally the
With the history of recession under over economist around the world started to works on the
indicators that were the major players in causing recession. The need for this study was to
develop an understanding about recession, making predictions about recession and eventually
In reality it is quiet difficult to predict the economy and there could be multiple factors that
can work simultaneously in causing recession. Among the major indicators some of them are
given below which include employment, output level, industrial production index (IPI),
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capacity utilization rate (CUR), interest rates, producer price index (PPI), duration, and
2.4.1 Employment
It is fairly clear that if the unemployment rate of an economy is increasing it means that the
economy is heading towards a recession. Reason for this is because when the economy would
not produce much they won’t need the work force and eventually it would result in job cuts
(Farago 2002).
2.4.2 Output
As we have discussed before output or GDP is the representative of the value of all the total
good and services produced in a certain territory in one year. The GDP could be presented in
two ways the first one is in terms of money value which would give the picture of the market
value of all the goods and services that were produced in that time period. In this kind of
calculation inflation is not adjusted which means that that if there is an increase in the general
price level it would not show that increase. The other type of calculation shows a much closer
picture of the economy reason being in this GDP the inflation rate is adjusted so it shows the
ground reality of what is really happening on ground. This is also known as real GDP and it
As the name suggests this is the economic indicator which deals with the results of the
industrial production of that economy. As we all know industries plays a major role in the
economy of a country and the industrial sector is a major stakeholder in the improvement of
an economy. The industry helps the economy in manufacturing the required goods that are in
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demand of that nation and apart from that it also helps in producing those items that are in
demand by the foreign countries and hence generating valuable foreign exchange for the
country.
The industrial production index measures the total output of the manufacturing sector, by
manufacturing goods we means that the tangible products the physical form of products that
were produced during that course of year. How the industrial production index could be an
indicator for recession the answer to this question is quiet simple that if the industrial
production index is low this means that the industry is not in good shape and they are not
performing up to their potential and if the IPI is on the higher side of the graph is would mean
that the industry is on the right track and no further actions are required (Farago 2002).
This is the third one on the list and economist believes that is interrelated with the industrial
production index. Basically the capacity utilization rate is the calculation of the output
produced by the manufacturing industries. The CUR measures the proportion of the industrial
facilities that are being used by the industry in order to produce the desired results. By
facilities it means the plants equipment machinery and other thing used for the production
purpose. If the overall production of the economy would increase it would result in the
increase of CUR which would show the demand of the equipments and similarly if there
would be a decrease in production the industry would not be looking at the CUR (Farago
2002).
Interest rates are also an important factor that contributes in predicting a recession. In the pre
recession period what government does is that it increases the interest rate in order to slow
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the economy which is growing at an abnormal rate. When the interest rate gets high
automatically the investments that were made by the private sector takes a break which
ultimately results in the stability of the economy. The state bank of the country can reverse
this action when there is an opposite situation means when there is no investment done by the
public. The state bank drops down the interest rate so that the public can get encouraged by
this and starts investing their money in the market (Farago 2002).
The producer price index is the index which measures the price level at the wholesaler’s end
only. What is does is that it measure the prices at the producer end and then compares it with
the selling price which gives a good idea about the inflation rate (Farago 2002).
The consumer price index gives a more comprehensive analysis of the price fluctuations in
and economy over a long period of time. The CPI measures the aggregate price change that
was recorded in a pre defined product or services. It records the price change in the food
and other daily use products and services. The CPI is an important indicator in defining when
According to the financial dictionaries recession mean a drastic slowdown of the economy.
History tells us that recession is caused by the combination of domestic and overseas factors
but domestic problems are more important. As discussed before recession does not mean a
slowdown in any particular sector but it effects almost every sector of the economy with the
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tourism, manufacturing firms, etc. As a result of this most of the organizations reduced their
workforce and increased their working hours in order to improve their productivity which is
The Keynes theory of recession was put into practice by many of the economist and
presented their own view regarding the dynamics of recession. According to these economists
recession results when there are economic imbalances between the investments and
consumption. The rational provided to support this idea is that entrepreneur or investors plan
their investments in the shape of plants, equipments, inventories etc. All these investments
are based upon their final sales and the profit that would be generated by these sales. In a
state of recession when people are trying to save rather than consume the demand would
automatically falls which in other words means investment would also decrease and would
end up in recession.
Another concept which is related with recession is of full employment. An economy which is
operating at its full potential is said to be at full employment means that all the workforce of
that country is contributing towards the economy. Output is said to be at its full potential or
full employment level when the labor and other sources of input are utilized at its maximum
level.
According to this school of thought recession occurs when GDP falls considerably below the
full employment level. Because of these two types of recession occur the first one is one in
which output falls significantly below its full employment level and the second one is the
condition when the economy’s potential level of output falls (Wessels 2006).
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The first type of recession takes place when output falls below it full employment level and
consequently unemployment rises. This usually occurs when consumers and investors are
hesitant in their aggregate spending. In the second type of recession the economy’s potential
output falls different factors play their role in the decline of the full employment output.
Another definition tells us that recession is that state of an economy when the growth of the
economy is significantly below normal rate. It is also stated as contraction by some authors
Some economist argue on the fact that recession only occurs when the real GDP falls down
the normal rate in fact they believe that recession could also occur when the real GDP is
below normal level and it’s not negative as well. The key point which needs to be understand
here are the terms peak and trough. By peak we mean the beginning of the recession as the
economy is at its highest level and cannot go beyond and trough means the end of the
recession period prior to recovery when the economy again gets stable and goes towards its
With recession comes unemployment both these phenomena are directly related to each
other. The question that bubbles in the mind is why is that so? Reason for this is because
recession in other words means the total output or GDP of an economy crashes. When the
economy would crash automatically it would have an effect on the purchasing power of the
people, and the trend of saving would increase in the general public rather than spending,
which would eventually result that people would not be interested in buying and the sellers in
the market would be left begging, and at last they would have no other option then to reduce
Usually the after effects of recession follows as most of the people are laid off and as
discussed before the unemployment level increase in this period .Those who survive do not
experience any increase in their pay scales, the organization’s profits and revenues falls down
John Maynard Keynes is considered as the most influential economist of the century. Keynes
proposed a theory which is very famous and widely used throughout the economical world.
Keynes projected the idea of spending money which we don’t have which is also known as
the income expenditure multiplier effect (Keynes 2006). The Keynes multiplier model applies
this function in the function implies that the amount that people would spend depends on the
According to Meierding (2009) "[John Maynard Keynes'] multiplier effect is based upon
those receiving income from government spending it again in return. Those who receive
income from them must spend it in turn so that the money spent by government multiplies a
number of times".
Keynes believed that people needed to be employed specially when there is a slowdown in
the economy and at this moment the government has to play its role in order to keep the
people in working because the private sector would be hesitant in spending which would
result in lower investment and lower investment would mean fewer jobs (Farago 2002).
Keynes contended that aggregate demand for goods might be inadequate during economic
turndowns which would lead to unemployment. In this situation the government policies
should be used to boost the aggregate demand which would eventually result in increasing the
economic activity and eradicating unemployment. By government policies it means that when
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there is a downturn in the economy and not much happening in the economy the government
should borrow money and start spending to run the economic cycle.
When the economy enters such a state of distress, it is natural to expect a decrease in
aggregate demand. This decrease in aggregate demand in turn results in a directly related
decrease in consumption.
