“Preserving Order Amid Change in NAFTA”
“The EU May Bend to Keep From Breaking”
“U.K. Firms Prepare for Post-Brexit World Even Before Talks Begin”
These are just a few of the recent headlines to cause sleepless nights among U.S. business leaders. While our geopolitical environment has never been what one might call “static,” today we’re dealing with greater complexity — and faster change — than ever before. In the past, keeping up with currency fluctuations and official trade policies may have been sufficient to navigate the international business environment. Not so today. Nor can a quick scan of each day’s top headlines offer the insights necessary to interpret and respond to a constantly shifting geopolitical playing field. Strategists need context to understand the dimensions of global changes so that they can avoid risks and identify opportunities.
For individuals, today’s world news can feel confusing and unsettling when considering the rise of nationalism, protectionism and political extremes across the globe. For companies, assessing the impact and future implications of legislative, regulatory and other changes across a matrix of regions is becoming increasingly cumbersome.
Navigating an Increasingly Complex World Order
When business leaders view today’s international environment through the same lens they used five years ago; they may be placing their companies’ interests at risk. Here are just a few of the developments that we hear and read most about when we think of geopolitical change and global business.
Political use of economic sanctions. When the United States and the European Union joined forces in imposing commercial sanctions on Iran and Russia, hundreds of companies found their international operations severely hampered. Consulting government officials has become a regular practice among businesses seeking to stay on the right side of economic sanction policies, and this practice is likely to continue. The prospect of impactful disruption is looming as the norms, including free trade policies and agreements such as NAFTA and Trans-Pacific Partnership come under attack. The impact on corporate supply chains for globally distributed companies is on the minds of corporate leaders in the United States and around the world.
Potential trade wars loom. Over the past decades, free trade agreements encouraged corporations to build up globally distributed supply chains. This means U.S. companies must be aware not only of domestic policies towards any given country its internal politics but also the influence of a multitude of external players. A company seeking to invest in Vietnam, for example, must understand the interests of China, India and other Association of Southeast Asia Nations (ASEAN) states and their influence on the business environment. Furthermore, given the growth of nationalist-protectionist movements — and potential trade wars which could result — companies must understand and keep a close watch on the drivers of change.
Declining U.S. leadership. Throughout the Cold War and for decades after, the United States took on the role as an “international policeman” who could be counted on to intervene against global threats. But, as John Chipman commented in the Harvard Business Review, “the appetite for intervention among U.S. policymakers and the public alike is on the wane. The world will be less stable as a result, which is the first reason multinational companies must focus anew on geopolitical risk.” The new administration's clear direction is to further this trend toward a less globally-engaged United States.
Nation-states are no longer the only power players. With the rise of transnational players such as the Islamic State and cyber-crime organizations, business leaders can no longer limit their list of concerns to what national governments are up to. While over recent decades national governments have combined forces to form supranational entities such as the European Union that wield considerable power and influence on the global scene, many forecasters now predict the unraveling of the EU and the emergence of new centers of power. This means more risk for global corporations from increased turbulence to trade agreements, regulations, and currencies in the coming years.
Context Is Critical
Stratfor’s VP of Analysis, Reva Goujon wrote recently that some of the changes referenced in this post may be symptoms rooted in the evolution of longer-term forces like shifts in global trade, automation technology and demographic changes.
For example, automation and global trade integration will continue to make workers feel as if their livelihoods are at risk. "A resurgence of nationalism in stressful economic times is natural, and it will be a significant force unraveling the European Union and reshaping the United States' interactions with allies and adversaries alike."
Goujon further points out "history has shown that anxiety is an especially potent emotion that politicians can channel. We see the symptoms of this in the form of potential impact from trade wars, increasing nationalism, and the political use of sanctions to satisfy disenfranchising populations.”
So waiting for things to get back to “normal" might not be a great strategy if the trends we are managing to are indeed manifestations of fundamental shifts that will continue play out over the long-term.
The Importance of a Strategic Intelligence Focus
Business leaders realize that keeping up with a complex geopolitical scene is a full-time job, requiring not only the capacity to understand current developments but also the ability to interpret their impact on global business relations. That is why many leaders are seeking strategic partners who understand the global environment and who can turn raw information into a true strategic asset.
Here are a few of the reasons Stratfor’s members and clients have cited in their decisions to seek out a strategic partner:
- Too much, too fast: To keep up with all the developments affecting their global interests, business leaders would have to be monitoring the news and events on a 24/7 basis, and this is simply not possible.
- Too many moving parts: Decades ago, understanding national governments was sufficient in predicting and responding to changes on the global scene. With the rise of supranational and transnational players, this is no longer the case.
- Too much noise: Much has been written about “fake news” in recent months, and many business leaders struggle to separate truth from spin.
- Too much to plan for: Planning for what’s next is extremely challenging. Predicting change is increasingly difficult, not to mention considering plans to address possible future outcomes.
By partnering with a geopolitical intelligence firm such as Stratfor, business leaders can sleep better at night, knowing they have the knowledge they need to navigate today’s complex, perilous global environment. For the last 20 years, international decision-makers have recognized the unique advantages that the Stratfor team offers, including:
Intelligent forecasting: We built our reputation on our ability to forecast shifts in geopolitical power, helping our members and partners seize opportunities and mitigate risks.
Strategic connections: In today’s complex world, nothing happens in a vacuum. Every idea we share is an entry point into historical context, related events and potential future implications. In contrast to news providers, Stratfor analysts weave global changes, trends and events into rigorously vetted forecasts, themes and topics to help members make sense of it all.
Innovative products: We are investing in new products and platforms to empower our members and partners, offering new ways to access strategic insights and real-time alerts where, when and how they need.
Tailored insights: Through bespoke consultations — and increasingly within the architecture of our products — we contextualize your world, as we take into account your interests, your geographic footprint, your assets, and your investments to offer insights tailored to your specific needs.
Facing the Future With Confidence
While today’s geopolitical environment is complex, unstable and perilous, we must remember that it is also rife with opportunity, and the future belongs to those who can predict it.
Armed with the tailored insights they need to anticipate and adapt to change, strategically minded businesses can capitalize instantly on developments around the world to not only manage risk but also pursue new strategic advantages.
When they seek out intelligence partners like Stratfor, business leaders have at their fingertips the tailored strategic insights they need to survive and thrive on the global scene. For these leaders, the future is not just less risky, but full of emerging opportunities.
Ken Maranian is Stratfor's chief product officer, leading the creation of a suite of new enterprise level lens products, including Stratfor Threat Lens.