International development of SMEs and ETI: 5 axes to adapt development plans to the global economic context

Tensions over supplies, non-consolidation of economies after Covid, rising social anger around the world, threat of a new financial crisis, the United States-China-Russia economic wars are the topics where business leaders must rely on adjusting their international strategy. Keep in mind that Europe may be preferred in some cases.

Cards in the global economic game are being reshuffled. Proof of this redistribution of cards: the G20 meeting in Rome on October 30 and 31, 2021 took measures such as a minimum tax of 15% for multinationals with a turnover of +€ 750 million with target implementation by 2023, and the elimination of customs duties on aluminum and steel imports. He also recalled the absolute need for States to consider climate risks in their economic activities.

If analysts announce global growth of 5 to 6% in 2021 and a strong recovery in world trade (+10.8% in the WTO forecast volume), SMEs will need to adjust their strategies and international development plans to adapt it to the new guidelines being put in place. If the context imposes new barriers to business activity and growth, it also offers its share of opportunities to seize.

To both advance on the topics to be addressed and capture these new opportunities, it is interesting for business leaders to reflect and work around the five axes.

First axis: supplies

Disruptions in international supply chains bring their share of new risks: stock shortages, longer lead periods, price increases, trade wars with competitors, and so on. But they can also be an opportunity to decide to shift its supplies and/or diversify its suppliers-variations in terms of geographical location but also company profiles.

Tensions in supplies have led to an inflationary trend. Here, too, the company should review its profitability calculations and dare to raise its prices. Because an inflationary market frees up prices and gives the manager more latitude to raise the prices of his offers. It can also exceed the so-called equilibrium threshold (i.e., it allows it not to lose money), and take advantage of it to rebuild its margins.

Second axis: the weakness of some national economies has not yet stabilized after the Covid 19 crisis

Some countries, marked by low vaccination rates and an initial weakness of their economy, remain severely hit by the consequences of the Covid 19 pandemic. Because they generally have no (or very few) systems of support and social protection. to get paid, it is a safe bet that consumption will not increase again soon.

Any French SME working in these geographical areas should therefore have to expect the recovery of local markets. At the same time, it must remain accommodating as new needs may arise there and there will be business opportunities to seize, while anticipating the fact that consumers will not have massive financial capabilities.

Third axis: the increase of social tensions in some countries

In some recent work, OECD economists[1] and the IMF reminds us that rising poverty, unemployment and inequality threaten to exacerbate social anger anywhere on the planet. The first danger is a paralysis of the domestic economy and international trade.

If the company has sites on site, it must be prepared to manage wage demands, tensions within its teams, as well as production or supply disruptions, logistics disruptions, etc. However, he can look at how this situation can help his development. For example, it can recognize and rely on new levers for mobilization and “social peace” in the company. It can also attract new talent seeking a different environment and professional culture based on French management skills.

Fourth axis: the risks of a new financial crisis

The indebtedness record of so -called wealthy states and corporations can derail recovery. The ECB has already warned in May 2021 of the high risk of financial crisis. At stake: Damocles ’sword of rate increases could have a major impact on SMEs and ETI’s access to financing. Here can be added possible devaluations of money, which have a direct impact of exchange rates on the balance sheet of companies.

Among the reflections and actions to combine these risks, French business leaders who have gone abroad can refocus their actions on the European zone, which may be appropriate given the current commitment to re-industrialization. of European Union countries. Their CFOs will also play an important role in taking a closer look in the coming months at the currency hedging strategies that will be used to not get caught when volatility rises.

Fifth axis: the geopolitical balance of power between the United States, China and Russia

The economic balance of power that continues to play out between the United States, China and Russia is changing according to bilateral agreements and the emergence of new “files”. One certainty: Europe will be affected by the collateral damage of these geo-politico-economic games.

International trade will be directly affected. So companies are invited to be vigilant in their international strategies so as not to see their contracts in question through the measures of economic warfare. The Huawei saga or the American sanctions against Iran are just the beginnings of strategic equations that are set to become more complex.

The risk becomes greater for companies seeking to have a virtual monopoly in a country. It’s time to diversify the economic model so that we no longer put all our eggs in one basket.

All of these challenges are new and many. There is a lot of uncertainty. But with each new situation, opportunities arise for people who know how to look at the game table in a pragmatic and global way. One thing is however certain: international development strategies cannot be based on traditionally targeted countries and Europe is becoming a development opportunity that should no longer be ignored.


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