Business | Economy
Firms face diminishing returns on investments, tighter cash flow
As the global financial crisis deepens, businesses in the region will face diminishing returns on investments and tighter cash flow in the short term, while more retrenchments are likely to hit the labour sector as companies are expected to cut costs, an expert said on Sunday.
- By Cleofe Maceda, Staff Reporter
- Published: 23:50 November 16, 2008
Dubai: As the global financial crisis deepens, businesses in the region will face diminishing returns on investments and tighter cash flow in the short term, while more retrenchments are likely to hit the labour sector as companies are expected to cut costs, an expert said on Sunday.
The impact will vary, depending on the maturity of a company within an industry, and those that will be badly hit are consumer-driven organisations. Some businesses will still see good returns, but how well they will survive the financial crisis will depend largely on how they manage their assets, staff, finances, products and services.
"The return on investment [ROI] in this region has been very good. The ROI can still be good even in tough times but that doesn't mean every company will have good ROI. The financial crisis is going to reduce credit, capital and ROI will probably be slow," said Dave Ulrich, business professor and partner and co-founder of the RBL Group.
"Those that are more consumer-driven, those that are short-term driven will not have long cycle times. In any sector, there will be survivors and losers. The survivors will be those who managed their assets very well, their people, their cash, their products and their services," Ulrich added.
Speaking at a press conference on the sidelines of the Leaders in Dubai Business Forum, Ulrich said one of the reasons the world's financial system is in trouble is that some people are consumed by greed and the key to getting out of the mess would be to promote the value of serving others, fairness and the spirit of cooperation.
"There's no one reason the financial system is in trouble. But one of the reasons is greed. People want to have short-term success. They're not willing to invest in the long term. There are some people who acted out of greed, not out of serving others," Ulrich said.
"We have to help people see that even though I may have self interests, I have to serve others. I have to be willing to put my interests behind.
"And one of the keys to that is looking at long term, not short term. It's not what I get today, it's how I invest in the future," Ulrich added.
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