Historical background of recession goes way back in the last century. The Second World War
was a major landmark in the history of recession and it ended up in the creating the global
economy into a bubble. Because of the destruction that was caused by the war there was a
massive increase in the productivity and employment rate. Many economist around the world
thought that the economy would again be in difficulty after the war would get over and the
soldiers would return to their home. However the post war scenario pasted a completely
different picture when the consumer demands for products rose because of the massive
demand that was flooded by the victims of the war. Unfortunately this bubble economy that
was created because of the war couldn’t resist the pressure and soon busted. The pace of the
expansion was so massive that the economy couldn’t survive it failed to maintain stability in
In our discussion till now we have discussed that when recession occurs it means that
consumer spending will become fragile and hence the manufacturer or service providers
would find it difficult in this period. Companies should keep in mind the following factors in
This is one of the most important strategies which should be adapted by the organizations in
times of recession. The reason for this is because at this point of time the organization needs
to know the most about the customers. Because of recession customer preference changes and
organization should know what exactly the customers are looking in this condition and then
redefine their strategy in response to the recession. Normally during recession the consumers
approach is a bit tentative, they take more time in searching for products that are long lasting
and durable. Negotiation gets stiffer at the point of sale and consumers have a tendency to
postpone or delay purchases. At this point of time the brands position in the consumer’s mind
plays a very important role. If the consumer have a good image of the brand chances are that
Another thing that should be done is to maintain advertising. The rationale is very simple
because the competitors would be backed off and they would be cutting off their advertising
budget the media would be open for the organization and proper time would be given on their
advertising. Studies also shows that brands that increase their advertising during recession
can enhance their market share rather than in good times. Psychologically also the consumers
are uncertain in times of recession and a reassuring advertising campaign would uplift their
morale to start spending. Favorable rates for advertising can also be achieved because of the
The organization should revise their products as for which one is getting much attention by
the consumers. Products that are multipurpose are preferred by the consumers (Quelch 2007).
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Organizations should take the approach in this regard of their personal life. In the time of
recession organizations should look around and decide for what counts is and is not essential.
While designing strategies to counter recession managers should ask themselves a simple
question what would I have done if my personal income would have dropped? The answer to
this question is fairly simple you would have given a hard look at your expenses and cut it
The same approach should be taken by the organizations like for instance organizations often
pay private medical insurance to their employees but should the organization be paying for
the medical expense at this time? The staff would not object to this action as it is far better
not to have a medical insurance then having no job in recession. Steps like this can be taken
and the employees should be taken in confidence that the business is going through hard
times and as soon as the recession period would be over all the perks would be back into their
This is another good practice which could be adopted by the organizations in recession.
Specially in the case of manufacturing companies as stocks are assets but it does not help the
cause of cash flow until and unless it’s fast moving. Another reason for lower the stocks is
because it’s a general understanding that during recession the consumers would not be very
active in spending so the need to put such a high number of stocks would cost the
organization some money. Experts believe that the organization should develop a (JIT) just in
time relationship with their suppliers. This would save the extra cost which is caused by the
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warehouse and these funds could be utilized in the business as stock is dead money until it’s
The most important thing that the organization should have in times of recession is the
amount of money they have in their reserves. So experts believe that organizations should try
to do transaction in cash rather than on credit terms and as far as payment is concerned try to
avoid it by paying the suppliers with invoices. All this depends on the business and customer
As we have discussed before that organizations should focus more on customer preference
and build a strong marketing campaign just to make a point that the organization would not
fear the recession but they’ll face it. But it is always difficult for organizations when the
recession hits the market. It’s a difficult decision to make major investment, or to launch a
new product. This aggressive and bold strategy would prove out to be a clear message for the
competitors that the organization is thriving continuously. In other words we can say that
these bold tactics would provide profitability during the bad times and superior growth when
“The natural reaction of many businesses experiencing a downturn in their revenue is to cut
costs in areas like advertising and promotion. Our findings prove that they should do exactly
the opposite if they are to ride out the recession and thrive thereafter (Roberts 2003, p. 33).”
Economists have defined two types of costs among which the organization has to make a
decision which one to go forward with. These costs are tagged as good costs and bad costs.
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The costs that come under the heading of good costs include the costs that are associated with
marketing, quality and new product and services. Among these costs the importance of
marketing is most highly rated. It’s a natural tendency that when businesses are facing hard
times or financial crisis they cut the marketing budget and call them as expense. Indeed it is
an expense but an expense which proves out to be quiet fruitful when the recession is over. A
research was conducted by PIMS (Profit impact of marketing strategy) which showed that
those businesses that increased their marketing spending were not much profitable during
recession but as the recession period was over and recovery started their profitability went up
dramatically faster than it was before recession. Apart from that organizations that boosted
their marketing spending during recession were able to gained market share three times
quicker as compared to those businesses that decreased their marketing spending during
recession.
One thing that should be kept in mind while developing marketing strategy in recession is the
customers’ intention or customer preference. This would help the organization to get a better
know how about the customers preference and what exactly they are looking for. Hence these
“During a market recession improving customer perceived quality of your offering relative to
competitors also pays off in better profits and growth (Roberts 2003, p. 35).”
Product innovation has also a major contribution in most of the cases during recession.
Research has proven that R&D spending both in times of recession is worthy enough for
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growth. A bit of research in the market to better understand the customer choice would
always be fruitful.
As far as bad costs are concerned they include the high manufacturing cost related with
The recession caused significant implications on the UAE Financial Markets as fluctuations
and the price earning ration at the Abu Dhabi Securities Market (Central Bank of the United
Arab Emirates 2009). The overall implication on the UAE financial market was that the share
prices came down to levels lower than those observed in other emerging economies.
As a result of the global recession, economic growth fell to almost 3.4% in 2008. Advanced
economies that are powered by strong industrial infrastructures experienced a decline in the
rate of growth. In 2008, the USA's growth came down to 1.1% to 2.0% while the rate of
growth in Japan came down to 0.3% from 2.4%. France experienced a decline from 2.2% to
0.8% with Germany recording a decline from 2.5% to 1.3% (Central Bank of the United Arab
Emirates 2009). Economies that were following the Euro experienced a decline from 2.8% to
2.5% in terms of economic growth while the UK fell from 3.0% to 0.7%. Asian Economies
also experienced a decrease where the average economic growth fell from 5.6% to 2.1%. The
implications of the recession were also observed in the area of global trade of goods and
services. Trade across the world experienced a downward turn when it was recorded at 3.9%
The recession in the UAE remained less violent in its impact since high oil prices provided
the UAE with vital funds alongside the Central Bank's decision of allowing companies based
in the UAE access to liquidity support facilities. These measures were taken by the Central
Bank in collaboration with the Ministry of Finance (Central Bank of the United Arab
Emirates 2009).
As the global recession has its effect worldwide the economic turndown has also dented the
construction market especially companies located in Dubai and Bahrain had severe impact on
the economy. It is estimated that four projects which were valued around AED 17 Billion
were terminated during the last financial year. The causes of these terminations were quiet
different it ranged from impact from client financing, the feasibility of the projects, and the
risk factor associated with the contractors (Murray and Roberts 2009).
Details of projects that were affected by the recession includes the Tameer Towers which was
supposed to be build in Abu Dhabi and valued around AED 6.2 Billion but the project was
Another example of recession effected project is of Trump International Hotel and Tower on
Palm Jumeirah the project appreciated around AED 3.3 Billion and it was terminated by the
clients even thought the substructure work was partially completed (Joshi 2009).
