Jeffery Perry identifies strategic moves that will help a company maintain status as a global player during times of geopolitical risks.
Expanding the global footprint of business has long been a key strategic focus, leading to overall success. Global drivers include access to new markets, lower labor costs, innovative talent, and diversified revenue streams, just to name a few. While there has been a rise in global expansion, geopolitical risks have risen across the business landscape as well. Given this reality, should businesses just retrench to domestic markets? The answer is not that black and white. Leading organizations understand the role global growth plays in strategy, regularly assess geopolitical risks, and proactively embed agility into business models.
While international trade has been part of business for centuries, it grew significantly after World War II, even greater after the Berlin Wall came down in 1989, followed by the dissolution of the Soviet Union in 1991. The founding of the World Trade Organization (WTO) in 1995 and China’s WTO admission a few years later are also regarded as significant markers in time. With the subsequent rise of the internet, businesses could connect across geographies with customers, technology, and supply chains like never before. By the 2000s, global trade grew to about half of world GDP. Since then, the continued rise of the digital economy has created an environment for even more global growth across industries.
However, there is a shadow side to global growth—the simultaneous growth in geopolitical risks. A few geopolitical issues on the rise relate to intellectual property protection, cybersecurity, data privacy, trade practices, labor practices, human rights violations, energy/environmental concerns, and political conflicts. Look no further than the implications of the economic tension between the US and China, the Russian war in Ukraine, drug cartels and immigration issues in Mexico, and political and economic instability in Brazil.
Several recent global surveys of executives highlight the rise of geopolitical risks as a business consideration:
Key points include:
- Identify global drivers
- Increase geopolitical acumen
- Build agility in the business model
Read the full article, Heightened Geopolitical Risks in Business Reality, on LeadMandates.com.