CFO Agenda - Economic conditions and your business

Overview

Macroeconomic results are a reflection of the collective decisions taken by individuals or entities at a micro level. In its simplest form, consumers, businesses, and policymakers attempting to maximize an objective subject to resource constraints, shape the economy as we see it today. Taking the argument in reverse, macroeconomic conditions also affect individuals’ decisions on a day-to-day basis. There is thus a delicate bi-directional relationship which warrants some discussion.

As CFOs, it pays to keep one eye on the external macroeconomic environment when developing strategies or managing financial risk. Failure to do so endangers strategy relevance and effectiveness. On the other hand, looking inward from a micro perspective, business strategy is usually marred by a concoction of inevitable human biases which, unbeknownst to most of us, can lead to an accumulation of bad choices over the longer term.

 

What to expect:

In this session we will provide some insights on the big macroeconomic picture, and also some tidbits on the small micro decisions taken at business level. The objective is to provoke thinking, stimulate discussion, and sow the seed for an appreciation of the various complex inter-linkages between agents in an economy and the stage where all the action takes place.

— Learning about the extent to which biases can affect business decisions is crucial in developing strategy. We will briefly discuss practical examples from the realms of behavioural finance and behavioural economics by outlining a number of inherent biases and how these can affect decision-making and business performance.

— Some of the inherent biases which you can expect to learn about: anchoring bias, salience, present day bias, decoy effect, and availability heuristic. We will discuss how these can be applied in a commercial setting, and how best to avoid them when taking strategic decisions as CFOs.

— Businesses do not exist in a vacuum. Being aware of the macroeconomic surrounding and competitive landscape is crucial in ensuring business growth and success.

— In our second session, we will focus on the macroeconomic environment. More specifically, we will discuss some international phenomena and trace their effects back to Malta and to local businesses.

This session is intended to provide some insight on the main macroeconomic trends, and how these can affect businesses in various industries, and also to explore some of the more interesting theories (and practical implications) emerging out of behavioral economics.

All participants will be given a CPE Certificate.

We trust that you find the insights and experiences shared of particular value in your increasingly demanding role of CFO.