Ever since the recession has hit the UAE some of the major changes that can be observed as
policy changes are that interest rates have climbed substantially and banks and other financial
institutions are very hesitant in providing loans to the general public. This is not the case with
only loans mortgages are also considered as high risk by the banks and they are very reluctant
to provide it to the customers. This attitude from the financial institutions has an overall
34
effect on the market. Making fewer funds available to the customers and companies is
This trend followed by the banks could be analyzed quiet well by understanding the concept
of the banks that when a bank views a loan as high risk or the environment is like such that
the banks considers providing loans as danger what they do to avoid giving loans is they
increase the interest rates. When the interest rate becomes high on loans then the public has to
think twice before applying for a loan. Similarly when the banks see loans as low risk they
decrease the interest rate so as to enhance the borrowing trend in the public. The current
situation which the UAE is facing is that the government has dropped the interest rates in an
attempt to boost growth. According to Andrew Clare who is a professor at Cass Business
School said that “This may be the first sign that people are thinking you can't get back to the
Another technique which is used by the banks is to increase the spread between what the
customers would get if they deposit the money and what they will have to pay if they want to
borrow money from the bank. What the UAE government needs to do now is to lower down
the interest rates reason being to encourage the public in spending the money rather than to
save. As we have discussed before that during recession there is a general tendency of saving
rather than spending. How the government change this trend is by decreasing the interest
rates and persuading the public to spend so that the money could enter the system and the
Another reason of Dubai’s recession is of its tourism industry. It’s obvious that during an
economic slowdown people would travel less and a major chunk of Dubai’s economy
depends on the tourist activity so this also makes up a reason of recession. The effect of
tourist not coming for visiting Dubai in recession would be far more than any other country
35
reason being that around 17-22% of Dubai’s GDP is based on tourism as compared to any
other country where only 5-10% of the total GDP depends on tourism (UAE Lists 2008). In
this regard what the authorities should do to attract the customers is to shift their approach
and they can do this by providing lower prices, better packages, and improved values all
these would prove out to be very handy in a recession time when the visitors have a smaller
Another very important issue that needs to be discussed especially in the case of Dubai is that
when people are jobless they spend less this is quite obvious. But in the case of Dubai if the
people lose their job they are also on the verge of losing their visa which would force them to
leave the country within 30 days of visa cancelation. What happens now is that it’s very
difficult to find a new job in a market downturn so spending becomes almost next to
impossible. So in the UAE getting money out from the unemployed will not just be less but it
would almost disappear which in other words means that more people would lose their jobs
In short we can say that loosing you job in recession periods in Dubai would ruin the personal
life of an individual but besides that individual the economy of the whole country would also
be dented. According to an estimate around 15% of the tourist visiting UAE have relatives or
friends in UAE when those people would leave the country the tourism industry would be
daunted because they won’t be coming to the country and hence won’t be spending money in
the UAE’s economy so the whole industry which is associated with the tourism activity
Dubai’s government restructured its decision making process in order to draw a line between
the financial crisis the committee would cover the economic development. As the property
36
market crashed in Dubai in 2008 the neighboring Abu Dhabi aided Dubai with $10 billion to
If we looks with a broader perspective this recession would hit Dubai more than the western
markets. The outflow of people in other words mean outflow of revenues because the
expatriates with themselves brings an awful lot of revenue in the shape of their spending,
their bank deposits, their sending, income generated from them in the shape of taxes and
other utility bills etc. to stop this outflow of people the visa policy should be revised and the
contribution that these immigrants are making towards UAE’s economy should be
acknowledged or otherwise the consequences would be very hard to face by the locals.
2.11 SUMMARY
To summarize all that have been discussed previously it could be said that a business cycle is
just like a roller coaster. Despite of the fact that business cycles differ in intensity and
duration there are four phases of a business cycle which are peak, recession, trough and
recovery. It starts with a peak then drop down to the bottom then again stats to climb and
after that it reaches another peak. Although it’s very difficult to predict the current level of
the economy it could be said that the economy operates in anyone of these phases. Through
research economist have derived some indicators that helps in the forecasting of a recession
Recession is the downturn in any economy during which real GDP declines the business
profits falls, the potential output is not generated and majority of the workforce faces
unemployment. Peak time of an economy is the time at which the real GDP reaches its
maximum. Trough is the time just after the recession the real GDP in this time is on the lower
side. And the last phase is of the recovery in which the real GDP again starts to regain its
37
previous position, organizations again starts to generate profit and the unemployment level
starts to move towards full employment. One thing that should be remembered is that real
GDP means total value of the goods and services produced in an economy in which price
changes as compared to the previous years are adjusted. Price adjustments include both
3.1 INTRODUCTION
Research methodologies are a very important step as far as the analysis element is concerned.
Research has always been given a very important status because of the results that has been
derived from these methodologies helps the researcher in developing a proper conclusion.
a subject and the ultimate objective of conducting a research is the attainment of knowledge.
environment which would help the organization in making effective decision making.
As this paper deals with the strategies to counter recession therefore emphasizes is laid on
the qualitative research and then deriving conclusion from this research. This section of the
paper would deal with the different types of research techniques and their implications.
Moreover the best possible methods of the research are identified and selected in completion
of the project.
The selection of the appropriate medium of research is very crucial reason being the whole
research and the conclusions and the findings of the papers depends upon this section. There
are quite a bit of methods that are used for research purposed but the important part is to
select the correct medium for your research that best suites the paper and a method which
The reason because of which the establishment of a credible research methodology serves a
pivotal role in the research is that the research methodology dictates the techniques that the
study will make use of in the collection, handling and analysis of data as well as the
39
underlying logic behind them. As a result, it stands to reason that the establishment of a
research methodology that is incompatible with the data types incorporated into the research
may cause the study to conclude upon inaccurate findings and interpretations. In terms of
credibility, the credibility of the research methodology translates into the reliability of the
findings of the actual research. It is because of the same reason that the research methodology
is carried out before drawing out the findings. More often the research methodology in
researches is established once a credible and adequate of the research variables has been
established so that the methods of data collection, handling and analysis can be established as
of the nature of the perspective that the research shall follow before beginning work on the
findings. This generally involves the analysis of different research approaches to deduce the
one that is the most appropriate and for which the research does not become vulnerable to
potential limitations. For this reason, the establishment of the research methodology cannot
be considered to have been completed unless a comprehensive and brief analysis, if not a
thorough and in-depth one, is carried out for the potential limitations of the research. For this
research in particular, special attention shall be given to the limitations of the research in this
chapter as well as in the last chapter to provide a thorough insight into the limitations of the
research.
The two most widely used research approaches are the qualitative approach and the
business research also experts believe that they are the backbone of a research.
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The qualitative approach brought into use when the research is one that incorporates the use
of opinions, ideas, perceptions and attitudes. More specifically, the variables brought into use
in a qualitative approach are ones that are not expressible completely through numerical
terms. While their polarity may be specific they cannot be measured in terms of their
magnitude. Data acquired for use in a qualitative approach is one that is generally acquired
from sources such as survey questionnaires, interviews, films, case studies, direct observation
techniques and the like. Quite often the data brought into use in the qualitative approach is
based on opinions and tendencies. The qualitative approach therefore allows the research to
evaluate the causes because of which the subject phenomenon exists. In essence, the
qualitative approach tends to consider the attributes of research variables for their qualities,
On the other hand the qualitative approach helps in having insight into problems or cases.
Qualitative approach mainly uses questionnaires and surveys that are designed in a fashion
that takes into consideration the population and its respondents as well. Qualitative research
is mainly applied in scientific areas to test the objectivity of the data as well as the application
of the data to the selected sample of the population (McBurney and White 2006).
However, the qualitative approach is not without its limitations. These limitations arise from
the fact that the qualitative approach tends to rest on extensive approximation as a result of
the absence of precision. This approximation serves to leave room in the research where the
applying the qualitative approach in scenarios where the research involves specific variables
terms serves to cause confusion and uncertainty. However, due to its complex nature, the
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qualitative approach is implemented through one of its two sub-classifications that allow the
The broader aspect of research that is mainly used by different organizations to conduct
research includes the deductive approach and the inductive approach. The deductive approach
focuses on a specific hypothesis and after that analysis over hypothesis is developed. The
deductive approach normally follows a set pattern according to which first and foremost an
objective of the research is made after that a statement of purpose of the research is
developed which focuses entirely on the objective of the research. When both the objectives
are achieved then the research proceeds and in the end the research hypothesis is either
accepted or rejected. The deductive approach is very frequently used when it comes to exact
sciences like physics and chemistry. The reason behind this is because these sciences provide
pre established laws which offer a base for the researcher to further elaborate the developed
hypothesis (Jackson 2007). The deductive approach is also known as the top down
approach, reason being that in the deductive approach the pattern of the research moves from
• Theory
• Hypothesis
• Observation
• Confirmation
situations and circumstances and deduces ideas out of it the pattern of the inductive approach
is completely different as compared to the deductive approach. The first step is to make
observations about certain variables after that these observations are broadened to get more
views out of it. After these observations have been applied a hypothesis is applied in the
scenario and in the end on the basis of these hypotheses and some theories result is derived.
