“In the Middle East, the highest risks come from the cost-of living crisis and the inflation rate. Secondly, we also see recession fears, mostly related to a stagnant global economic outlook.”Hisham El Badawy, Managing Partner, Signium Egypt & GCC
Whilst Signium’s latest research suggests inflation is expected to decline but still remain high (6.6% in 2023, compared to 8.8% in 2022), the Organisation for Economic Co-operation and Development (OECD) concurred in June 2023 that underlying inflation pressures remain intense.
However, headline inflation has fallen in many economies in recent months due to the downturn in energy prices, but food and services prices have continued to rise rapidly. This means core inflation currently remains stubbornly high.
Marco Piantanida, CEO, Haribo Italy in Signium’s latest report spotlights the challenges posed on them by inflation – “The main global risk we see right now is related to raw materials costs and the rise of inflation, which affects all global companies and indirectly affects consumer purchasing power. Another key point is the volatility of markets, particularly tech-related stocks, and the banking sector, as shown by recent bank failures in the US and Europe. Negative media fuels this vicious circle that affects consumer and investor confidence. If you fear the present, you are less open to investing, leading to a decline in the overall economy.”
Navigating a company through this global inflation is complex. So, what three key initiatives should C-suite executives keep front-of-mind?
1. Financial risk management
2. Cost strategies and optimisation of revenue
Inflationary upheavals often mean companies are pressurised into raising prices to maintain profitability. However, a balance must be struck between protecting profit margins and staying competitive.
To do this, it’s vital that the C-suite collaborate with sales, marketing, finance and procurement teams to develop balanced pricing strategies. This may involve market research to understand consumer behaviour and price sensitivity; identifying areas where price adjustments are feasible; and exploring value-added services that can help the company maintain or gain a competitive edge.
Optimising revenue streams through cross-selling, upselling and customer retention strategies can help offset increased costs and maintain profitability, and seeking new revenue sources may also prove fruitful. Further suggestions include:
3. Company-wide operational efficiency
Where inflation disrupts supply chains, increases costs and impacts operational efficiency, C-suite leaders who focus on driving operational agility to mitigate these challenges will see results.
As nobody can predict the precise timing of inflationary turbulence, optimising resources like employees, time, inventory, equipment and money means streamlining base operations while eliminating redundant processes and waste, thereby creating agility and potential for new revenue streams.
To accomplish this, business leaders may try reviewing the following:
All initiatives suggested by experts throughout unpredictable inflation rates must be tailored to each organisation’s specific industry, market conditions and unique circumstances – but flexibility, adaptability and proactive leadership are always core to the C-suite successfully navigating a company through global inflation and fiscal fears.
About the Report
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Signium recently published a comprehensive research report that identifies the key risks faced by business leaders today and highlights practical ways to navigate through turbulent times. The report engages seasoned business executives and partners across Signium’s global network to gather views of what lies ahead and how leaders can futureproof their businesses.