Submitted To

Mr. Harsh

Submitted By

Arsh Koul

SHOULD R&D BE BANNED DURING RECESSION

Deflation or Recession is a persistent decrease in the level of consumer prices or a persistent increase in the purchasing power of money because of a reduction in available currency and credit. It is a situation in which prices and money incomes are falling, accompanied by an increase in the value of the monetary unit.

Deflation happens when too less money chases too much goods.

What is recession

The subprime mortgage crisis led to the collapse of the United States housing bubble. Falling housing-related assets contributed to a global financial crisis, even as oil and food prices soared. The crisis led to the failure or collapse of many of the United States' largest financial institutions: Bear Stearns, Fannie Mae, Freddie Mac, Lehman Brothers and AIG, as well as a crisis in the automobile industry. The government responded with an unprecedented $700 billion bank bailout and $787 billion fiscal stimulus package. The National Bureau of Economic Research declared the end of this recession over a year after the end date.

HOW IT CAME

Fall in Durable consumer goods demand Freeze on new recruitments Job cuts and pay cuts Unsold houses (Foreclosures) Bankruptcies Stock market slide and falling investor

confidence Decrease in business investment.

Symptoms of Recession

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According to Organization for Economic Co-operation and Development "creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society, and the use of this stock of knowledge to devise new applications".

What is Research and Development

Research and Development should not be stopped during recession , as in the long run it increases the shareholders value

It all depends on the stage where research and development is working. If we are working on the new product then it can help you to come out of recession but if it is a usual one then we should stop it.

My View

Spending cuts are not how a company can get out of recession.

Increasing investment in Research and Development is important to develop innovative products

More generally, the researchers found, with all else equal, in recessions the higher the firm's market share, the more an increase in R&D spending increases its profits

In recessions, firms are pressed to control costs to maintain liquidity; thus, R&D programs, which may have limited ability to increase short-term cash flow, receive close scrutiny.

However, if a firm cuts its R&D spending in recessions, it risks losing its long-term technological advantage.

Effects of the recession

The figures say it

ALL THE TOP BUSINESS START DURING RECESSION AND NO BUSINESS CAN START WITHOUT R & D

Hyatt Corp Burger King: 1953 IHOP Corp LexisNexis is a research hub for the law,

media FedEx Corp. began operations on April 17,

1973 Microsoft Corp. -1975 General Motors: 1908

Businesses launched during recession

Wikipedia Foundation Inc. was born during the recent post-9/11 recession. Established in January 2001, the online encyclopedia had more than 100,000 entries by 2003

GE (General Electric Co.) was established in 1876 by famed American inventor Thomas Edison

HP (Hewlett-Packard Development Company LP) was inauspiciously born in a Palo Alto garage at the end of the Great Depression