The inductive approach follows a bottom up approach. At the end of the study certain
theories and conclusions developed the steps which are included in this approach are given
below.
• Observation
• Pattern
• Tentative
• Theory
In this technique the researcher primarily uses claims for developing knowledge like the use
of cause and effect thinking. In this process specific variables are identified and hypotheses
are developed upon which the research is carried on. Different observations are also given
way and testing of theories is also an essential part of the quantitative technique. In other
words we can say that the quantitative approach focuses more on the numbers and the
statistical techniques and its goal is to test the phenomenon that whether the theory holds true
43
or not. They are measured and expressed in terms of quantity and precise measurement is
done.
The quantitative approach is one that is based on the analysis of research variables on the
basis of their precise quantitative. The quantitative approach tends to shed light on currently
present standings of the research variables. More than often the quantitative approach is
brought into use to ascertain whether or not a particular relationship between the research
variables exists or whether the relationship shall progress in a specific manner with time. It is
for the same reason that the quantitative approach more than often incorporates the use of
statistical techniques. The use of statistical techniques allows the quantitative approach to be
used for researches in which forecasting has to be performed. The scope of a quantitative
approach hence becomes a function of the statistical techniques that the research shall
A luxury that the quantitative approach provides the research is that it makes the research
compatible with data incorporated in researches performed in the past. A variable, if studied
in a recent research in the past and subjected to the quantitative approach, can be brought into
use in an ongoing research, hence allowing the research to develop a retrospective perception
It would not be justified to bring the discussion on quantitative research to a close without
considering the specific limitations that are present for it. The quantitative research, on the
basis of being highly specific, becomes ineffective in cases where the variables are ones for
which the data cannot be expressed in numeric terms. The data has to be expressible in
numeric terms. For instance, a research incorporating opinions, attitudes and behaviors
observed through direct observation may not give accurate findings and conclusions if
subjected to the quantitative approach since it will call for the conversion of non-numeric
44
data into numeric data. This conversion will add complexity to the research, hence reducing
Data collection is a very important aspect of every research and it helps to analyze and
evaluate the hypothesis. There are two sources through which these date are being gathered.
These sources are named primary sources and secondary sources of data collection. Further
By primary data we mean to say that the data which is collected specifically for the purpose
of the current research and this data did not exist in the past prior to the current research.
Primary data as compared to secondary data has many advantages like for instance the
biggest advantage of primary data is that primary data is relevant to the nature of the problem
which is on hand currently, as it has been collected for the very purpose. Secondly the
primary data is coincided with the current scenario it is much more accurate and enough to
fulfill the requirement of the research. Apart from the advantages primary data has two major
disadvantages first and foremost the time which is required to collect accurate and relevant
data according to the current research. After that the conversions of that data into information
then analyze and interpret that data. Another disadvantage which is associated with the usage
A very common practice which is adopted by most of the researchers in this regard is the
questionnaire which should properly demonstrate each and every aspect of that problem. It
may require hiring professional researcher which would design the questionnaire to be
45
effective (Goodwin 2007). Also the cost related with transportation and traveling is also
inducted in this section. The major techniques to collect the primary data include the survey
research and observation. The survey research includes personal interviews, telephonic
interviews, mail questionnaire and online questionnaire. Interviews can be one on one or it
can be with a group of people sitting together (Myers and Well 2002).
In this research we have also used the survey questionnaire as our primary source of data
collection. The primary objective of using the survey questionnaire as source of data
collection was to get first hand information from the employees of Johnson Arabia LLC and
the impact that was brought on their work after the recession. A comparison of work life
before recession and post recession was identified in the questionnaire. The questionnaire is
divided into three sections the first section comprises of the demographic data which included
the name of the participants their designation age and sex. The second part was the close
ended questions in which the participants have to answer the questions in yes or no. the other
part included the open ended question in which the respondents were given free hand in
writing the answers. Some questions were also designed on the likert scaling format in which
the participants have to rate the question according to their preference. The range was
between 1-5 where 1 was labeled as least important and 5 were tagged as most important.
Multiple choice questions are also a part of the questionnaire. By adding the multiple choice
questions in the questionnaire the respondents have a large amount of possible answers from
Also a major chunk of the questionnaire is developed on the likert scale or the rating scale.
The likert scale enables the respondents to prioritize or rank their choices. If there are a
number of choices which the researcher believes through experience and research that would
apply in a particular scenario then the rating scale is preferable as the choices can be ranked
46
as most important to least important. Likert scales are a measure of gauging the opinion of
The questionnaire is designed in such a manner that in the beginning open ended questions
were asked like what is the general understanding of recession in the mind of the participants,
what comes to their mind when they hear the term recession. How their work life changed
when the recession occurred, what was the general reaction of the organization to the
recession phenomenon etc. after that the questionnaire asked the impact of recession in that
particular industry that is the crane industry. In this regard the questions were divided into
two parts the first part was on likert scaling in which the participants pointed out their opinion
and in the second part they provided the explanation of their choice that why they choose any
option in the first part. After that the questionnaire became narrow and tried to find out the
impact of recession on that particular organization that is Johnson Arabia LLC. Once the
questionnaire entered in this mode questions like effect of recession on company’s sales,
effect of recession on the customer base, effect of recession on the company’s style of
operating business, and effect of recession on the organization’s decision making were
discussed.
After that the questionnaire moved towards the other important organizational tools like
recession effect on the finances of the company, the recruitment and selection policies,
compensation and benefits, cash flows etc. also what did the employees thought about the
business in the time of recession means that were the feared the recession or they decided to
This was the end of part one of the questionnaire in which questions were asked to develop a
general framework of the impact of recession in the mind of the employees. The second part
of the questionnaire deals with the strategies and tactics that were formulated by the
47
organization in order to cope with recession. Both the sections of the questionnaire are
correlated with each other as the first part identifies the issues and the second part discusses
The first question in this regard is a general open ended question which asked the respondents
to tell the strategies that were developed by the organization to cope up with recession. The
answer to this question would give us a clear picture of the organization’s approach towards
recession mean that was the organization aggressive in nature or defensive approach was
adapted. Moving forward the question was asked that how well the strategies were
implemented were the employees were taken into confidence by the upper level management
regarding the changes that were going to be taken place in the company. And most
importantly were there any bottle necks in the change process because this is a fact the when
ever there is a change resistance occurs and how well the management dealt with the
resistance
After that we tried to figure out that what was the focal point of the strategy means that what
was the organization’s approach towards the recession what were they focusing on were the
thinking about decreasing the workforce, or working on a new marketing and promotional
This was the most important section of the questionnaire which also leads us towards the end
of this eventful activity. The question that what were the changes that were observed after the
implementation of these strategies and what did the organization learn from this current
global recession and their contingency plans that they have developed in order to deal with
As the name suggests secondary data is the type of data which has been researched or
published or it exists prior to the current research. The data which is drawn from this research
is not similar with the research that is on board, means that the secondary data that has been
acquired by the researcher is developed keeping in mind the data and scenario of that
particular case. This means that the data will differ from what the research actually requires
and this is the major disadvantage of using secondary data. After this the issue of availability
arise means that there are certain topics on which finding secondary data is relatively
difficult, and the researcher has to conduct their own research to acquire the necessary data
and information. Another very important disadvantage which is being associated with the
usage of secondary data is its reliability. Accuracy has become a major concern now days
with so many sources available the researcher has to absolutely make sure that the data which
has been selected for the research comes from a reliable source. It has been observed often
that the data which is gathered from secondly sources are faulty and it becomes quite difficult
Despite the number of disadvantages attached with the secondary data researchers still make
frequent usage of the secondary data in their researches. This is mainly because the secondary
data is relatively inexpensive and it can be found or gathered from various sources. Example
could be taken of a car manufacturer and the research the company has to conduct on
demographics, lifestyles, buying patterns of the population before launching a new product. It
would not be regarded as a wise decision if the company decides to use primary source of
information in its survey when there are tons of information available in this regard on
various sources like libraries or the internet. Apart from that a major advantage of using
secondary data is that it saves time and in today’s competitive business environment time is
49
considered as a very significant factor as far as getting competitive advantage over the rivals
There are numerous sources of secondary data such sources includes internal sources within a
company like for instance report by the sales force, customer database, account and financial
history etc. external sources of secondary data could be journals from libraries, internet,
newspaper, trade journal, online journal, reports by the government agencies, government
statistics, census report, corporate publications etc. Furthermore secondary data includes the
When there is information which is unstructured and undefined in its initial stages certain
limitations can come up. The research aims at providing an insight into areas of study that
were previously not explored. But one cannot neglect the number of obstacles that pertain
either with the subject of the research, the process of the research or the researchers. One of
the biggest limitations of this report is the primary resource which means the participants that
have been questioned for the research, their selection and responses should also be taken into
However it should be kept in mind that a considerable amount of time and energy has been
research.
