IMD International

IMD faculty urge optimism to business leaders amidst currency crisis

February 13, 2015

currency tsunami

Are you adapting your business to the current high-volatility environment?

Nearly 300 business leaders came together to explore opportunities and challenges in fluctuating markets at an event dubbed "Currency Tsunami" at IMD.

Ten IMD faculty members provided guidance on how Swiss and international businesses should react to the recent appreciation of the Swiss franc.

IMD President Dominique Turpin opened the event by urging business leaders to be optimistic and to use the crisis as an opportunity.

Moderating the evening, Professor of Innovation Cyril Bouquet said that it would be a mistake for companies to wait and see what happens and that now is the time to find solutions.

"Don't panic. Don't generalize; you have to find different solutions to different problems. And whatever you do, make sure you keep your credibility. We need credible leaders," said St├ęphane Garelli, Professor of Competitiveness.

tsunami 2

Carlos Braga, Professor of International Political Economy, warned that a strengthening dollar, a weakening euro and geopolitical turmoil could increase the Swiss franc's safe-haven appeal, further driving up its value.

"Volatility is here to stay forever," said Professor of Finance Nuno Fernandes. "Companies must hedge to minimize business exposure. Swiss franc to euro parity is coming."

Carlos Cordon, Professor of Strategy and Supply Chain Management, said that growth has stagnated all over the world and that the only way companies can increase their profits is to cut costs. "It will not be easy but you have to kill complexity and bureaucracy," he said.

Stefan Michel, Professor of Marketing, discussed how businesses should approach pricing in times of crisis. He said that companies must divert attention away from prices by offering more value and a range of products with different prices and values.

Robert Hooijberg, Professor of Organizational Behavior, said that while radical solutions like relocating all or part of a company to a cheaper location could be affective to reduce costs, they would have negative effects on marketing advantages, culture, communication and flexibility.

The message from Didier Cossin, Professor of Finance and Governance, was that companies must find a way to make sound decisions for the long term despite pressure and high costs in the short term.

Closing the event was Professor of Leadership, John Weeks. "A crisis is a terrible thing to waste. Leaders have a short term discount in the price of change. But the true test of good change is whether or not you would roll back the change when the crisis is over. The answer should be no," he concluded.

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