Many of the blogs I write are based on real-world content that Advantexe is creating for our global clients. This week, we are launching a brand-new business acumen simulation on the topic of devaluation. The reason we are building this simulation is to help global leaders understand what devaluation is and what they can do about it in the short term and long term. In the world of global macroeconomics, there are uncontrollables like inflation and there are controllables like interest rates and devaluation. Understanding these terms and impacts provides a stronger base of business acumen skills.

I’ve taken the best excerpts of the content to share with you in this blog.

What is Devaluation?

Devaluation is a deliberate downward adjustment of a country's currency value relative to another currency, group of currencies, or standard such as precious metals like gold and silver.

This is typically done by the country's government or central bank and can occur for various reasons, such as improving the country's trade balance by making exports cheaper and imports more expensive, addressing trade imbalances, or responding to economic pressures.

Devaluation is not a friend of businesses that are trying to expand and grow in a region whose government is trying to use devaluation as a way to stabilize the economy.

I had an interesting conversation with a prospective new client this week. Someone I have never spoken with before but from an industry (process manufacturing) we know a lot about. What was interesting about the conversation was that this potential client wants to take a radical new approach toward developing the future leaders of her company. She shared her bold vision with me, and I asked her if it was okay to include it in a blog, and she agreed.

It’s a funny statement that made me laugh out loud. Read it again. “At least we know where we are not okay.” It was a statement made by a group of participants going through a sophisticated business acumen simulation after receiving their results from the first year of running their business.

In this situation, the group of high-potential leaders chose a business strategy and executed that strategy through operational decisions. Unfortunately, their actual results compared to their forecasted results were not very good. They completely misread the market and two of their competitors undercut them on price. As a result, revenue, profits, and cash flows were negatively impacted.

After analyzing the results and assessing the market, they said it, “At least we know where we are not okay.” It was a mature, profound statement and got me thinking about the lessons one could learn from this approach.

Here are five things leaders can do when they know their mistakes and can identify and prioritize the short-term and long-term fixes.

This has been “one of those weeks” for the business world. We all woke up on Tuesday with fears that the markets were in for their worst performance since the crash of 1987.

A lot has changed since the pandemic including remote work and hybrid models, “AI” and the digital transformation of things, an evolved focus on mental and physical health, changes in social interactions, increased environmental awareness, continued focus on climate change, and continued political volatility and social unrest.