The interview survey questionnaire technique has been adapted in the qualitative analysis
performed in this research and it’s essential to throw some light on this fact that the interview
Interview technique helps the cause to the best reason being that when an interview is being
carried out the participant can be viewed live and changes are that the interviewer can capture
significant amount of facial expression. The high degree of involvement of this non verbal
communication is one of the most important limitations in this approach. This is because that
the non verbal expressions like the gestures and the body language also speaks in a way that
The reason why the interview technique is being labeled as limitation is because the
researcher may misinterpret an expression given by the interviewer. Also the usage of certain
words like short, small and heavy causes a significant amount of error in the research. This is
because of the fact that the perception behind such relative words may be different to the
Also the factor of random sampling and its error should also be kept in mind since the larger
the sample size the more accurate result would be delivered. This is because of the fact that a
large sample size provides a deeper and more insight understanding of the population’s
perspective.
A limitation which should not be ignored is the researcher’s own subjectivity. The degree of
knowledge, information, expertise and the interpretational skills that the researcher possesses
serves to have deep implications o the research. It is therefore advised that the interpretations
upon which the research is conducted should be considered and the limitations should be
kept in mind significantly if the research conclusions are read by user to make any decision.
51
Research methodology does not simply focuses on the methods used to acquire the
information but it also incorporates the methods used for the analysis of the information. It
also provides a passage for the different analysis that can be used in the research.
However it should be kept in mind that the limitations that each research methodology
incorporates and these limitations should be considered not only when the research is being
The data collection for primary data was carried out through the surveys conducted. The data
was subjected to tabulation in order to make analysis all the more convenient and to ensure
that no handling errors occurred. The Responses to the questionnaires were successfully
acquired from the Division Manager, the Sales and Marketing Manager and the Operation
Coordinator/Debt Collector. All three personnel belonged to Johnson Arabia and were part of
Data collection for secondary data took place through official publications released by the
government and other regulatory bodies of Dubai. This approach was selected in order to
make use of precise statistics in an attempt to ensure credibility for the research. Reports
published by financial institutions based in Dubai were also brought into use in the
formulation of the secondary findings for this research and special attention was given to the
assurance of the credibility of the data extracted from those reports and publications for
incorporation in this research. The secondary findings were developed so that the foundations
for the study formed in the earlier stages could be brought into use to validate the presence of
According to the responses give by the Division Manager, it was observed that Recession
fundamentally comes across as a contraction in which the organization moves from operation
on a nominal base to one in which there is contraction aimed at bringing about correction.
The Division Manager perceived the recession as one that served to bring about a positive
reaction in the organization and that brought forth the significance of effective and efficient
risk management.
The Division Manager considered the severity of the economic recession to have been of a
severe nature for the industry. The next question sought to acquire an elaboration of the
degree to which the recession had been intense and the Division Manager, after identifying
the industry to be that of construction, elaborated that the recession had a negative
implication on the construction and had brought the industry to a standing where no
improvement had been observed until now. This came in compliment to the response to the
next question in which the respondent was asked whether or not whether or not the recession
had managed to have an effect on the organization; the response to which was recorded to be
in affirmative.
It is of the utmost importance to highlight at this point that this question was one that was
augmented into the research in an attempt to highlight whether or not the recession had had
an implication on the organization while earlier questions had sought to establish the reaction
of the organization to the recession. The exact implications of the recession, as per the
Division Manager's response was one that had little impact in its initial stages but was
beginning to show long term consequences. The Division Manager was also observed to be
54
of the opinion that the current economic recession had indeed had implications on the
organization and had not only effected the organization but also the manner in which the
organization perceived and performed business. However, the recession did not change the
actual decision making process in the organization but did instigate the development of
systems to deal with circumstances of such severity in the future. This was further warranted
through the Division Manager's affirmative reply to the question that sought to determine
whether or not the organization's cash flow had experienced any changes as a result of the
recession.
However, the Division Manager also noted that the recession has served to bring about a
considerable degree of changes and while the recession may have made it difficult for the
organization to acquire new business, the organization had chosen to respond by hiring new
staff. It was also observed that the organization had chosen to avoid the option of salary cuts
and reduced working weeks by exercising reduced overtime working hours and by abolishing
all expenses without which the organization could do. The Division Manager was of the
opinion that the incidence of growth during recession is not an impossible phenomenon but
can only be established if the organization is experiencing an increase in its market share. It is
perhaps because of the same reason that the sales volume acquires pivotal significance during
times of recession as opposed to gross profit, reputation, increase in employment and others.
The hiring of new staff was further justified through the fact that the organization had chosen
to expand into new areas of business while concentrating on customer retention as a means to
introduce new influxes of revenue. The Division Manager was observed to give the highest
priority to entrance into a new global location when confronted with the task of prioritization
of the factors that could help an organization during times of recession. Second on the
respondents priority list were mergers and acquisitions while the addition of new products
55
and services came as third on the respondents list of priorities while the option of the
expansion of the distribution took fourth place. The fifth and last on the respondents
prioritization was the option to bring about an increase in advertising and promotion.
Having developed an understanding of the factors that were of the most importance for the
subject organization during the recession, the questionnaire further proceeded by inquiring
upon the factors that could be considered to be the most imperative to the business in the
recession period. The Division Manager expressed that customer retention was the most
important factor, followed by the training and development of employees. Second most
important to the organization was the need for increase in the training and development of
employees while the third most relevant factor was the need to bring about an increase in the
customer base through advertising and promotion. The second least relevant factor was the
redesigning of tasks while the least relevant factor was the need for hiring specialized
professionals.
When asked about how the strategies outlined above had been implemented, it was observed
that it was implemented through the establishment of new departments and is one that is still
underway. Furthermore, the Division Manager expressed that while communication had
taken place between the higher management and the lower hierarchy before the
implementation of the strategies, the strategy had nonetheless run into hurdles during its
implementation. The Division Manager concluded by expressing that the recession and the
measures taken in reaction to it had allowed the organization to develop a contingency plan in
According to the responses given by the Sales and Marketing Manager, a recession is a
scenario in which banks no longer have the funds available and a rise in bankruptcy and
unemployment is observed. The Sales and Marketing Manager further asserted that the
overall reaction of the organization to the current recession was one in which the organization
underwent nervousness in response to any internal changes that took place in the
organization.
The Sales and Marketing Manager, much like the Division Manager, identified the intensity
of the recession as one that was of a severe nature. In his elaboration, the Sales and
Marketing Manager found the severity to be present in the fact that the recession had caused a
decrease in projects causing supply rental companies to aggressively pursue those that did not
come under the fold of the deceleration. Also, payments became late which caused relations
between companies and their clientele to experience damage. According to the Sales and
Marketing Manager, the recession most definitely had an implication on the company's sales
and this effect was visible through the decrease in the number of telephonic enquiries.
