How companies should prepare for a crisis

The current corona crisis and the actions to fight it are probably the biggest threat to the world economy since World War II. Governments and central banks are flooding the markets with liquidity. However, if companies immediately lose customers many will go bankrupt. Hence, managers always work on solutions to prepare their businesses for unexpected events like the corona pandemic. Professor Dr Matthias Mahlendorf, Professor for Managerial Accounting as well as academic director of the Master in Corporate Performance and Restructuring at Frankfurt School of Finance & Management, examines if and how enterprises can be prepared for crises.

In his research about the financial crisis of 2008, Professor Mahlendorf found many examples where companies had to make challenging trade-offs between profit and cash-flow.  “One very important point that is similar in most crises is that cash becomes more important than profit. When companies lose customers they have to face tough decisions. For example, they may sell expensive machines for a low price just to be solvent in order to survive”, says Mahlendorf.

Find out more about Professor Mahlendorf´s and colleague´s research on how companies should prepare in order to be more stable in economic crises.