Micro simulation · 5 min

A market shock just lifted your input costs by 15%. What do you do?

You lead commercial strategy at a mid-market homewares brand. The range is sourced from suppliers across south and east Asia and lands at your distribution centre by sea. The business has had a steady three years. Margin is healthy, the brand has earned a loyal core, and the trade book is the strongest it has been.

Yesterday a regional conflict closed a key shipping lane. Overnight, freight rates have tripled, oil is up sharply, and one of your component suppliers based in the affected region has suspended shipments for at least three months. Your finance team has run the numbers: landed costs are now 15% higher on average, with some lines hit by 25% and others barely touched.

Your nearest competitor has already announced a uniform 12% price rise. A discount-end rival is holding flat to grab share. The board want a position by Friday. Your second-largest trade account has called for an urgent meeting.

Three decisions. Five minutes. How sharp are your commercial instincts?

Sequence your first 48 hours

It is Tuesday morning. The news broke yesterday afternoon and your team has been catching up overnight. Four workstreams are competing for your attention. They all matter at some point this week, but the order you take them in shapes everything that follows.

Rank the workstreams below in the order you would tackle them; place the one you would start with at the top.

Drag to reorder, or use the ↑↓ buttons.

⠿

Brief top trade accounts

Get ahead of the rumour

Call your top trade accounts before they hear it from elsewhere and tell them you are working through the response.
⠿

Lock the cash position

Financial containment

Review payment terms, working capital and CapEx commitments. Put a hold on non-essential spend until the picture is clearer.
⠿

Secure alternative supply

Operational containment

Get on the phone to procurement. Find alternative routes and secondary suppliers for the most exposed lines so you can keep the shelves filled.
⠿

Map the exposure

Assess before you act

Pull finance and ops into a room. Find out exactly which lines, which margins and which suppliers are actually hit before deciding anything else.

Sequencing the first 48 hours

A market shock invites action, but the order in which you act often matters more than the actions themselves. Assess what is hit before you decide what to do, contain the operational and financial risks before you respond, and only communicate once you have something worth saying.

Things to consider

Map the exposure

Almost every other decision rests on this. Without a clear view of which lines, which margins and which suppliers are actually hit, the response will either be too cautious or too blunt. A few hours spent here saves a quarter of regret later. Assess before you act is the principle that separates leaders who weather shocks from those who get caught reacting.

Secure alternative supply

Pricing decisions assume you can deliver, so until the most exposed lines have a credible alternative route or supplier, you are pricing into a stockout. The reason this lands second rather than first is sequence: a few hours mapping which lines are actually at risk lets procurement work on the right ones, not all of them.

Lock the cash position

Sensible, unglamorous and absolutely something to do this week. The reason it sits behind supply rather than ahead of it is that financial containment buys you time, but operational containment keeps the business running. Both are right; supply is more urgent in hour zero, cash is more urgent across the week.

Brief top trade accounts

Communicating without a plan is the classic panic move. A 48-hour call where you have nothing to say tells your top customers that you do not yet know what you are doing, and they will tell each other within the day. Reach out as soon as the plan firms up, but not before, and not as your first move.

The pricing call

Pre-read note from your CFO

Two weeks have passed. The exposure is mapped, alternative supply is firming up on the worst lines, and your pricing group has modelled four scenarios. Your nearest competitor is in market with a uniform 12% increase and a discount-end rival is holding flat. The board want a position by Friday.

'The bigger risk here is being wrong slowly. Margin is leaking by the day, our entry-tier shoppers will trade down at the first list change, and our premium customers have not flinched at a price move in three years. We need a position the team can ship on Monday. What is the call?'

What is your headline pricing response?

A

Apply a uniform 15% increase across the range. Restore margin fast, ship it next Monday, hold the line if customers push back.

B

Hold prices flat for the next quarter. Bet on volume and brand loyalty, absorb the margin hit while the dust settles, revisit at the year-end review.

C

Phase in selective increases. Protect entry-tier and high-volume lines at close to cost, raise more on premium lines where the customer base is less price-sensitive.

D

Cut entry-tier prices by 5% to grab share. Move while rivals must raise, take trial customers from the discount competitor, and recover margin on premium later.

The pricing call

A market shock is rarely uniform. The cost increase has hit some lines hard and barely touched others, and your customer base reacts to a price move in very different ways: loyal premium shoppers absorb a rise without flinching, entry-tier shoppers trade down at the first sign of one. A pricing response that ignores either dimension is leaving margin or share on the table.

Option A

'Apply a uniform 15% increase across the range.'

A uniform move feels decisive in the boardroom and underperforms in the market. It restores headline margin but treats every customer the same: entry-tier shoppers churn or trade down, premium shoppers absorb without incident, and the share you should be defending starts to move. The blunt instrument tends to be the option of leaders who have not done the work to segment.

