As gas prices continue to stay low, Saudi Arabia is sitting pretty – producing oil at $15-18/barrel. They have $740bi in cash reserves, so they can stay on this course for a very long time.
Meantime, Venezuela depends on oil for 95% of its budget and owes China ½ year of their oil production at current prices. It is out of money and deep in debt. President Maduro has been to Russia and China begging for more loans and the door has been slammed shut so far. The volatility in Venezuela is scary high.
As you look at your own competitive position, my guess is that you are neither Saudi Arabia nor Venezuela, but are you in a good position? If someone were to pull one card out of your hand (Saudi Arabia), or the only card in your hand (Venezuela), what would you do?
This is a game of concentration played with vital resources. You are playing one, too.
What is your concentration among customers or clients? Does any one customer have more than 10% of your sales? If so, what are you doing to diversify your customer base?
What is your concentration among vendors? Do you have a small account with a back up supplier, just in case, for each of your top 3 components.
How is your cash? Are you over invested in inventory or accounts receivable versus cash? If your banker shuts down your credit, do you have a back up plan?
Who are your most valuable employees? Does one salesperson have all the top accounts? If that person leaves, what happens to your business?
How are you managing your concentrations? Are you investing your profits in your long-term strategy to stay at the forefront of your industry? Are you looking for new opportunities to invest in? Is there a concentration play that would be a good strategic long-term investment?
And what if you don’t have a strategy, how soon can you get one?
Be assured that the Saudi Arabia of your industry does.
photo by author of sun-dial, Jaipur, India with special effects by Paul Dye