Operating when there is inflation
October 14, 2021
by an investor from University of Commerce Luigi Bocconi in London, UK
I want to initiate an experience share here (please only shares from real & own experience) about operating (post acquisition) in times when there is inflation. My guess is that quite a few searchers who acquired never managed a firm during times of inflation (especially the CEOs in US & Europe, less so perhaps in latam), and an experience share on this could be valuable. thank you for sharing specific strategies and tactics you employed to cope with inflation.
in Peregian Springs QLD 4573, Australia
When consumers "accept" price inflation, you can use it to your advantage in multiple ways:
- You can increase retail price faster than your cost increase.
- You can reduce size, quantity or quality and keep the retail price increases lower,
-or you can lock in future sales now (if you can manage your cost).
It can also be an opportunity to move older inventory at increased prices - especially where the price inflation is caused by supply chain constraints.
from Massachusetts Institute of Technology in Calle de Juan Bravo, 46, 28006 Madrid, España
1. Increasing prices regularly (meaning once every one month or two) by a smaller percentage, than every six months by a larger %. This way the Company gives more predictability downstream, that clients end up appreciating
2. Using price discounts vs purchases made on credit to hedge your cash position against inflation, with other financial instruments
3. Get bank financing with negative real interest rates..