Furthermore, the Sales and Marketing Manager observed the effects of the recession to have
a domino effect on the customer base since a decrease in projects were observed to be
causing a decrease in the work available and clients began to consider cheaper options. This,
according to the Sales and Marketing Manager had considerable implications on the company
and it came as no surprise that the decision making process of the company experienced a
change. The Sales and Marketing Manger perceived that the recession caused the company to
take on an attitude in which each customer inquiry and lead is now pursued more
The Sales and Marketing Manager confirmed that the recession had affected the
organization's cash flow and as a result had made it difficult for the organization to win new
business contracts. It is important to realize at this point that unlike the Division Manager, the
Sales and Marketing Manager considered recruitment as a highly unlikely action during times
of recession. The Sales and Marketing Manager also considered the subsequent implications
To the Sales and Marketing Manager, growth during times of recession can be acquired by
allowing existing personnel to engage in multi tasking and engaging them in planning and
existing customers. The Manager considered Sales to be the most important factor that should
be considered as a prime indicator of growth during times of recession and further asserted
service to be of an equivalent relevance. The respondent did not oppose to the idea that an
The Sales and Marketing Manager appeared to follow a stringent belief according to which
each new job is given the relevance that the last available job would be given. In the same
regarded, the Sales and Marketing Manager considered the provision of exemplary service to
be equally imperative and chose to address pricing in a manner such that consumers could be
given more flexibility without taking the edge away from the company as well. When asked
about the establishment of the most relevant factor with regard to the overcoming of the
recession, the Sales and Marketing Manager considered expansion of the distribution system
to be a highly critical element. The Sales and Marketing Manager further considered the
hiring of specialized professionals to be the least imperative measure to take during times of
recession, followed by the redesigning of tasks and the training and development of
employees as comparatively important factors. The second most important factor on the Sales
58
and Marketing Manager's priority in times of recession was the necessity for an increase in
the customer base through advertising and promotion while customer retention came as the
When asked about the effectiveness with which the strategies highlighted above were
implemented, the Sales and Marketing Manager observed that the organization needs to
become more customer focused in order to implement the strategies effectively. Also, the
Sales and Marketing Manager believed that no hurdles were encountered during the
implementation of the strategy, perhaps as a result of the highlighted fact that the higher
management had chosen to consult the lower hierarchy before implementing the strategies.
The Sales and Marketing Manager, unlike the Division Manager, did not observe the
organization to have developed a contingency plan as a result of this recession so that it could
The responses give by the Operation Coordinator/ Debt Collector held that a recession is one
in which business activity slows down as a result of financial constraints. The overall reaction
of the organization to the recession, according to the Operation Coordinator/ Debt Collector,
was observable in the form of the changes in the manner in which the company chose to deal
The Operation Coordinator/ Debt Collector, much like the Division Manager and the Sales
and Marketing Director, believed that the recession was one that was of a severe intensity and
most definitely had had implications on the company. The recession served to dramatically
reduce the number of ongoing construction projects in the industry. The Operation
Coordinator/ Debt Collector believed that this reduction of ongoing projects had served to
59
reduce the need for equipment rental companies such as Johnson and had therefore brought
The Operation Coordinator/ Debt Collector, in agreement to the Division Manager and the
Sales and Marketing manager, further noted that the recession had caused a decrease in sales
expressed an increase reliance on the projects that were scheduled to take place but had been
considered the recession to have affected the manner in which the company is doing business
and in his elaboration, stated that the recession had caused the company to become picky
about whom to perform business with. It was therefore no surprise that the Operation
Coordinator/ Debt Collector considered the recession to have brought about a change in the
The organizations cash flow, according to the Operation Coordinator/ Debt Collector, was
affected by the recession in addition to the fact that the recession made it difficult for the
company to acquire new business contracts. The Operation Coordinator/ Debt Collector
further noted in answer to a recruitment related question that the slowing down of business
When questioned about the status of compensation management in response to the recession,
the Operation Coordinator/ Debt Collector noted that Johnsons Arabia generally engaged in
half yearly and annual bonus policies but the recession had caused these bonus policies to be
only partially implemented. In the eyes of the Operation Coordinator/ Debt Collector, the
performance of a business during times of a recession can only be identified as growth in the
event that the business is present as the market leader despite the recession.
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A fact that merits highlighting at this point was that while the Operation Coordinator/ Debt
Collector answered in affirmative when asked whether it is possible for a business to grow
during times of recession, unlike the Division Manager and the Sales and Marketing
Manager, the Operation Coordinator/ Debt Collector chose to give primary relevance to the
recession.
In the area of countering recession, the Operation Coordinator/ Debt Collector expressed that
an aggressive policy towards the collection of money and the acquisition of new jobs was the
strategy upon which the management had chosen to focus upon in an attempt to counter the
effects of the recession. The Operation Coordinator/ Debt Collector, similar to the Division
Manager and the Sales and Marketing Manager, believed that entering new geographical
locations was the best option that a company could exercise during times of recession.
When asked to prioritize across a number of factors that are relevant for a business during
periods of recession, the Operation Coordinator/ Debt Collector expressed that customer
retention is the most imperative factor. However, it is imperative to note that the respondent
gave primary relevance to the redesigning of tasks. This was followed in relevance by the
significance of an increase in customer base through advertising and promotion. The factor
that held the fourth position in terms of relevance was the training and development of
employees while the hiring of specialized professionals came across as the least relevant
The Operation Coordinator/ Debt Collector further expressed that the strategy outlined above
had not been implemented concretely which had resulted in the generation of circumstances
in which little or no improvement was being observed. The Operation Coordinator/ Debt
Collector expressed that even though the higher management had indeed consulted the lower
61
hierarchy before implementing the strategies, hurdles had been encountered. Also, the
reaction given by customers in response to the implementation of the strategy was one that
yielded little or no productivity since the consumers were in no condition to pay up.
This section shall present a detailed discussion on the company's financials for the past few
years. For the purpose of analysis, a ratio analysis was carried out which incorporated the
current ratio, the debt to total asset ratio, the debt to equity ratio, assets to equity ratio and net
cash flow to asset ratio. This analysis shall be carried by making use of the company's
balance sheets.
Balance sheet is the primary source of information for the stakeholders of the company.
Basically it is the summary of the organization’s performance over a period of time. Balance
sheet is one of the most important financial statements of a business or institution which
shows the assets, debts and owner’s investment in the business as of a specific date. Assets
are divided in to two major categories which are the current assets and the fixed assets.
Usually assets are categorized according to their liquidity, means that how soon they can be
converted into cash. As far as the debt part is concerned it shows the liability that the
organization has. Debts are recorded in the balance sheet according to how soon they would
be paid. In short we can say that the balance sheet show two sides of the business’s financial
situation number one what the business owns and number two what the business owes.
What the business owns is called the assets and what the company owes is called the
liabilities and the value of the shareholders equity. Both the assets and the liabilities and
equity should be equal to balance the book. The importance of balance sheet could be
62
analyzed with the fact that the investors plan their investment after having a look at the
Following are some of the variables which are identifies from the balance sheet of Johnson
Arabia which gives a comprehensive look of the overall growth of the company.
As we have discussed before that financial statements plays a vital role for the organization
as the investor’s decision making and their future interaction with that business depends on
the financial position of that company. Apart from that the financial ratios are a useful tool
for the management of the organization as well reason being it shows the overall position of
the organization. It also tells that how healthy is the business and what is the performance of
the organization for a specific period of time. For this particular analysis the ration which has
been selected is the liquidity ratio. The information for the liquidity ratios are acquired from
the balance sheet and their primary purpose is to measure the liquidity of a company on a
particular date.
