The Multinational Firm and Geostrategy

Author: Jones, Milo
Source: IE Business School
Year: 2011
Number of pages: 8

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Abstract:

This course will explore how geopolitical factors affect multinational firms, and how business strategy intersects with geopolitical events; it is also designed to provide you with frameworks to make practical use of geopolitical awareness and give you the tools to incorporate that awareness into your business analysis. We will consider geopolitics in the broadest sense, looking at how geography, climate, culture, demography, politics, economics and technology interact with business strategy. We will call this approach “Geostrategy”.

One useful metaphor for distinguishing Geostrategy from the more familiar discipline of macroeconomics is to say that macroeconomics describes the “weather” of business, while Geostrategy describes the “climate’ in which industries and firms operate. Just as climate is the recurring patterns of weather due to systemic forces, so too Geostrategy considers the deep, systemic drivers and recurring patterns of economic activity. We will especially address how people, as they attempt to understand geopolitical events analyze issues and “use” history either well or poorly.

The course has two parts. Part One introduces the central ideas of geopolitics, and provides frameworks for analyzing geopolitical events and their impact on business. These tools are drawn largely from the world of elementary political economy and intelligence analysis: they are not “rocket science”, but together they provide a disciplined way to decide what geopolitical factors businesspeople should consider in a given situation. In most sessions, in-class exercises and short cases will supplement the lecture. In the most practical way possible, Part One is “Thinking about thinking”: it will help you avoid common errors in business strategy that stem from ignoring geopolitical factors, and teach you to see the opportunities as well as risks that are embedded in newspaper headlines.

Part Two then offers you a chance to practice the styles of thinking and tools acquired in Part One. First, we introduce a few extra tools that you may wish to draw upon in future sessions. Then, we will look at some hypothetical (but possible) geopolitical events and their likely effects on particular industries and firms. There will be no “right” answers to these hypothetical scenarios, but you will have many opportunities to apply the geostrategic methods described in the lectures and the ideas from your readings. Because the subject of geopolitics is vast, a bibliography of suggested readings is provided at the end of this syllabus.