Preparing for a new global business environment: divided and disorderly or integrated and harmonious?

Abstract

Many executives base their strategies on the assumption that globalization is here to stay – they bank on a future of open markets, cross‐border capital flows, and international cooperation. However, companies should consider the possibility that what lies ahead are conditions reminiscent of the early decades of the 20th century, with business activities constrained by protectionist walls and international conflict – not globalization, but deglobalization. If the future does bring more international discord and disorder, the commercial impacts could be momentous. But nobody can say for sure which vision of the future will materialize. How can a company move forward given this uncertainty? Strategic flexibility is the answer – an approach to planning that involves defining scenarios on how the marketplace might develop and then adopting strategies that fit all scenarios while making limited investments in assets needed only if specific scenarios emerge. The latter are treated as a portfolio of real options – the investments are increased, held, or abandoned depending on how events unfold. Strategic flexibility is thus valuable to executives facing strategic risks due to globalization’s unclear future.

Citation

Allen, D. and Raynor, M.E. (2004), "Preparing for a new global business environment: divided and disorderly or integrated and harmonious?", Journal of Business Strategy, Vol. 25 No. 5, pp. 16-25. https://doi.org/10.1108/02756660410558906