Managing firms throughout the business cycle
A Davis Service Group case study

Page 5: Boom

Sometimes a period of boom follows on from recovery. During this period people become very confident. If businesses provide the right goods to the market these goods will sell. Businesses can be confident that they will be more able to borrow money to invest and develop.

Of course, there are different challenges which can arise in a period of boom. For example:

  • firms might find it more difficult to recruit and retain skilled labour. They might therefore be forced to raise wages in order to attract employees which puts up their costs
  • in the economy as a whole there may be a general rise in prices. This general increase in prices is termed inflation.

Davis, like all companies, will grow if boom conditions return. However, the Group is well structured to manage its way through both periods of recession and boom. This is partly due to the important nature of the services that it provides. For example, providing bed linen to the UK's National Health Service and other hospitals is essential at all times.

Davis is focused on a range of services that are particularly valued by its customers. Most companies want to concentrate on doing what they do best.

For example, a hospital seeks to cater for the healthcare needs of patients. A restaurant wants to focus on giving customers high quality in food and service. A car factory focuses on manufacturing cars and other vehicles efficiently. They do not necessarily have the people or equipment to provide non-core activities such as providing and frequently cleaning work-wear, table cloths and towels. This is where Davis Service Group's services provide value.

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Davis Service Group | Managing firms throughout the business cycle

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