Riyadh, KSA: In its latest thought leadership publication, Strategic Gears experts explore the global factors that have led to high inflationary pressures, how companies reacted, and what alternative strategies companies can adopt to enhance/sustain profitability in the long term.

Strategic Gears experts highlight a combination of several demand, supply, and other factors that led to high inflationary pressures globally. Due to rising inflationary pressures, companies’ profitability was at risk of being under strain, and as such they had to react in response to mounting cost constraints. Strategic Gears experts point to two main ways that companies globally reacted – (1) by adopting a cost pass-through strategy (the passing on of higher prices to consumers to protect operating and cash flow margins) and (2) by reducing costs through layoffs.

The report underlines that although inflation is forecast to subside in 2023 from high 2022 levels, price pressures remain, and companies can adopt a range of alternative measures (beyond cost pass-throughs or layoffs) to enhance or sustain profitability. In the report, Strategic Gears experts discuss 12 alternative strategies in detail. These include:

  • Eliminating Ingredients or Process Elements that are Not Valued by the End Customer.
  • Accounting for Demand Shifts
  • Hedging/Indexation
  • Product Mix Adjustments
  • Recalibrate Recruitment & Salarysetting Approaches
  • Embracing Digitalisation
  • Diversify Supply Chain/Supplier Base
  • Active Price Management
  • Develop Flexibility in Product Development & Manufacturing
  • Restraint Dividend Payments
  • Expand into Untapped Market Segments
  • Cut Expenditures (capex/opex)

The report also presents case studies on how two companies within the GCC increased GM% (without increasing price) and improved products (leading to share growth) by eliminating ingredients or process elements that do not add value to the end customer. The Strategic Gears case studies can serve as a reference for companies who are intending to safeguard their profitability levels amid these inflationary headwinds.

The “ENHANCING OR SUSTAINING PROFITABILITY AMID INFLATIONARY PRESSURES” report is available to download here.

-Ends-

About Strategic Gears

Headquartered in Riyadh, Strategic Gears is currently one of the leading management consultancies in the MENA region. The company offers consulting services in the areas of Strategy, Marketing, Operations & Organizational Excellence and Digital Transformation, to a range of clients in both the public and private sectors. The company is heavily involved in the transformation era of Saudi Arabia, driven by the Vision 2030 initiative, in engagement with various government organizations and the Vision Realization Programs.