One defining feature of the geopolitical environment in 2024 will be multipolarity, according to Ernst & Young.
As a greater number of powerful actors will shape an increasingly complex market, finance leaders must be wary of the changes ahead to be able to strategise.
China will be among those countries that will continue to shape the global operating environment in profound ways and geopolitical swing states such as India will gain more sway over the international agenda.
Multipolarity and de-risking will pose both challenges and opportunities for companies and this will affect organisations in unique ways, hence requiring specific geostrategic actions to capitalise on the opportunities they present while also mitigating the risks they pose.
At a high level, there are three no-regrets geostrategic moves that organisations should take, EY says.
1. Build geopolitical considerations into business models and strategies.
In this era of profound change in the international system, the importance of geopolitics to corporate strategy is at its highest level in a generation. Successfully weaving geopolitical dynamics into corporate strategy will increasingly be a competitive advantage.
2. Increase the resilience of global supply chains.
Many companies’ supply chains are exposed to geopolitical developments. Executives need to determine how they can better position their company’s operating model and supply chain strategy to proactively adjust and increase their resilience to geopolitical disruptions.
3. Adapt sustainability strategies to geopolitical realities.
Multipolarity and de-risking are influencing government approaches to policies regarding climate change and natural resources, which will affect companies’ sustainability requirements, costs, competitive opportunities and strategy. Finance leaders should incorporate new policies and regulations, as well as signals for how such policies may evolve in the future, into their sustainability strategies.
