Question

Please explain the fundamental channel management issues associated with recessionary, inflationary and deflationary periods in the economy in more detail

Answer 1

Recession is a period when there is slowdown in the economy and the business and the trade of products is reduced. It is generally defined as the time when there is a fall in the GDP of any country. The fundamental channel management is also affected at the time of recession. As the business has a constraint in the available finances then the first thing they do is to reduce the production. The adverse effect of the channel management is that if there are no or fewer products then there will be need of small channel management and at this time the people engaged in the channel management process become unemployed as there is a financial crunch the companies are not able to handle the large volume of employees. The earning power of the people reduces and the effect is that the demand also decreases which also has a direct impact on channel management and its requirement also decreases. The whole channel management system faces an adverse situation.

Inflation is a phase where the rate of the goods and services see a visible increase in their prices. The demand also curbs as the prices of the goods and services rises. This also hampers the channel management because the people demand fewer products due to an increase in the price. The goods are available but the demand decreases and hence the channel management system has an adverse effect on it.

Defation is the opposite of inflation . In this, the price of the prodtc and services decreases in an economy and the purchasing power increase. The people can purchase more and hence the demand increase. In has a positive impact on the chammen management and they get likely to involve in various activities to fulfill the supply chain. This is one of the most favourable situation in the channel management system.