Recent geopolitical events have unquestionably resulted in a highly uncertain global economic climate. Policy ambiguity, revoked trade agreement positions, volatility across multiple industry sectors, and rapid changes in technology have left many businesses wondering how to successfully operate – let alone thrive – in a dynamic global economy.
Couple this ambiguity with key geopolitical events in the U.S., Europe, Middle East, Latin America, Asia and the world quickly becomes a place which, on the surface, may appear as a hostile place to conduct business at the moment.
Feels like chaos, doesn’t it?
Well, chaos – akin to beauty or opportunity – may be in the eye of the beholder. Pick your perspective – glass half full vs. half empty – and normally ye shall find it.
This very perspective, the choice of how to view the world, to find opportunity, to decide with whom to partner in conquering it (if partnering at all) in doing business globally, and what to do next all start with the slant of one’s prism. And this very conflict and complexity drive the world to be a hard place to do business, or one that is filled with opportunity.
Many of us may remember the pop-like psychology test when deciding what the following represents at first-glance:
What did you see in your first read?
“Opportunity is nowhere?”
Or “Opportunity is now here?”
I am not one much for labels, so which one of these interpretations represents you is, well, for you alone to know.
However, I am one for exploring what both sides of a perspective bring when trying to (A) make sense of the world, (B) whether a negative can be turned into a positive, and (C) where opportunities exist that can be leveraged for a wholesome benefit (whether for others or myself).
For me, B is what makes A and C possible.
So, as we look at the world today, what hard-trends (i.e. those that have longevity and are unlikely to change in the extensively foreseeable future), factors and considerations can we monitor which will assist us in making sense of the world as it stands, of where it may be headed, and how it may impact your business?
Three thoughts to consider:
1. History is remarkably skilled at repeating itself. Watch for signs.
The United States’ 1929 market crash was driven by a few factors, but the biggest contributors were (very) rapid growth in bank credit, “irrational exuberance” (i.e. false performance expectations), and mismatch between production and true consumption (that was not overly-leveraged by buying on margin).
Sound familiar? It should. In 2009 — 80 years later — many of the same factors again emerged in contributing to the recession in the U.S.
Another example relates to protectionist trade policies, which can be both the boost and the bust of a country. A major driving factor is whether such trade stance is coupled with the balance in government and sound stewardship. Brazil stands as an example of both, having ranked as the 11th most prosperous nation less than 10 years ago, only to decline into a recession in 2015. Brazil now, it seems, has “gotten” the major drivers of change it needs, and the signs of improvement already show brightly. The prospects for the sustainable prosperity for the country are as positive as they have ever been.
What can we draw from all of this? My take: in three to four generations our memory as communities (or civilization, for that matter) seems to reset itself. This is highly preventable. Watch for signs and take action wisely.
2. Change is constant. Monitor the change, but even more so its amplitude.
While change itself lets you know to shift position, strategy or tactics, the amplitude of the change tells you what to do in light of the change.
Let’s consider trade policy, for instance. The new incoming administration has openly motioned for a restraint in reducing or eliminating trade agreements. At the time of this writing, president-elect Donald Trump has yet to take power, but much of the new administration’s stance on foreign trade has been openly stated.
Fair to expect a change in trade policy is coming. TPP (Trans-Pacific Partnership) is the first of such examples. Good for trade? Bad for trade? Has it been about trade for the U.S. vs. keeping China out of TPP? Each of these is debatable.
However, since change is likely coming, the question then becomes “how much change will come?” And the amplitude – the difference in the big vs. the small change – is a path we can see, monitor, and leverage corollary examples in order to prepare.
3. Vision without execution is a hallucination. So is engaging in global trade without expert help.
According to the U.S. Commercial Services Department, less than 1 percent of all U.S. companies export. Many factors drive this statistic though my team’s experience in helping companies grow across 140 countries attests, our own primary research points to a few key, driving factors:
- Lack of experience in conducting global business
- Underestimating the complexity of global trade endeavors
- Failing to properly consider risks and proactively create mitigation plans for said risks
- Stumbling upon linguistic, cultural, capital, and legal roadblocks (avoidable and removable with proper experience)
- (And connected to all the above) Inability to quickly and adequately adapt to changes when doing business abroad, as evidenced by limited potential or being outpaced by the local market/competition.
The great news is this: you need not go it alone.
Resources abound. Some are free, others are semi-subsidized, and others deliver proven results for hire.
So, will you chose bravery – and venture alone – only to learn your (potential) defeat could have been prevented by surrounding yourself with the right expertise?
Positive or negative, the choice – and the outcome - is entirely up to you. And based on your prism, that may be a great thing.
Jeff Jorge is principal and international growth services practice leader at Baker Tilly Virchow Krause, LLP. In his role, he and his team help client organizations to successfully compete globally across 140 countries in a turnkey manner, spanning multiple industry sectors and foreign markets – with particular emphasis in the Americas and large, fast-growing emerging economies such as Mexico and Brazil. Jeff is fluent in Portuguese and Spanish, and leads the Latin American Service Desk firm-wide.
Invited often to meet with legislators and policy-makers on global growth and international business, Jeff is also a bi-national board member in the congressionally-appointed U.S.-Mexico Chamber of Commerce. In this capacity, he has been tasked along with fellow board members with providing direct recommendations, input and perspective to President-elect Donald Trump and to Congress on matters related to global trade, national security, and foreign relations.
For further information, Jeff may be reached at (248) 368-8965.