Geopolitical tensions are shifting the business landscape resulting in seismic shifts in strategic gameplay

The baby boomer era from (1946 to 1964) brought about much expansion in the world. The significance of this era is explained in the census report of July 2019. The 2019 statistics highlighted that the boomer era represented 73 million people in the United States. Globalisation was brought about by the boomers accelerating and propelling the economies to synergise and integrate supply chains. The result was hugely prosperous for most economies as growth depended on interlinking innovation, manufacturing, and logistics to the receptive consumerist markets, as the notion of having everything at your fingertips became a reality.

On the contrary, the world is now experiencing the beginnings of great unrest, as protectionism reverses the methodology which once drove globalism. The continuation of such steps will inevitably result in a great reset. What the rest will look like is debatable, but we can all be sure that we are on the cusp of change not witnessed in the last century.

The economic engine of globalisation has been running at full steam ever since the late 1990s. Political leaders were forced to adjust to the demands of a continuous marketplace, and the speed of political circumstances around the world required C-Suite executives and board directors to take the initiative to confront the consequences of adaptive policies head-on. These adaptive policies came into being for many reasons, but in the context of economic occurrences, growing consumerism helped shape trade ties, fair trade laws and a more collaborative, friendly, globally connected ecosystem. At the time, it was wise to entwine supply chains as the cost of goods manufactured in emerging economies was far less, making logical financial sense to offshoot manufacturing to environments with cheaper labour costs, less onerous laws, and a determination to advance at any cost, produced capital gains in excess. This boom era ignited wall street to invest aggressively in adjacent markets, which saw returns magnified.

As emerging economies like China became the world’s manufacturing hub, it allowed a shift to occur from within the consumerist economic playbook. One of the most significant challenges of the modern age is the inability of countries and organisations to map out contingency plans effectively. Strategy adaptation is necessary to maintain current market holds or gain market share, yet there is no manual for competing within an economy of growing uncertainty and rapid transformational laws and systems which are rewriting the global order.

Amidst inflation, rising interest rates, droughts, floods, famine and shifting alliances, the world is reshaping. Geostrategic risk is rife, especially with geopolitics taking centre stage. Assertive, coercive tactics have been deployed from all angles, and the war in Ukraine still rages on. The implications of the compounding effects of dramatic change impact business behaviours and bottom lines. The result is that a portion of all global business will fall by the wayside as too much pressure is asserted from multiple areas, economic and political. The economic weaknesses exposed by the Covid pandemic, the war in Ukraine, Russia’s grip on gas exports, the devaluation of all global currencies, the fight for Taiwan, climate change and the spiralling debt of nations paint a dire picture for the economic continuum.

Strategic adaptations will have a top-down approach as governments write the rules that companies respond to, either aiding organisations to excel or binding their ability to trade, serve or invest. However, men/women have always found a way around insurmountable challenges and prevailed. The crucial point to remember is that market weakness is used as leverage by though who have the leverage. From a business perspective, ponder on your organisation’s leverage over competitors and further evaluate whether that leverage is longstanding. With magnified interest, attention and funding targeting climate change initiatives, there are other pros and cons to address, including environmental and social governance (ESG). For more on ESG, click here.

Technological advancements have enabled control mechanisms like never before, and all manner of intelligence is being deployed to control the media, education, job applications, food enhancements, and biological transformations, to name but a few. Technologies such as artificial intelligence, facial recognition, high-definition cameras, 5G internet and the expansive eyes-in-the-sky that track logistics supply chains and even human movements all influence and sway decision making. Man’s competitive nature to desire more has manifested over time into a competitiveness that challenges the status quo. Nevertheless, it is not uncommon to see dominance challenged or new challengers entering the arena. For instance, modern capitalism has worked remarkably well for the Chinese ruling party, and competition through technological development has also seen China rise immensely over the last two decades.

The amassed wealth of the Chinese influenced their relationships abroad, placing great emphasis on trade and lending for mutual prosperity. The strategic agendas catalysed by the one-belt-one-road vision saw China develop its strategy to a more assertive and calculating phase, incorporating capital strategies to compete by introducing new techniques into the fabric of policy to advance interest via crucial infrastructure assets by which to control the parameters of trade and exchange. The book entitled “The Digital silk Road” provides greater detail on the points I have addressed.

Fast-forward to the disorientating media headlines of the COVID-19 outbreak and the incoherent messages from global leaders attempting to tackle the pandemic from different directions, and we begin to see the fractures that an interruption in momentum can have on the global economy. Uncertainty is death by a thousand cuts for markets as the foundations of a business are built on the notion that core elements must be predictable to some degree and quantifiable without significant swings on either end of the spectrum. The market tends to either overcompensate based on false predictions. By producing more goods to cover forecasted market predictions, the flooding of the oversupplied products temporarily lowers their value and cost. The other extreme is where massive out-of-stocks increase the price of goods as the market’s needs exceed the supply. The inability to accurately predict the ebb and flow of supply and demand outcomes cause rapid price hikes and bullwhip markets.

However, the fraying links of globalisation caused by geopolitical gameplay are now negatively impacting supply chains and business connectivity which will have an inescapable implication on business performance for the next decades.

If your organisation wants to compete with precision through the turmoil of unpredictable markets and find strongholds of assurance which allow for adaptive manoeuvres, then you have come to the right advisory firm.

This work is not aimed at lecturing audiences and organisations on the complex economic outlook of the markets or geopolitics but instead reminds organisations that to draft adaptive strategies fit-for-purpose, the geopolitical parameters cannot be excluded. Strategy Hubb has the understanding and insights to deliver tactical advantage to corporate situations. On the other hand, Ocean Blocks Australia can help structure ESG strategy and aid with carbon accounting. Reach out today for an introductory discussion regarding your company’s concerns.

Disclaimer: Please note that the information provided in this article is not to be considered as financial advice. Please seek advice for your personal or business matters from a qualified professional or make contact with myself or one of the team at Strategy Hubb to tailor custom solutions to accommodate your circumstances.