Option B

'Hold prices flat for the next quarter.'

Holding price protects volume and signals confidence, but absorbing 15% of input cost erodes margin fast. Without a credible parallel plan to take cost out elsewhere, this is a quarter you do not get back. A defensible opener if combined with cost reduction; a slow bleed on its own.

Option C

'Phase in selective increases. Protect entry-tier and high-volume lines, raise more on premium lines.'

This is the textbook commercial response. The shock is uneven and your customer base is uneven, so a uniform price is a blunt tool. Protecting your entry tier preserves volume and brand goodwill where price elasticity is highest; raising more on premium where loyalty cushions the hit recovers margin where you can. The principle behind it: the same headline price has very different effects across loyal, regular and new customers.

Option D

'Cut entry-tier prices by 5% to grab share.'

Bold, contrarian, and not wrong. There is real share to be taken from rivals who have to raise and from a discount competitor who cannot sustain a flat price for long. Risky if your cost cushion is not there, and it leaves the premium margin recovery untouched. Often works best as a sub-strategy alongside selective increases on premium, not on its own.

Holding a key account

Your pricing position has been signed off and the supply situation has stabilised. Three weeks on, your second-largest trade account, who books 12% of revenue and has options, has called for an urgent meeting. Their CEO is on the line. She is courteous but pointed.

'I appreciate the call. The market feels uncertain and my buyers are worried about what is coming next. I need to understand your pricing position for the year ahead, and frankly I am taking calls from competitors who are offering me certainty. What can you do?'

What is your line?

A

Hold the line on existing terms. Tell her that the current contract reflects today's market and that you cannot offer a special arrangement that you would have to extend to every other major account.

B

Offer a 12-month price freeze for them only. Lock today's terms in to keep the relationship; address any margin slip internally through cost reduction.

C

Walk her through your cost picture honestly, explain how you are protecting your most price-sensitive customers across the market, and offer a multi-year price-lock with capped annual increases in exchange for an uplift in committed volume and a longer contract term.

D

Postpone. Ask for a week to come back with a formal proposal once you have signed off internally on what you can offer; promise to bring options and not just a list.

Holding a key account

A senior moment with a top trade account is rarely won by holding a price. It is won by changing the shape of the conversation, from a line item negotiation into a value trade. The same headline price can be heard as a take-it-or-leave-it or as the start of a partnership, depending on what you bring with it.

Option A

'Hold the line. The price is the price.'

Holding the line saves the price but loses the conversation. You have just used a senior moment with a 12% account to send a take-it-or-leave-it signal. The CEO has options and has just told you so. You will not lose the account this week, but you will be the first call she makes when a competitor moves, and the relationship has cooled by a degree your sales team will feel for a year.

Option B

'Offer a temporary freeze for them only.'

Protects the relationship and avoids the immediate revenue hit, but trains the customer to expect concessions and signals to your sales team that the price is negotiable. Sets a precedent your other top accounts will hear about within a fortnight. Right instinct, wrong execution.

Option C

'Walk her through your cost picture honestly and offer a multi-year price-lock with capped increases in exchange for committed volume and a longer term.'

This is acumen meets relationship. Transparency about cost converts the conversation from price-haggling into value-trading, and the ask in return turns a defensive concession into a commercial deal that improves your forecast and locks share for years rather than weeks. She came looking for certainty in an uncertain market; you offered it, and asked for one in return. The principle: in any pricing conversation, look for a trade that creates value beyond the line item.

Option D

'Postpone. Ask for a week to come back with a formal proposal.'

Buys time, which is sometimes the right play. The cost: you lose the initiative, the customer's buyers spend the week shopping around, and 'I will come back to you' is rarely heard as 'I have a plan'. Use sparingly, and only when you genuinely do not yet know what to offer.

Further learning

This simulation draws on frameworks from our Acumen programme on commercial decision making.

Take it further with Acumen

Acumen is our full business acumen simulation. Over an immersive day or two, your team navigates pricing, product mix, organisational priorities and leadership challenges across a global entertainment business, pulling strategy, finance and people decisions into one connected story. Participants come out with a felt sense of how the commercial moves they made in this micro sim play out across a much larger system.

Explore Acumen →

Try another micro simulation

Silent team member

A senior analyst on your team has gone quiet. Three decisions to bring them back.

Conflict resolution

Sales promised four weeks, Production needs eight. Three decisions to mediate the meeting.

AI governance rollout

You are leading the rollout of an AI Governance Office. Three decisions on stakeholder priorities.

A market shock just lifted your input costs by 15%. What do you do?

Sequence your first 48 hours

Sequencing the first 48 hours

Things to consider

The pricing call

The pricing call

Holding a key account

Holding a key account

Further learning

Take it further with Acumen

Try another micro simulation

Share and connect