Management SummaryStern Stewart Research // Volume 56
Henry Mintzberg once said that “Turbulence is nothing more than a change, that planning could not handle.” Certainly nobody would disagree with him today. What is new of late is that turbulence is not a noteworthy event, indeed, uncertainty in the business world is becoming more and more the business norm.
This also means that companies have to brace themselves for permanent high market volatility. Doing so requires focusing much more intently on the financial viability of the strategy and on earnings and liquidity alike. Yet, the reality is that the common static and rather administrative planning processes are no longer able to handle market dynamics. Companies have to be able to react consistently and quickly to volatility or to anticipate it and be able to change the strategy at short notice from consolidation to growth or vice versa. Companies also need to have the ability to navigate in some markets/divisions in consolidation mode and in others in growth mode. For this to happen, effective countermeasures suited to the crisis scenario have to be designed in advance. In doing so, it is essential to take an integrated approach to one’s own earnings and liquidity situation as well as to the financial impact of the countermeasures.
1. Integrated view of earnings and liquidity – Financial viability of the strategy has to become an integral part of corporate management. 2. React quickly – Market volatility has to be identified early on and integrated with the strategy. 3. Be prepared – Define countermeasures.
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