Chapter 7: Executive perspectives on geopolitics: management implications for international corporations
Literature on the impact of geopolitics on business and how corporations react to geopolitical events is scarce. In this chapter, the authors gather the views of geopolitical experts, consultants and field practitioners in order to shed light on the best practices corporations can execute to manage geopolitical challenges and opportunities. Geopolitical events in other parts of the world lead to a diversity of responses from corporations. For instance, war in the Middle East may encourage Company A to minimize spending and conserve their financial resources for tough times ahead. Company B may take on an aggressive behavior and purchase a lot of inventory in anticipation of potential price increases. Company C may not see any relevance of the event on their business and choose to do nothing. In the same vein, when corporations invest in a foreign country, approaches to the geopolitical terrain can be very different. In a country that has an inefficient legal system and offers poor protection for property rights, Company A may take on a risk minimization strategy and refrain from business engagement (evaders). Company B may choose to join the illegal bandwagon and do what the locals do (raiders). Company C may choose to live with the inadequacy of property rights protection and reinvent their business model to succeed in this market (assimilators). In this chapter, the authors gather the views of three geopolitical experts in order to gain clarity on the interconnection between geopolitics and business, understand firm behavior, and identify viable business practices.
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