In this regard the first analysis which has been done is the current ration of Johnson Arabia.
The current ratio can be obtained by dividing the total current assets of the company by its
total current liabilities. This ration expresses the working capital relationship of the current
assets which means that what is the relationship between the company’s liabilities to its
assets. It we look at the current ratio analysis of Johnson Arabia over the years it could be
seen that there is a growing trend which means that the company is going towards the right
direction as their relationship with assets to liabilities is on a decline. Because in current ratio
the current assets and current liabilities figures are taken it shows that the result which would
be generated would be for one year. If we further elaborate this it could be said that the
current ratio would tell that weather or not the company have enough resources to pay its
liabilities over the next year. The trend which we see in Johnson Arabia’s current ratio is on a
higher note like for instance if we take the current ratio for the year 2005 it is 1.74 which in
other word means that for every AED in current liabilities Johnson Arabia have 1.74 AED in
its current assets. This shows a growing trend for the company as they have the capability to
pay off their liabilities within one year and still left with their assets. Overall the current
ratios of Johnson Arabia gives a good picture of the organization and the growing trend
which could be observed from the chart also depicts the fact that the liquidity part of the
It is also known as the total debt ratio. As its name suggests this ratio shows how much the
company is in debt. For example if we take Johnson Arabia’s debt ratio figures for the year
64
2006 it shows 0.41 which means that for every AED in total assets Johnson Arabia has 0.41
AED of debt. This also shows the company is doing well as far as the debts to assets are
concerned. This ratio also leads us to the conclusion that the lower the debt ratio will be the
higher its chances are to go up in comparison to the previous or the base year. As far as the
debt ratio of Johnson Arabia is concerned it is quite evident from the graphs that it is one the
declining side which in other words means good news for the business as their debts are
consistently low to its assets. Throughout the five year data of Johnson Arabia which has
been acquired it’s very clear that every year their debts are getting lesser as compared to their
The next tool that has been used as a part of the analysis is the debt to equity ratio. This ratio
is obtained by dividing the total debt with the total equity. This ratio measures how the
company is dealing with its debt against the capital which is being implanted by the owners
of the company. If the liabilities part of the ratio exceeds the equity or net worth of the ration
than it means that the creditors have more stake in the company as compared to the
shareholders. The debt to equity ratio shows the proportion between equity and debt which
the company is using to finance their assets. A higher debt to equity ratio means that the
company has a hostile policy in financing their growth with debts. One thing which should be
remembered in this regard is that if the ration is greater than one than it shows that the
company’s assets are mainly financed by debt and similarly a ration which is less than one
shows that majority of the asset’s financing is done with the equity. If we analyze the debt to
equity ratio of Johnson Arabia it shows that there is mixed trend in this section. This means
that in the year 2004 the debt to equity ratio is 2.28 which is above 1 and it shows that the
investors were quiet happy in investing their money with Johnson Arabia and they had their
65
trust maintain with the company. Similarly if we move forward the debt to equity ratio for
Johnson Arabia is constantly at its decline this shows that now the company is financing most
of its assets through their own money. Apart from that the impact of recession can also be
measured from these ratios. in the earlier stages the ratio is high but in the later part like in
2007 which was the beginning of recession it has dropped to 0.88 which in other words
means that due to the recession the trend changed and people were going more towards
saving rather than investing and similarly in 2009 it has further dropped to 0.57 which shows
that there is a continuous fear in people’s mind and they are not ready to invest. This shows
that the banks have also become hesitant in providing loans and as a result of that they have
increased their interest rates just to discourage the borrowing trend. To summarize it could be
said that this is a good situation as the company is not much dependent on borrowing and
The assets to equity ratio primarily tells that how much of a company’s total assets are owned
by the company means what is the ration of the possession of the company’s asset’s and how
much of them are influenced or financed through debts. In other words it also shows the
relationship between the value of the assets of the company and the portion which is owned
by the shareholders. In the case of Johnson Arabia it could be seen from the graphs that there
is declining trend which indicates that in the last few years the company is depending on the
This is another important financial ration which measures that to what extent the company is
able to generate cash from its current operational activities. In the case of Johnson Arabia it is
66
evident from the figures in the table that the company has a growing trend as far as the
generation of cash through operations is concerned. In the last year that is the year 2009 the
percentage of cash flow with assets is at the highest of all and the reason for this could be the
fact that because of the recession most of the banks were banks were reluctant to pay loans,
so companies were on their own to generate funds for the businesses and its effect can be
This ratio measures the amount which can be paid to a company’s shareholders after
incurring all expenses and investments. In other words we can say that how much cash is
available with the company to pay to their equity shareholders. Johnson Arabia’s cash flow to
equity has been up and down in the year 2004 when economic conditions were pretty much
stable the cash flow to equity percentage was 83.11% which means that this amount of
money was available with the company to pay to their shareholders. Gradually we can see
from the table that it is coming down and again in the year 2009 it is getting stable.
Dubai's GDP was experiencing a growth rate of almost 17.9% from 2000 to 2006. However,
the growth rate slowed down to almost 6% in 2009 (AME Info FZ LLC 2008).
The Dubai Financial Market underwent a considerable decline as a result of the recession.
The decline was recorded to be almost 72% at the end of 2008 when considered in
observed in the fact that the market recorded its peak in January of 2008 and its trough in
December of 2008. The steepest decline in performance was observed in the utilities sector
where the market declined by almost 84%. This was followed in its decline by the real estate
67
sector which came down by a staggering 82.6%. In the same difference of 2008 and 2007, the
declined by 69.9% according to a report by the Dubai Financial Market (2008). Furthermore,
the Dubai economy saw a complete decline overall in the sectors of banking, consumer
It is imperative to highlight at this point that the Dubai Statistics Center defines the
construction sector for Dubai as the activity that include engineering contracts in
residential as well as others such as water networks, bridges and roads (Abdelgalil 2005).
According to the Dubai Statistics Center for the Government of Dubai (2009), the Gross
Domestic Product at Basic Constant Prices for the Emirate of Dubai was standing at 223,344
million AED in 2006 while it grew to 243,998 million AED in 2007. In 2008, the Gross
Domestic Product at constant prices grew to 257,870 million AED in 2008. It is important to
note that the Gross Domestic Product in the case of Dubai is showing a downward trend in
terms of the percentage of growth over the years. Essentially, the Gross Domestic Product
Furthermore, the construction sector in particular grew from recording economic activity of
18118 million AED in 2006 to 21058 million AED in 2007. In 2008, the construction sector
The recession had direct implications upon the manner in which Johnson Arabia operates and
perceives the business environment. As a result of the recession, Johnson Arabia was forced
to take on a highly competitive approach towards the market in which business is carried out
by engaging in business deals that are lucrative and decidedly beneficial to Johnson Arabia
68
rather than engaging in a broader customer acquisition strategy. Johnson Arabia began to
focus on customer retention in its attempts to realize the significance of adequate risk
management. Special attention was given to pricing in order to ensure that potential
consumers are not left with a reason to hesitate when they consider hiring Johnson Arabia's
services. While all of these were steps that Johnson Arabia took in order to streamline its
position in the market, it became equally important to bring about internal changes as well.
Johnson Arabia deviated from its customary six month and bi-annual bonus programs and
bonuses were not given out at their regular volume. The company also brought the
recruitment process to a stop. Besides these measures, special attention was given to areas
where costs could be cut but the company ensured that no employees had to take any salary
cuts. These measures while not exactly unwelcomed, did not stop the employees from feeling
restless. The internal environment at Johnson Arabia LLC has now become highly sensitive
since employees have begun to feel uncomfortable about potential layoffs and are new
recruitment policies. Similarly, while Johnson Arabia has realized the need for a contingency
plan to be developed and put into place for any recessions in the future, the current changes in
the operations of Johnson Arabia are still far from complete in their implementation and are
in a state where no conclusive evaluation of the status of their objectives can be acquired.
