Question

What are the most difficult issues in determining realignments?

Answer 1

Realigning the company’s strategy requires an assessment of the financial and operational condition of the business. The first step in crafting a realignment plan involves an assessment of the sources and uses of cash, timing of each, and an analysis of real profitability. Information reporting in this regard is essential. If sufficient, detailed reporting is not being produced or available, then the CEO must ensure finance and IT personnel work together to generate the desired information quickly. This is not a task force assignment to install new systems or design the most comprehensive reporting. It is an urgent collaboration of key personnel to determine what can be produced to give management critical information necessary to make the required assessment. It is imperative this information be centralized and controlled by the finance department, which already understands reporting integrity and cost allocation issues. Reports generated by department heads are often less reliable and may not contain critical elements of related revenue and expense.

Or we can say that it is a

Situation in which the governments or central-banks of several countries coordinate to revalue one or more currencies. This may occur when currencies become so strong or weak that they negatively impact internation altrade or a country's balance of payments. Central banks may effect a realignment, for example, by buying or sellingthe relevant currencies in large volume.

The financial crisis brought only a brief pause to these dynamics. The onset of severe balance sheet recessions in the countries at the core of the crisis, prominently the United States and parts of Europe, led to highly expansionary monetary and fiscal policies not only in these economies, but also in those exposed to them through trade and financial channels, including China. The resulting demand boost triggered a resurgence in the commodity boom as resource-intensive industries expanded in key economies, supported by readily available finance. As the crisis-hit countries recovered only slowly from the balance sheet recession, highly expansionary monetary policy remained in place for an extended period even as fiscal policy tightened somewhat. The persistently easy global liquidity conditions induced spillovers to commodity exporters and other EMEs, boosting broad-based domestic financial booms in those countries.