Business operates in an era of uncertainty, as amply demonstrated by the current economic recession. While any business is susceptible to be affected by economic shocks, businesses that are in those lines which are considered luxury products or those whose purchase can be postponed are the ones that are most vulnerable. And as a general rule, trees that grow tall are supposed to be rooted deep to the ground – to tide over uncertainties, businesses that expand almost endlessly need to make sure that they have had their foundations right and have a good base which they could bank on, before they stretch out into the sky.

Toyota’s Expansion: Such shocks as the economic recession are by nature, unpredictable. And even the best and the biggest could be in for turbulent weather which they may find too hard to handle. Toyota, the world’s largest automaker, is an example. The Japanese car manufacturer was growing at amazing speeds and was aiming at displacing GM from the top spot, even as the economic recession was unfolding. Toyota had never posted a loss for six decades and was increasing its capacity and was on a thorough expansion mode, given the booming economy.

Toyota in Economic Recession: However, when Lehman Brothers collapsed and the financial meltdown struck ominously, Toyota couldn’t keep pace with its own momentum. Toyota suffered its first loss in decades and had to roll back on its expansion drive. The company went into drastic cost-cutting mode as it shut down operations. Now, with all the cost-cutting that Toyota has done, it is still expected to post a consecutive loss at its half-yearly results expected in March 2010. It is only in the second half of 2010 that Toyota is expected to post a profit, even as the economy recovers from its recession, with Toyota picking up volumes and with all its cost-cutting activities bearing fruit.

If huge behemoths like Toyota can be dislodged from their growth path, not much is needed to be said of smaller players who may still be struggling to establish themselves. Forces of the business environment are largely unpredictable and it is conventional wisdom to grow at paces that the company’s inherent strengths would warrant. Presence of a market opportunity is no reason for unsustainable growth.