Ever since the Brexit vote in 2016, the world has become increasingly agitated and politically fragmented, while the global socioeconomic climate has also worsened against a backdrop of mounting inflation and political uncertainty.
Such a climate creates significant challenges for businesses, particularly in terms of their corporate strategies and how they remain financially viable during a period of immense volatility.
But does the climate impact on corporations, and how can your business adopt to this type of challenge?
How Does Global Tumult Affect Corporations?
Businesses are only just recovering from the impact of Covid-19, which saw diminished consumer spending and demand (particularly for certain goods) while industries such as travel, leisure and hospitality ground to a halt.
However, the current issues are combining to create new (albeit familiar) challenges, highlighting the fact that businesses must be adaptable to cope with a broad array of problems if they’re to remain successful.
For example, inflation peaked at 7% in the UK in March, having hit a 30-year high of 6.2% the previous month. This is reducing the purchasing power of the pound and lowering consumer confidence, as spending plummets and business earnings are impacted directly.
In the short-term, the Bank of England (BoE) has moved to lower inflation by authorising three base interest rate hikes in four months between December 2021 and March. This will increase the cost of borrowing, squeezing business profits at both ends for the foreseeable future at least.
Businesses are also being impacted by the Russia / Ukraine conflict, which continues to rage and is the embodiment of geopolitical crisis.
In simple terms, the conflict is compounding international gas and energy price hikes by impacting the balance between supply and demand. As a result, businesses and households are struggling to pay their bills as the latter slip further into poverty, further impacting on spending and the demand for non-essential goods and services.
How to Cope as an Entrepreneur
The question that remains, of course, is how can you safeguard your business against the current macroeconomic and geopolitical threats?
The first step is to seek out advice and consultancy, in order to gain an insight into the most relevant risks to your business and how you can utilise strategy to account for these.
According to global consultancy firm RSM, the current socio and geopolitical unrest should also be viewed in an altogether more positive light. More specifically, they claim that “upheaval can also mean opportunity if you’re prepared”, suggesting that some events may create potential in terms of investment and the global positioning of your brand.
This type of outlook is particularly important when considering universal issues such climate change, so adopting a keen corporate social responsibility strategy and becoming an ambassador for sustainability can help you to become a genuine leader in your marketplace.
