Radu MAGDIN, PhD
Summary. Geopolitical impact is emerging as a major risk for multinational companies (MNCs). As tensions mount between Washington and Beijing, and the global political landscape is filled with uncertainty and power shifts, international companies are caught in the crossfire either if new regulations and interventions target them specifically, or if they are only collateral damage. This article aims to explore the geopolitical landscape in which MNCs operate nowadays, look at real examples of how they manage geopolitical stress, and explore alternatives they could pursue.
Keywords: Great Power Competition; Trade war; Multinational companies; Strategy; Geopolitics
Companies today operate in one of the most complicated international political and economic environments in modern history. Geopolitical considerations are now high on companies’ risk-assessment agendas, and, if not yet for some of the players, it would better become so. Geopolitical impact is emerging as a major risk especially for multinational companies (MNCs). As tensions mount between Washington and Beijing, and the global political landscape is filled with uncertainty and power shifts, international companies are caught in the crossfire either if new regulations and interventions target them specifically, or if they are “only” collateral damage.
The COVID-19 pandemic brought even more uncertainty to the table. Some would argue that the pandemic has brought up more opportunities than constraints, but few companies share this opinion. From a political perspective, the COVID-19 crisis has increased countries’ national desire for strategic autonomy and increased resilience, after the hidden vulnerabilities of the current interconnected system of supply chains have been brought to light. This has in turn reinforced the economic decoupling trend. But while decoupling is easier said than done, geopolitical harm is easier done than said, as several global operators have felt it intensively in annus horribilis 2020.
Clearly, the dynamics caused by the pandemic, together with the uncertainty driven by the spirit of continued great power competition, but also trade tensions and new regulations, all of this make for a business and reputational Molotov cocktail putting MNCs to test. For this reason, it is worth to examine the geopolitical landscape, its main actors as frontline states and companies, in order to understand what are the main problems MNCs are facing in today’s world and what options and opportunities they have.
Radu Magdin, PhD in Political Science, SNSPA, is a global Romanian analyst and consultant, former Prime Ministerial advisor in Romania and Moldova. He advises CEOs on managing risks and is a visiting teacher with Romania’s SNSPA in the fields of “Global Competition and Strategic Communications” respectively “Global Communications Campaigns”.