How to adapt your business model to macro-economic shocks?

Speakers :

• Jean-Baptiste Rudelle, President of The Galion Project
• Hortense Harang, Co-founder of Fleurs d'ici — We trade local
• Maëlle Chassard, Co-founder of Lunii
• Mathilde Lemoine, Chief Economist at Edmond de Rothschild

Issues

• How to adapt the company's way of working to the covid crisis, but also to the economic crisis and conflicts between blocks?
• What are the impacts of inflation, and how do you deal with wage demands?
• How and why should we adopt a model adapted to the challenges of relocation?

Key ideas

• After a very rapid jump caused by the health crisis, at the end of twelve years of incredible growth, the Tech sector is now facing a tightening of the market.
• Europe is suffering from American inflation, gas prices and the ecological transition that it does not really know how to manage
• Europe, leading of trade between 2000 and 2010, was overtaken by Asia, which established free trade zones, thus accentuating the regionalization of flows
• Despite the trade war between China and the US, trade between these areas has never been so numerous.
• The idea that some countries produce and others consume, and that it would be possible to outsource its social and environmental impacts, is now outdated.
• According to the IMF, it is interesting that countries can implement capital controls when they are victims of an economic crisis, which condemns entrepreneurs based in these countries to recycle their investments there.
• The end of the mid-range seems to be near, since it seems preferable for companies to bet on the exclusivity of the high-end or the volumes of the low end.

Points of attention or don's

• Faced with inflation, wage increases would be sustainable and would undermine the underlying dynamics of Net income of businesses, which remains uncertain for the years to come
• These general increases could weaken structures in the medium term, and impact their investment capacities.
• Entering a price-salary loop can limit the visibility of businesses and their ability to make decisions.

Key learnings or do's

• Faced with inflation, to maintain the purchasing power of employees, favour targeted short-term bonuses and actions (restaurant tickets, Macron bonus, mobility packages) over general increases;
• Be pedagogue and transparent with the teams on the situation of the company;
• Diversifying production sources;
• Ask yourself very regularly about possible price increases;
• Have a double business model, allowing to preserve the margin;
• Relocate to regain control of its value chain;
• Turn to local investors where the business is located, to develop an economy and facilitate growth.

Mathilde LEMOINE: “Faced with inflation, Americans can afford wage increases that are much higher than ours because of their significantly higher development prospects.”

Hortense HARANG: “Inflation makes our model more competitive every day. A rise in energy prices increases the price of imported flowers, which consume a lot of energy, and mechanically lowers the price of local raw materials, which grow with the seasons. In addition, the local one is not necessarily more expensive, and it provides a quality argument by reducing the time elapsed between production and consumption.”

Maëlle CHASSARD: “The relocation of Lunii has triggered an act of purchase among some parents, but this impact is still minimal. On the other hand, it has strengthened the trust of the community and the way in which we are perceived outside. In addition, investors are increasingly paying attention to the commitments and CSR policies of companies. That was not the case in 2018.”

JB RUDELLE: “When I was expanding in all countries, when I entered the United States, I tried to have American investors in my capital. When I was in Japan, I wanted to take on Japanese investors, so that they could help me locally. For me, the nationality of the investor was not a subject of risk, but a subject of opportunity. I tried to have almost as many investors as the countries in which I was based. So I always had a local branch to help me.”

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