How smart businesses can adapt to inflation
In a nutshell, inflation?occurs when demand outweighs supply in an?economy, causing prices across sectors to go up. This year, prices were up over 7 per cent in the United States (although this has dropped) and even more around the world – and there’s a sense of exhaustion in the corporate world.
Then there’s the sentiment among consumers – which is in short, not great.
According to?research recently published by McKinsey, consumer confidence dipped in February 2022 with only 38 percent of survey respondents saying they feel optimistic, down from 44 per cent in October 2021. The steepest drop was among high income consumers, a group that had been buying more expensive products and brands even in Covid-hit 2020 and 2021.?
But since the only thing certain in life is uncertainty, top strategists are now highlighting the need for businesses to adapt to inflation – finding a kind of insurance against economic disruption.
Here are three ways companies can proactively avoid inflation’s worst effects – as outlined in an interesting recent Entrepreneur.com article.
Be nimble?
To stay afloat during periods?of high inflation, firms should consider increasing prices and saving where possible.?Try to target price increases based on specific supply disruptions rather than raising prices across the board as this will cause less damage?to relationships with customers.?Rising inflation is not permanent, so staying nimble will benefit companies in the long run.
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Be smart when managing cash flow
Keeping around a large amount of cash can be damaging during inflationary times. As inflation rises, the purchasing power of cash savings may go down, so consider investing that money to keep up with rising market prices.?Consult with a?financial advisor?to determine which kind of investments make the most sense for your specific situation.
Maintain and expand your network?
This is a great tip and yet one that I think often gets overlooked… Supply chain disruptions fuel the inflation fire, so working harder to communicate with suppliers to get a sense of what products are in highest demand is extremely valuable. This can help businesses anticipate?future?supply challenges and prepare suitably. At the same time, expand your network so that you have sourcing options when supply chain issues inevitably impact inventory.
General Manager at Pearl Continental Hotel- Versatile & Visionary Leader # Expertise in Pre-Opening and Transformation # Multi-skill # Diverse Entrepreneial Leadership
2 年Very True! One more issue is the huge gap of income between rich & poor and unstable political situation in our country where our so called leaders are exploiting all of us for there own gain.
Security Professional at H G Pearl Continental Hotel Lahore
2 年The truth is true
Hospitality Leader Passionate hotelier | Fostering Memorable Moments & Building Exceptional Teams
2 年Did anyone of us think about any alternative ways?
Former Member FBR, Additional Secretary Corporate Finance, Board Member at Pakistan Railways Board and Managing Partner at CC Tax & Legal Advisory
2 年If I may just add, in a purely Pakistani context inflation is not exclusively a supply side phenomenon and is affected by a host of other factors and policies including weather conditions, import policies, world commodity prices, exchange rate, fiscal policy, pattern of income distribution and population growth.
Cheif Security Officer at Islamabad Marriott Hotel
2 年True