Dr Boojihawon, Senior Lecturer in Strategy and Programme Director for the Online MSc International Business, Birmingham Business School, explains why today’s international business environment is as easy to predict – let alone manage:
So, we’re talking about ‘Why today’s international business environment is important and different?’
There’s a lot going on if you’re looking at the international business arena, you know? It almost seems to me that every business – no matter where they are based, irrespective of how big or small they are – they are in the international business game.
We have forces in the international business environment which are in a constant state of flux. There’s clearly more volatility, ambiguity and uncertainty – and creating conditions which are not always easy to grasp (let alone manage).
So, this exposes vulnerability for business conditions everywhere, but at the same time it also exposes new opportunities.
If I can be more specific around that, so if we take a look at how the world has changed, for example: in 2007 (just before the 2008 financial crisis) there were all the conditions in place for the world to come on the brink of a financial disaster. But governments were able to draw heavily on monetary, fiscal and diplomatic resources to prevent that crisis from destroying the global economy.
The world looks different now. Today, the financial dominos – or the monetary dominos – are set up in a way that is not so predictable and in ways which are a little bit more difficult and manage in that respect. That’s why a lot of pundits are calling the recession ‘imminent’.
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My point of view is that the international business arena is down to the play of market and non-market forces, including politics – and how they are going to shape this global downturn which everyone seems to be talking about.
The world is moving with a lot of uncertainty. The American economy, for example, remains the linchpin of the global economic system (which is now led by Mr Trump himself and his very overt and controversial ideas, in some ways).
Britain is close to leaving the European Union (EU). The political planet across the rest of the EU may turn uglier than what it is already.
Most advanced economies have now viable populist and national parties which are coming out to the forefront and really voicing out their views around what their rights are and what the country should be doing.
On the other hand, we have got a burgeoning in emerging markets from around the world which is really taking the global stage. You know, they are the thriving markets and they are where the opportunities lie today.
In that part of the world, China has got a very interesting place – or set of cards in its hand. We are witnessing a superpower where ‘power’ is concentrated – or dangerously concentrated in the hands of one man: Mr Xi Jinping. That is complicated in the global trade war that Mr Trump is waging - and China and others have now become openly hostile.
So, what a world we are facing?! What a state of flux, but what an exciting arena for an international business manager exercise their skill and their knowledge in.
Interviewer: Can I draw on two things you’ve said there? I could ask you about all of it – all of it is fascinating, thank you very much. If I could just home in on two things:
1. You said that monetary, fiscal and other levers might not be as accessible to policy makers next time round. Can you expand on that a little bit? Why not?
Yes, it’s only because this sense of ‘togetherness’ and ‘cooperation’ which existed prior to the 2008 crisis around global leaders, around central banks working together; it seems to me they are very strained right now. You know, everybody is pulling their corners because there is a ‘protectionist’ attitude and mindset which has really taken over – how central governments and banks are kind of protecting national interests first.
That applies to a Western context but it’s also true of a lot of emerging contexts. I mean, look at what China is trying to do, for example. So, it’s not very transparent, you know? That’s why my reservations are there.
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Interviewer: The second thing was, you mentioned ‘opportunities’? Now, I’m sure for the right businesspeople or the right ideas there are always opportunities. I remember reading about people who made money during the hyperinflation in Weimar, Germany, you know? I just wonder, can you just give us a couple of examples where there might be opportunities that businesspeople who aren’t trained to think in the way your programme trains them to - inaudible – won’t be able to exploit those opportunities. What are we talking about?
Ok, so if we look at the areas of technology and innovation, for example, there’s a lot being talked about around artificial intelligence, industry 4.0 - all the high-tech developments that we’re talking about. Now these are, to me, some of the surface level issues that is kind of going on around in every industry.
What lies underneath all of that is either opportunities for collaboration (for example) to find out how a given company is going to unhang its own strengths around certain technologies, around a certain partnership, around planning a new niche in a given market; unexplored opportunities.
Only a few years ago we were not thinking of television as being a place where you can stream live videos online, for example, yeah? And there you go, you have got Netflix, you have got Amazon Prime. These are the businesses which have come in with a global proposition – but there are other more local opportunities which are players within that. So, you have got local channels which are still kind of creating their own stamp within those spaces with new business ideas.
So, the opportunities are there. They are moving targets in a way. It needs the right mindset; it needs the right knowledge and skill to kind of bring them together and maybe look at giving them a bit of a different twist if you want.
Interviewer: Is there a sense in which even the chaos we are in itself; with the right mindset and skill, there could be opportunities? So, say, for instance that I’m a US company or an Asian company that looks into this: well, I can see that the ECB (European Central Bank) isn’t going to be able to carry on for much longer with QE (quantitative easing), because Mr Trump is saying that he considers that a pre-cursor to a currency war – could I say ‘[W]ell, I see an opportunity for myself there. I’m going to work the currency in some way or do something.’ That’s just one example - I’m just giving that as an example. Are there ways in which we can say ‘[H]ey, you know, even the chaos can work to your benefit if you have the right people with the right skills?’
Yeah, well chaos is only a room for failure to the mind – but to the right mind, it can be a room full of opportunities. So, chaos is a matter of interpretation in a lot of ways, yes.
It’s chaotic, it’s messy and it’s unpredictable, it’s uncertain, it’s volatile – all of these things, they are here, but these could be considered to be the new norm for doing business in this kind of global context.
We are not going to have an environment where all is predictable, all is stable, and you can use clever statistics and analytics to create the kind of environment you want.
No, these are gone (if they’ve ever existed?!) We are now talking about your ability to be able to combine your thinking in a way that actually brings different types of understandings together. So just to think about your example (for example), you know the currency market is very much in a state of flux because of the volatility and economic health of countries around the world.
It is the main currencies around the world in which, around which, the global wealth of - inaudible - are in a state of flux which means that the repercussions are going to be there for emerging economies and more local, fragile economies (in that respect, in the same way).
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So, the international business manager has got a very exciting goal here to be able to perceive where are the differences happening and how, in that state of flux, they can actually manage these forces to the strengths of the company.
So, if I am sourcing from different parts of the world, I need to know how that infrastructure is also going to affect the cost of my products and my raw materials from the different places that I’m sourcing them from – and how I am going to leverage that into the cost structure of my company and my products, and how I am going to make a profit out of them. So, it takes the right insight to do that.
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Can you think of any other reasons why today’s international business environment is important and different? Leave a comment below: