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Copyright © 2019 Richard Ivey School of Business. All rights reserved.

Macro-micro linkages: Impact-response
framework
Professor Tony Frost
GMM, HBA Intersession 2019
April 15, 2019
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F/X
Impact Channels Channel

Exposure to changes in F/X

• Transaction exposure
• Translation exposure
• Operating exposure

2019 Richard Ivey School of Business. All rights reserved.

Supply Non-Market Demand
Channel Channel Channel

Incentives & constraints imposed by

Factor Inputs used by Demand for the firm’s products
non-market actors
the firm & services
• Government policies & regulations
• Cost • Level of demand
• Scrutiny & pressure by press,
• Availability • Buyer preferences & buying
advocacy groups, other stakeholders

Copyright © 2015
• Quality patterns

Credit /
Finance
Channel
Financing of the business
• Cost & availability of credit
• Accounts receivable
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Where macro impacts play out for firms

Impact Channels Impact Locations
(How) (Where)

Copyright © 2019 Richard Ivey School of Business. All rights reserved.

Industry

Firm

Line of
Business
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Firm level responses to macro shocks

Bassett Dollarama
• Launch new product lines • Aggressively expand
Strategic Direction Change in lower priced segment & footprint riding tailwind

Copyright © 2019 Richard Ivey School of Business. All rights reserved.

move into alternative trend of consumer
distribution channel via frugality + move up
HGTV partnership market to offer a broader
array of branded goods

Cathay Nestle
• Maintain premium • Take advantage of falling
position focused on advertising costs to
Continuity business travellers. continue strategy of
Reduce capacity & costs “premiumizing” Nestle
to survive. brands

Defensive Offensive

Strategic Posture
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Macro-Micro Impacts: Conceptual Framework

Impact Channels Impact Locations Response Framework
(How) (Where) (What to do)

Copyright © 2019 Richard Ivey School of Business. All rights reserved.