The Great Recession of 2008

The Great Recession was a period marked by severe economic slowdown and decline across different markets in the world. The Great Recession started in 2087 and ended in 2009 although its timing and scale varied from one state to another. It originated from the collapse of the real estate industry in the United States as a result of the global financial crisis which occurred between 2007 and 2008. The mortgage crisis in the United States which also occurred between 2007 and 2009 also contributed to the Great Recession of 2008. The Great Recession of 2008 had a significant impact on several industries as it leads to a decline in the demand for goods and services. One major sector that experienced a significant impact due to the global financial crisis is the financial markets (Walker et al., 2016). The financial and banking industry incurred severe impacts of the global financial crisis since they offered loans to many of the firms which later found difficulty to repay the debts. Consequently, many of the lending institutions increased the rate of interest and thus make it possible for individuals and businesses to obtain loans to fund their operations. Due to the negative impact of the Great Recession of 2008 on the financial sector, it is important for the entrepreneurs to develop appropriate strategies that can help them minimize its impacts on their organizations. In addition, an entrepreneur is required to assess the changes that the Great Recession caused in the business environment in order to make appropriate responses and adjustments. 

The Economic Information that needs to be gathered 

The assessment of the impact of the Great Recession requires an entrepreneur to gather adequate facts and economic information to determine its magnitude and the possible outcomes. In 2008, the Great Recession was characterized by the changes in various economic variables. One of the notable variables of the 2008 economic recession was the changes in the gross domestic product (Rognlie et al., 2018). The United States experienced a decline in the gross domestic product during the global financial crisis. The decline in the gross domestic products led to the decline in the purchasing power of consumers (Kriesi & Pappas, 2015) . The table below shows the changes in the gross domestic products during the Great Recession.

From the table, it can be noted the GDP of the United States experienced a decline between 2007 and 2009 and then started to rise in 2010. It shows that during the global financial crisis, the United States experienced a decline in its production output. The graph below shows the trend in GDP changes from 2007 to 2011. 

From the graph, it can be noted that the lowest level of GDP was recorded in 2009 which also marked the end of the crisis. After 2009, the economy of the United States started to increase as demonstrated by the growth in the gross domestic products. 

Entrepreneurs should know the trend in GDP since it affects other important economic variables such as unemployment rates and the consumers spending. The unemployment rate in an economy can determine the purchasing power of consumers (Kalleberg & Von Wachter, 2017). Countries with a high rate of unemployment can experience a decline in consumers spending. Since many entrepreneurs are often engaged in the production of goods and services to satisfy the needs of the consumers, they will be interested in knowing their purchasing power to determine the amount of the goods and services to produce. When a country experienced a low unemployment rate, the level of consumer spending will be reduced and this eventually leads to a reduction in demand for goods and services. During the Great Recession, the entrepreneurs should avoid excess production given the reduction in the demand for goods and services. 

The table above shows that there was a reduction in the gross private investment from the onset of the Great Recession in 2007. The decline in the private investment can indicate that there is a lack of adequate capital for investment, high-interest rates and the unwillingness of the entrepreneurs to invest due to uncertainties and risks in the business environment. 

A good entrepreneur should make an informed decision using relevant data and information to ensure the survival of the business in a competitive business environment. Many of the companies who invested a huge amount of dollars during the financial crisis collapsed. This can be explained by the graph below which indicates a decline in the gross private investment a condition that leads to the collapse of many companies. 

After examining the changes in the business environment as a result of the Great Recession, an entrepreneur should come up with appropriate organization structure and strategies to minimize such changes. In essence, it is important for the entrepreneur to apply strategic management to ensure the success of the company. In responding to the changes caused by the Great Recession, it is important that an entrepreneur cut down some of its operation cost by reducing its spending (Kroft et al. 2016). In addition, short-term measures such as reducing the number of employees can help reduce the expense of the company and ensure that it survives in the business environment. Besides, the entrepreneur should avoid taking a huge amount of loans to funds its operation since, during the Great Recession, the interest charged on loans are high. In addition, the financial markets are surrounded by uncertainties that can expose businesses to huge risks. 

References 

Walker, S. M., Earnhardt, M. P., Newcomer, J. M., Marion Jr, J. W., & Tomlinson, J. C. (2016). Crisis Leadership During the Great Recession of 2008.  International Journal of Leadership and Change , 4(1), 9. 

Rognlie, M., Shleifer, A., & Simsek, A. (2018). Investment hangover and the great recession.  American Economic Journal: Macroeconomics, 10(2), 113-53. 

Kalleberg, A. L., & Von Wachter, T. M. (2017). The US Labor Market During and After the Great Recession : Continuities and Transformations. RSF. 

Kroft, K., Lange, F., Notowidigdo, M. J., & Katz, L. F. (2016). Long-term unemployment and the Great Recession: the role of composition, duration dependence, and nonparticipation.  Journal of Labor Economics , 34(S1), S7-S54. 

Kriesi, H., & Pappas, T. S. (Eds.). (2015).  European populism in the shadow of the great recession  (pp. 1-22). Colchester: Ecpr Press.