Economy
Geopolitical changes in areas of operation can be significant for companies, and at Falco Geopolitics we have observed many that react to change in precisely the wrong way.
One problem is the duality of the relationship between a large number of organisations' headquarters (HQ) and their individual branches. Although it is absolutely necessary to be close to customers in order to understand their needs, build authentic relationships and have a tangible point of contact, Falco would argue that these offshoots often operate with far less autonomy than they deserve. Deciding and controlling everything at HQ is not always the best option when dealing with cultural, organisational and strategic hurdles. As the world becomes increasingly connected and multinationals seek to reach new markets, one of the key soft skills they require from new hires is emotional intelligence and the ability to create relationships with peers living thousands of miles away.
The Economics of Geopolitics
THE CHANGING GLOBAL ORDER AND IMPACT ON WORLD ECONOMIES
An understanding of geopolitics has always been important for business; perhaps because, at the most basic level, international law allows governments to stop foreign firms from operating in their countries. Areas of geopolitical interest for companies range from differences in international trade and legal requirements to the threat of war or terrorism, or specific events. The latter includes the growing momentum of the so-called 16+1 initiative: China's mechanism for engaging with countries in Central and Eastern Europe.
The most recent gathering of 16 states which endorse China's ambitious 'Belt and Road' investment project took place in the Croatian city of Dubrovnik, and has unsettled European Union (EU) leaders, who are watching the growth of China's political and economic influence in the region closely.
Chinese-led infrastructure projects, including a high-speed railway from Budapest in Hungary to Belgrade in Serbia, promise European countries that are most in need of support a financial boost. However, China would also benefit significantly from the overall plan of linking up this railway line with its port in Piraeus, Greece, the entry point for Chinese goods to Central and Eastern Europe. State-owned Chinese banks will provide the finance for these projects and Chinese companies will supply the technology and construction.
Yet, although many European businesses have developed plans to deal with the moderate change factor of Brexit, barely any are focusing on (arguably) more dramatic geopolitical events and associations, such as this alliance. A preoccupation with creating plans for all Brexit outcomes - including the improbable - has dominated many businesses, fuelled by the European media. Despite the UK leaving the EU, eyes are still firmly fixed on micro-changes in the EU debate, meaning that other important events and geopolitical shifts are largely passing unnoticed.
One such issue is that the population of Africa is expected to more than double, to 2.4 billion before 2050. Despite such a huge projected growth figure, companies are still not devoting enough - or, in some cases, any - attention to this demographic, which is likely to become highly relevant to them. China, however, has recently pledged $60bn USD of investment in major capital projects which aim to develop the local African economy.