How to build a robust strategy for a volatile world
All of these geopolitical developments pose both challenges and opportunities for global organizations. To thrive in an era of geopolitical volatility and uncertainty, companies will need to develop more strategic approaches to managing these and other political risks – and incorporating political risk into their long-term strategies. There are five broad no-regrets geostrategic moves executives can implement to help their companies thrive amid stabilized volatility and policy trade-offs in 2023.
1. Manage higher costs.
Nearly every development is likely to push up costs for companies. Restructuring supply chains, enhancing cross-border operating model effectiveness and improving energy efficiency could help to manage these cost increases.
2. Evaluate supplier ecosystems.
Each development will likely impact supply chains — the second year in a row for which this is the case. Boost resilience by conducting a multidimensional risk assessment; identifying opportunities to onshore, nearshore or friendshore suppliers; and positioning supply chains to support sustainability and ESG goals.
3. Explore opportunities in “friendly” markets.
The shift toward greater use of industrial policies and self-sufficiency will challenge traditional global business models. Exploring home country markets and those with which a company’s home country is allied may provide the most robust growth and investment opportunities.
4. Align strategies with stakeholder priorities.
Geopolitical developments are likely to shift stakeholder priorities and their expectations of companies. Developing a growth strategy designed to satisfy the demands of customers, employees, investors and policymakers could help to proactively mitigate these political risks.
5. Conduct scenario planning.
Geopolitical developments in 2023 highlight the high level of uncertainty for the medium-term geostrategic outlook. Conducting geopolitical scenario analysis can help to strategically position companies to flourish during the turbulent times ahead.