The Arab Spring has ushered in a new era for the Middle East and North Africa region. Foreign companies must adapt to a changing local environment or risk falling behind competition. Companies can take practical steps to mitigate risks and capture opportunities across the region.

1. Vet local partners with an eye toward the stigma of previous regimes

Be mindful of which local companies built their success on connections with previous regimes. Some are likely to be targeted by anti-corruption initiatives as new governments seek to demonstrate progress with economic and political reforms. In Libya and Tunisia, companies will want to disentangle from partners with close ties to the previous regimes. The same will be true of Egypt in the long term.

2. Consider price sensitivity in the medium term to solidify long-term customer loyalty

Ongoing instability involving oil-producing countries will place upward pressure on commodity prices, hurting consumers in import-dependent economies. Companies should pursue special pricing initiatives to be accompanied by advertising campaigns to express solidarity with the people.

3. Maintain relationships with experienced bureaucrats and key embassy staff in transitioning markets

The bureaucratic cores of most governments will stay in place. Senior executives should establish close relationships with career bureaucrats that handle product registration, taxation, and tariffs. Ambassadors and staff can assist companies in reaching out to local government officials.

4. Contemplate opportunistic M&As or resetting expectations with local partners

Assets are trading at extremely low valuations. They look even cheaper when currency devaluations are factored in for markets like Egypt. Now may be the time to shop for companies and deepen your presence in the region. Weakened market conditions can help companies reset contracts to drive efficiency gains in the short term.

5. Build robust contingency plans to mitigate risks and capitalize on opportunities

Escalating violence in Syria raises the threat of spillover in Iraq and Lebanon, and a clash between the Egyptian military and Muslim Brotherhood would set a dangerous precedent for the region. Companies that take an informed approach to contingency planning for these types of events will preserve resources, while mitigating risks and maximizing upside opportunities. Multinational companies with plans in place will be positioned to gain market share while competitors scramble to respond.