Appraising business policy, easy steps

In strategy the fundamental principle is “concept begets policy & policy begets strategy”. Here strategy becomes the end goal. The heavy middle path is the policy where conceptualization of policy turns out to be the first step. Then comes policy appraisal which is the most arduous task. Here is a fool’s guide of appraising policy in easy steps:

Look at the cost benefit ratio as the first concern. If a particular business policy such as buying Russian discounted oil amid geoeconomics sanctions and making a big chunk by re-packaging it as your own product and selling elsewhere you tend to earn great deal of temporary lucre. But you also earn the wrath of powers including America and the Western Europe who are bent upon delivering a strategic defeat on Russia. Needless to say, the trade-off must be neatly balanced to get the best of the both world.

The second aspect of enquiry is who gets the benefit and who suffers the loss. In geoeconomics there are always two sides of the coin. Say for example, when a country imposes trade related restrictions, chiefly amongst these is tariff placed on imports of items from the rest of the world she needs to appraise who will benefit and who shall lose.

In most cases the tariff is inward looking in the sense it proposes to increase domestic manufacture and reduce importation volume. In this scenario exporting country at the first sight appears to lose as her quantum of exports slides. However, this can be off-set by the exporting country if it succeeds in finding alternate markets. But the real question is whether the tariff imposing country has the ability to increase manufacturing in the short run. If not the cost of living is hiked up as the tariff amount is ultimately passed on to the final consumer.

It is curious to note, that when Russia began to discount oil price to the market floor price all hell broke down. Russia gains whatever happens to the importer of her discounted oil who is caught on the cross-hairs of countries who have imposed sanctions on the sale of Russian oil. These countries have the unpleasant task on hand to impose punitive tariffs upon the exporters of the countries who buy Russian oil resulting in bad blood between both of them.

Finally find out who is paying the price for the continuation of business policy of buying discounted Russian oil by one side and sanctioning that by the other side. Invariably it is the public at large who suffers in both countries: the importer of discounted Russian oil and the imposer of sanctions over it. Ultimately, the imposer of tariff stands to lose both sides of the bargain, when domestic inflation hits higher than the status quo ante.

 

Cheers!

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Business Strategist