FIREFIGHTING. A Thai-flagged cargo ship caught in the crosscurrents of a raging war in West Asia
| Photo Credit:
ROYAL THAI NAVY
The current West Asia crisis is like no other. When CEOs face any challenge, they look for precedent — previous cases — to decipher their next move. In this case, there is no precedent. The last big disruption and challenge was World War II, and the world for a CEO was dramatically different then.
The West Asia crisis has the following impact:
Prices of all petro-linked products and derivates will go up. Everything from petrol to fertilizers will cost more over time.
Packaging material prices will go up. This is significant for all FMCG brands, where packaging could account for 10 per cent and above of cost base.
Global supply chains will get reorganised again after Covid. Anything that originates in West Aisa or routed through the region will be rethought.
Remittances from West Asia to India will drop, thus depressing real estate prices in many Indian urban centres. Real estate companies will have to offer added value.
Tourism will be hit as travellers play safe. Dubai will take time to get back as a haven for anything.
Luxury and fragrance brands will be hit big. Gold and jewellery prices will drop.
Air travel will get more expensive and stressful.
Indians will rethink their Dubai golden visa application and about sending their kids to West Asia for higher education and jobs.
Electric vehicles will boom.
Some companies and countries may again implement ‘work from home’ policy.
Cost pressure
Affordability will be the “core” issue for consumers and businesses. How should CEOs think about the situation, irrespective of sector?
Start from the consumer end. Will there be disruption either in supply or price or delivery? CEOs must protect this revenue generating end of the business model. Avoid price increases and cutting product grammage. These have collateral damage that is not visible today.
Build alliances with key customers and suppliers to keep the flow running. Extend new terms to them, so that you can build certainty in business and the supply side can serve you better.
Rethink all costs. Don’t cut people. Every business has good costs and bad costs. Bad costs are inventory, too much borrowing, delays in decision-making, and so on. Cut all costs that can be cut. Plan a 20 per cent reduction in costs without cutting headcount. In doing this, cut flab, not muscle.
Lay out the 30-day, 90-day, 300-day plans for your company and communicate them with all employees. Monitor progress, report it, else employees will be worried. It’s better for employees to hear news from you and not the media.
Postpone all incentives for employees by a year and give it back to them when the tide turns. Do not cut employee salary. Conserve cash as much as you can.
Meet as an industry body regularly to analyse the risks and threats to the sector. Keep the State and Central governments briefed on issues and seek help where needed. The current situation needs every country to think like a business.
Renegotiate with banks the capital needs and payment schedule. This is an exceptional situation, and support from banks is vital to keep the show going. Banks also do not want non-performing assets (NPAs) on their books.
Communicate relentlessly and be visible as a CEO. Avoid setting any system in panic.
I also think this is a crucial time for the government. Diplomacy will be priority, but the government must also look at ensuring that every sector has the right inputs to be competitive and tide through this crisis.
Remaining competitive for the day the tide will turn must be the guiding principle as CEOs navigate today.
(Shiv Shivakumar is former Chairman of Pepsico India and former CEO of Emerging Markets at Nokia)
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Published on March 16, 2026
