The Reasons Businesses Should Care About Geopolitics

Geopolitics can be defined as a power struggle between people, businesses, and institutions under the constraints of geography, economics, and technology. Businesses and their strategists need context to understand the dimensions of global changes and the implications of it. Businesses that have little or no geopolitical knowledge, have a greater threat to the potential and impacts on their performance can be significant. Therefore, it is vital to interpret political, social and market trends to reduce risk and capitalise on opportunities. Businesses need to care about geopolitics because they need to communicate effectively with workers and both the local and international community. If, there is not effective communication and engagement then there is a risk of lobbying and protests as seen with H&M and their factory conditions and wages paid to workers. Businesses have to acknowledge the local geopolitics to mitigate the risk of strike action and lobbying by workers or the local populace. There are many complex geopolitical issues across different operating environments, and so businesses need to improve their organizational agility and resilience to rapidly deal with events that pose as a threat to them. Thus, without context, in this sense businesses are left dealing with issues that are bigger than they seem on paper and can be a bigger threat in the future.

Geopolitical events are rarely foreseen but they can, nonetheless, be prepared for and their impact can be moderated to some extent. Applying nuanced geopolitical thinking will enhance the ability of businesses to react quickly to changing circumstances and therefore, maintain or increase their value. This is done by effective analysis and communication of local geopolitics. A limited awareness of the different types of geopolitical interaction can cause a strain local relation beyond the point of control and repair. For that reason, it is important to understand the region’s deep-rooted historical and social values. Civil unrest occurs rapidly, thus, businesses must have local knowledge to analyse the particular dynamics of an emerging geopolitical situation. There must be a sophisticated amount of knowledge otherwise developments like the internet have liberated more individuals to shape national and international events which can cause backlash for businesses. There is a greater need to pay close attention to local engagement strategy before investment to minimize the potential financial and reputational risks associated with civil unrest. This is the same with institutions they choose to cooperate with, and the people representing them. This could either lead to opportunities or risks for businesses. As such, without the knowledge of geopolitics businesses face the risk of ruining their reputation and losing worthwhile investments.

Ultimately, geopolitical knowledge will help businesses to capitalize on new opportunities and avoid or lessen new threats. This can only be achieved by a sophisticated familiarity of cultural, historical and religious differences. These things make a difference in what people want, what people are willing to pay for and without this information businesses will miss out on a lot of opportunities that exist in a globalized economy. Every idea we share is an open window into historical context, related to event and political future consequences. To have the best opportunity and to avoid risk businesses must recognise the history of the region’s geopolitics to see if there is a pattern or any influences that can impact decision making. As such, nothing happens in a vacuum, there must be thorough research and consideration done before making a decision. There is a need for lots of continuing engagement and instantaneous communications around the globe so businesses can have accurate information about financial goods, investments and international laws that affect their company. This is why businesses must care about geopolitics.