PROFITABABILITY

. The speed with which the global financial crisis took hold in many of the world’s
countries showed our degree of international interconnectedness, as organisations
everywhere cut production and laid offstaff in a struggle to survive. Share markets
tanked, commodity prices fell quickly, and even the oil pricesank within months from
US$140 per barrel to less than US$40 per barrel, only to resume former pricelevels
within a year.

. In Australia the exchange rate dropped from parity with the US$ to only 70c to the
US$ as the prices of mineral resources bottomed and Chinese demand for coal and
iron ore declined..

. if inflation rebounds in a slow United States recovery, Australia’s exchange rate will
fall and its terms of trade will decline.

STRATEGIC DIRECTION OF THE COMPANY

. Once proud icons of industry appealed for increasingly large govern-ment grants
and loans, and banks that had previously been free with credit tightened loan criteria
to thepoint at which some businesses failed for want of operating capital. Even the
United States governmentdid the formerly unthinkable and virtually nationalised
banks (as did the British government), and madestaggeringly large ‘loans’ to big
business, just to keep the economy turning over. Queensland alone exports one

.third of the world’s coking coal (the kind used to make steel), and estimated
reserves of coal seam gas

in that one state are sufficient to power a city of a million population for a thousand
years. Meanwhile,huge deposits off the northwest shelf are being tapped and the gas
exported to nearby Asia with its bur-geoning appetite for energy and iron ore. The
Pilbara area in Western Australia has iron ore for at least 30 years of exports.
SOURCES OF COMPETATIVE ADVANTAGE

. Hundreds of banks in the United States and other countries collapsed, and
governments injected ‘fiscal stimulus packages’ into economies, aimed at spending
their way out of — or at least delaying the onset of the recession they feared.

. By 2009, it was clear that this was not just a temporary downturn. Leaders of
nations, including Australia, joined together in an unprecedented initiative for
coordinated action. It took a year of fiscal stimulus by Western governments before
optimism and signs of global recovery emerged. The tightly regulated Australian
banking sector remained conservative throughout the GFC; while the banks
neededand got government guarantees, they had no need of the rescues required by
their foreign counterparts.

MORALE OF THE COMPANY’S EMPLOYEE

. United States President Barack Obama told them their bailout support would not
continue, and that they could not expect to live on as ‘wards of the state’.
Management had to accept the downside of their behaviour along with the upside
they had enjoyed for years. Ordinary people were furious as their superannuation
funds were savaged while corporate high flyers took large bonuses. The crisis
became an enduring downturn, and many household names simply disappeared from
the market.

. The

key is whether Australia can develop the infrastructure and political institutions to
spread the benefits

across the economy and develop other sectors too.1 Regardless, a slowing global
economy in 2015 was a drag on Australian growth. The formerly high Australian
dollar had meant Australians could travel internationally far more readily. However,
this had the downside of making Australian-manufactured goods — and the formerly
profitable tourism sector — less competitive on world markets, so factory closures
and job losses became disturbingly frequent media headlines.
CUSTOMER SATISFACTION

. the business environment is telling organisations everywhere that if they are to

survive, they need to be better managers of their assets and better leaders of their
people. Even Hollywood, when it was not offering escapism with stories about
unpopular wars, was quick to capitalise on a trend and reflect both fear and favour,
releasing movies showing organisations selling off toxic assets to unsuspecting
buyers and terminating the employment of loyal and productive staff.

. Romantic comedies took a back seat to risk management. Movies, as a barometer

of the times, showed that the tough decisions demanded by the new workplace
could be better made by managers with a strong moral compass. Business ethics
became ranked with finance as important topics to be studied, in a new age of
uncertainty.