Nibletz Staff
Each year the business world changes. And each year that brings new challenges to CEOs. But dealing with these changes is a CEO’s job. It’s up to them to work out how to best use the resources at their disposal. And it’s up to them to work out how they’re going to manage their company through economic booms and busts.
This year there is unlikely to be a slowdown in the pace of change. We have disruptive new technologies launching practically every week. Dark clouds are hanging over the world economy right now, particularly with respect to global trade. And there is the ongoing asset bubble which could pop and send the whole economy into a recession.
2016 is certainly shaping up to be a turbulent year. So what are some of the significant challenges that CEOs are facing?
The Presidential Election
Nobody would contend that the 2016 election is just another election cycle. Here we have, for the first time in American history, a businessman poised to take the Republican nomination. But what if Trump beats Clinton/Sanders and wins the presidency? The fallout for businesses could potentially be enormous. A new trade deal with China could spell the end of cheap outsourcing. Penalties for companies moving to Mexico could mean that CEOs have to rethink where they produce their products. And financial markets might be rattled if they believe that Trump will reign in government spending. CEOs could potentially see millions wiped off their market cap for any of these reasons.
Rising Input Prices
Don’t expect the recent hiatus in input price inflation to last. Everything from cheap oil to HP ink cartridges is vulnerable to dollar devaluation. Remember the dollar index has fallen against world currencies this year. And that’s despite money printing abroad.
Cybersecurity
The digital world is the new frontier in crime. The rewards are big and the policing is small. It’s still a Wild West out there and businesses need to be vigilant. Hackers are trying to gain sensitive customer data, login credentials and money. And they’re doing it all by exploiting weaknesses in company IT systems. Zero-day hacks are on the increase as data, not physical stuff, becomes the truly valuable commodity.
Getting Capital
Right now the banks are holding huge reserves at the Federal Reserve. The reasons for this are complicated. But it basically amounts to the fact that they’re massively overleveraged and don’t want to lend out anymore. In other words, banks are no longer where businesses go to get access to credit.
The Fed has tried to solve this problem with endless rounds of quantitative easing. They’ve been literally injecting trillions of dollars into the banking system. Yet the debts owed the banks are so high that they’re still unwilling to lend. This means that in 2016, CEOs are going to have to find alternative means of finance. Expect to see greater competition for venture capital.
Manage Growth Expectations
If the stock market is to be believed, companies across America are due to make bumper profits this year. But it’s far more likely that the stock market is overpriced. That means CEOs are going to have to manage investor expectations.
