You are the VP Strategy. The CEO paints a gloomy picture as oil price falls to USD 50 pb with the possibility of falling further. How do you respond?

The role of the Strategy VP is to work with the CEO to develop scenarios on how the competitive environment may evolve, assess ways of responding positively and managing risk, identify early warning systems of scenario enactments, and ensuring realistic implementation plans are being prepared. Far too often this side of strategy is neglected.

Falling oil prices are not necessarily a disaster. It depends upon the industry and the response of oil producers to market prices. This is often the time for taking action to improve the cost competitiveness of a company, either through a focus on costs or on product range and sometimes through mergers and acquisitions. It all depends on the specific situation of the company and rivals in the industry, both in a domestic and international sense.

If the CEO is worried about falling revenues or high fixed costs, then a more tangible plan of action can be discussed. If the CEO is worried about high forthcoming capex commitments, then we have a quite different scenario to deal with. That's where the experience and insights of the Strategy VP can be very useful in providing strategic choices to be discussed. Often these discussions lead to new, creative solutions that are of benefit to the company.

It's hard to say without knowing more about the business.  However, there's no point in having a VP of Strategy if he doesn't have a contingency plan for a falling oil price .....