This book develops and presents in an easily comprehensible way the essential elements of a corporate strategy for managing uncertainty in the macroeconomic environment. This Macroeconomic Uncertainty Strategy – MUST – enhances firm value by allowing management and external stakeholders to distinguish between changes in the intrinsic competitiveness of the firm and changes in performance caused by macroeconomic fluctuations. These fluctuations – manifested as changes in exchange rates and inflation rates – are beyond management’s control but they have substantial impact on performance.
MUST includes methods for:
- Identifying the impact of macroeconomic fluctuations on performance.
- Developing strategies for macroeconomic risk management.
- Developing management compensation schemes based on management’s contribution to the firm’s intrinsic competitiveness.
- Developing reports to external stakeholders about the impact of macroeconomic fluctuation of performance.
- Evaluating the relative performance of subsidiaries and business units in a multinational company.
- Evaluating performance as part of the due diligence process in an M&A context.
