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Credit crunch could lead to change in business behaviour

Published: 23 November 2009
Tough economic climate is expected to become the catalyst for a new era, with firms adapting fresh approaches to financing and supply chains.
The recession and credit crunch has raised concerns about commercial models, supply chains and finance, with the two reshaping business behaviour well into the next decade, the Confederation of British Industry (CBI) said today.

The organisation, which has released its report, The Shape of Business - The Next 10 Years, said that the recession had become the catalyst for a 'new era'.

Finding that new trends are emerging in business operation, the CBI's report highlights four key areas where it believes fresh approaches will be taken as a result of the downturn.

With companies wary of higher debt levels, the CBI predicts that businesses will look to alternatives to debt-driven growth, with more financing options created and deployed in coming years.

Firms are also said to have concerns over a 'domino effect' of supply chain failures and will therefore be compelled to forge "more collaborative supplier relationships". In fact, 68% of business said in a recent survey that they would be strengthening the level of partnerships with suppliers in the coming years. One in three said they would be increasing their number of suppliers, while one in five said they would offer finance to key suppliers.

Meanwhile, sustainability and ethics are expected to become more integrated into the business model, with businesses seeking to further improve corporate responsibility in a bid to attract and retain both customers and employees.

Finally, the CBI believes a more flexible workforce will evolve, with some firms relying on a smaller, "core set" of employees, with flexi-workers making up the numbers.

CBI director general Richard Lambert explained: "We may be at the start of a new era for business, in which attitudes to finance and to corporate leadership are changed for a generation by the shock of the past two years.

"What we need now is a more balanced, less risky pathway to growth - one in which the short term returns may be lower, but the long-term rewards for management success will be a lot more sustainable and secure."

He added: " There are important questions around how businesses are going to finance growth and investment in the future. And in a more collaborative, less transactional world, closer relationships with customers, suppliers, employees and shareholders look like becoming the new norm."

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