A tropical storm viewed from a weather satellite looks more or less uniform, as if it is affecting every area it touches with equal force. On the ground, the picture is different. One home loses its roof while others on the same street come through intact. One community is devastated while its neighbour a mile away escapes unscathed.

The same is true of economic downturns. Even a sharp downturn affects everyone differently. Each company has particular strengths and vulnerabilities. Each will have different answers to three critical questions: How is the slowdown affecting the industry I compete in? What is my company's strategic position within that industry? And what level of financial resources can my company draw on?

Bain Brief

Beyond the Downturn: Recession Strategies to Take the Lead

The next crop of leaders are acting now to restructure costs and go on offense.

In considering the first question, executives need to know: Will the downturn hurt my sales and earnings harder than the overall GDP? Will it force bankruptcies and capacity reductions? History doesn't repeat itself, but it does provide context. From 1987 to 2007, the US economy experienced two recessions. But the apparel industry weathered negative growth in 13 of those 20 years, petroleum and coal in 10 of the 20. Insurance also suffered 10 years of negative growth, while healthcare had no down years at all. Recovery times also vary dramatically. Following the 2001 recession, the S&P 500 index for computers bounced back in nine months, while the telecom index took almost three years.

We're seeing the same variability today. Though the financial services industry entered an acute slowdown with the collapse of Lehman Brothers, most healthcare-related industries have continued to grow, though at a slower pace. One indicator of the difference: between January 2007 and early January 2009, the S&P pharmaceutical index sank only 20%, while financials dropped by approximately 50%.

Second, how strong is my strategic position? Are we one of the most viable long-term competitors? Will this downturn favour our competitive advantages? Do we have the opportunity to gain significant market share?

The returns of market leaders on average are both higher and more stable than those of followers. As prices decline in a recession, followers typically see profits turn to losses and may be forced to cut costs sharply. Leaders may record lower returns, but their profitability provides greater flexibility to maintain spending on R&D, advertising, or acquisitions.

And third, what are my financial resources? Are we highly confident that we can meet all of our financial obligations and still invest for growth? Will competitors face serious financial challenges long before we do?

Money provides options. As Virgin Group founder Sir Richard Branson recently commented, "There are enormous opportunities in recessions. And we've got financial resources." Virgin, he says, is considering setting up airlines in Brazil and Russia. "It's a good time to get brand-new planes at reasonable prices."

Your best strategy in a downturn depends on where you stand on these three dimensions. For example, if your company has a strong financial, strategic and industry position, then your options are more plentiful. You could out-invest competitors in marketing to increase customer loyalty. You could attack or even acquire weaker competitors; you could price products to gain share. You may be well-positioned to lead consolidation within your industry, or to dominate critical market niches by concentrating your financial and marketing strength.

During the last recession, the UK retailer Tesco quickly moved its advertising focus from its "Finest" line of products to "Value" products. Then it began to invest. It expanded its sales area by 10% annually from 2000 to 2002, triple the expansion rate of a leading competitor. Thanks to strategic acquisitions, it was able to roll out a new express-store format quickly. These moves enabled Tesco to avoid massive cost reduction plans and helped it double its market-share lead.

If your company has a weaker financial position, by contrast, you face a different set of possibilities. Depending on your strategic position and your industry's volatility, your best options may be to divest non-core assets and restructure the balance sheet, or accelerate decisions around reducing cost and debt. You may need to seek alliances or merger partners and dispose of anything that is not essential to survive. Or you may choose to reposition your business by selling weak operations and focus on a sustainable core business.

With the economic storm gaining intensity, companies around the globe naturally feel exposed and vulnerable. By understanding clearly your strengths and weaknesses as a firm, and how this downturn will affect them, you can focus your actions on the areas of the business you control.

Charles Ormiston is a Singapore-based partner at Bain & Company and leader of the firm's Asia Pacific Strategy Practice. Darrell Rigby is a Boston-based partner at Bain & Company and head of the firm's global retail practice and global innovation practice. Adapted from the forthcoming book Winning in Turbulence by Bain & Company and published by Harvard Business Press.