69
CHAPTER 5: CONCLUSION
recession on a thriving and well established economy. The study began by establishing a
background and giving an introduction to the case-study chosen for the research: Johnsons
Arabia LLC. Research objectives and research questions were identified before proceeding to
the literature review. The literature review defined recession and its causes followed by a
discussion on the measurement of recession and the indicators of recession. The effect of a
recession on an economy was observed through discussion on recession and its implications
The literature review also spanned a discussion on recession in a historical context before
recession. A number of different strategies were highlighted after which the discussion
moved on to elaborate on the strategies that an organization can bring in to use to acquire a
competitive advantage during times of recession. Having established a strong foundation the
literature review proceeded by elaborating on the effects of the global recession on UAE in
particular. The literature review was brought to a conclusion through a brief discussion on the
current standing of UAE's economy after it has undergone the effects of the recession.
The next stage was the identification of the research methodology in which different research
approaches were discussed before moving on to the establishment of the approach that was
most suited to the study. Different data collection techniques were also discussed along with
It was observed through the survey findings that the responses given by the respondents could
be placed along a categorization in which the implications of the recession on Johnson Arabia
and the measures taken by the company could be perceived as those that were internal and
external in nature.
In light of the primary findings, the recession influenced Johnson adversely through a
deceleration in growth of the core construction market. The halting of ongoing projects and
shelving of projects that were in the pipeline caused a decreased need for rental services for
products such as those provided by Johnsons Arabia. The implications of the recession on the
company were no doubt ones that registered with the company as those of a severe nature.
While all responses acquired showed that the recession had served to bring forth a downward
trend in the industry, numerous dissimilarities were observed between the responses given by
Firstly, the recession was observed to be one that realigned the organization in a manner with
risk management and stringency in policies but served to create internal unrest according to
the sales and area manager. Externally, the company became all the more cautious in its
dealings while internal measures were taken in the form of increased aggression towards
business leads. However, while no internal cutbacks in salaries were introduced, the regular
Another area in which dissimilarity was observed was that of recruitment and selection in
which the respondents, other than the division manger considered recruitment as a highly
unlikely function in times of recession. Also, growth was observed to be present when an
organization is able to derive maximum productivity from its personnel while developing
Entry into new geographical regions was observed as the favored option to take during times
determinant of growth. Customer acquisition and customer retention strategies were observed
to hold undeniable when considered in light of the management approaches that experience
Regardless of the measures for Johnsons Arabia that were suggested by the respondents, it
was observed that there was a significant absence of implementation since almost all the
respondents highlighted a need for continued implementation and identified the counter-
recession strategy as one that was still fairly underway and was in no condition where
conclusive determinations for its outcome could be made. There was a strong need identified
for the implementation of a sustained strategy to counter the effects of the recession.
The study served to prove that a recession serves to have significantly adverse implications
on an economy and that it serves to introduce a decrease in growth for the industries within
the economy. This decrease in growth is one that contributes to the shelving of pending
projects and the halting of ongoing projects which in turn leads to a decrease in the demand
of the utilities, products and services utilized by the industry in its operations. In the case of
Johnson Arabia LLC, the decline in the construction industry contributed to a decline in the
need for the products and services provided by Johnson Arabia LLC. The implications were
observed to have taken place in distinctively external and an internal perspective for Johnson
Arabia LLC.
Internally, Johnson Arabia observed a tendency towards change in which the organization
attempted to become all the more committed and devoted towards its objectives. Systems
were developed and managers sought to acquire maximum productivity from personnel.
72
Decision making procedures were influenced and company attempted to cut costs and
However, it was observed that there was a strong need for concrete implementation for
strategies such as these. Put concisely, it was observed that there was a strong need for
recession management to adequately introduce the strategies that were meant to assist
While this study was not one that was designed to be extensively exhaustive, it is one that
findings. In its attempts to do so, the research covered numerous areas and topics that were
although covered, were deemed to ones that merited an extensive research. Carrying out an
in-depth research in these areas would have caused the research to deviate from its actual
for further research in the future. Research in these areas can be connected to this study or
One of the areas where a need for further research was required was the implications of the
is being made in light of the fact that a lack of practical implementation was observed in the
case of the strategies that Johnson Arabia developed in the face of the recession. This may
have come about as a result of ineffective change management. However, considering the
expertise that Johnson Arabia brings in the field, it becomes evident that it is the recession
that made it difficult to carry out the implementation of the measures that were established to
73
counter the recession. This study therefore suggests a research into change management
principles in light of the need for realignment of the measures towards the circumstantial
scenario that takes place in times of a recession and hence recommends the need for change
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limit=20andlimitstart=160http://www.nytimes.com/2008/10/05/world/africa/05iht-
Questionnaire
Dear Respondents,
You are hereby invited to complete a survey questionnaire which is being carried out as a part
of my MBA dissertation.
Objective
The objective of the research is to develop a clear comprehension of the implications of the
Sponsor
Responses
The questions are divided into three groups’ Demographic Multiple Choice and
Time Required
precious time.
81
Name:
Age:
Sex:
Organization:
Designation: _________________________________
2. What was the overall reaction of the organization to the current recession phenomena?
3. Which one of the following options describes best the severity of the economic recession
in your industry?
4. Do you think the current economic recession has an effect on your organization?
Yes No
82
7. Did the current economic recession made any significant changes in the way of doing
business?
Yes No
Yes No
Yes No
10. Is it difficult for organization’s to win new business contracts during recession?
Yes No
11. What was the effect of recession on recruitment and selection of the organization?
12. What is the effect of recession on the compensation management of the organization?
14. What is the most important factor which you consider as growth during the time of
recession?
Yes No
16. What are the strategies that are designed by the management to counter recession?
18. Did the higher management consult the lower hierarchy before implementing the
strategies?
Yes No
Yes No
20. Rank the following as most important to least important for your business during
• Customer
retention……………………………………………………..1…..2…..3…..4…..5
……..1…..2…..3…..4…..5
…..1…..2…..3…..4…..5
• Redesigning
tasks……………………………………………………...1…..2…..3…..4…..5
• Hiring specialized
professionals……………………………………….1…..2…..3…..4…..5
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21. Form the list below pick one option that you think would help the organization overcome
services………………………………..1…..2…..3…..4…..5
1…..2…..3…..4…..5
system…………………………………….1…..2…..3…..4…..5
promotion……………………………..1…..2…..3…..4…..5
1…..2…..3…..4…..5
22. What were the customer’s reactions after applying those strategies?
23. Did your business grow after the implementation of these strategies?
Yes No
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24. Is there any contingency plan designed by the organization to cope up with this kind of
Yes No
THANK YOU
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Table 2: Assets
Chart 1: Assets
Table 2: Liabilities
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Chart 2: Liabilities
Earnings 3 0 3 2 3 5
3 the recession
1 Factor of growth during
4 recession Sales Sales and service Reputation
1 Business growth during
5 recession Possible Yes Yes
1 Management strategies to More aggressive in collecting
6 counter recession Expansion Customer retention money
More aggressive in getting new
Customer retention Price flexibility jobs
New revenue streams
1 One option to help during Entering new geographical Entering new geographical
7 recession location Expanding distribution system location
1 Most important during
8 recession Hiring specialized professionals Customer retention Customer retention
Training and development of Training and development of
employees employees Redesigning tasks
Increase in customer base Training and development of
through promotion Redesigning tasks employees
Increase in customer base Increase in customer base
Redesigning tasks through promotion through promotion
Customer retention Hiring specialized professionals Hiring specialized professionals
1 How well strategies
9 implemented Still undergoing Needs improvement Still undergoing
2 Higher management consulted
0 lower hierarchy Yes Yes Yes
2 Any hurdles during
1 implementation Yes No Yes
2
3 Customer's reactions N/a N/a Customers had no funds to give
2 Did business grow after
4 implementation N/a N/a N/a
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2
4 Contingency plan for future Yes No N/a