Geopolitics and Change: Implications for Businesses

Geopolitics refers to the relationship between the political power and geographic space. The drivers of change for the geopolitical environment of a specific geographic space are – Time, Location and Demography. The main purpose of the Geopoliical studies is to understand the political and strategic significance of a geographic space when defined in terms of – Location, Size, Workings, Culture and Resources.

Geopolitics lead to geostrategies which bring about the change which businesses has to deal with. One good example of such changes is, the emergence of China as a third power in the world as a result of geostrategic efforts by America’s foreign policy which was an answer to the long haul of cold war during the years of a bipolar world which did not help grow the multinational business. America took note of the cracks in the Sino – Soviet relationship and encouraged the development of China as a third power centre as its geostrategic moves over the years.

These geoplotical changes were coincided with growing changes in the world brought about by the sudden advances of technology, communication and IT, which made the world highly connected.

How does business deal with such changes

It has been argued that businesses around the world can deal with such chances as well as the result of war and recession (caused by some bad geostrategic ideas), by democratization of technology, finance and Information. This could only happen with the support of poltical powers around the world which encourages such democratization.

This means above political effrots can being about prosperity through openness and democratization of modern fruits of advancement

Golden Straightjacket

The golden straightjacket view as popularized by Thomas Friedman is: Tight Money, Small Government, Low taxes, Flexible labor legislations, deregulations, privatization, and openness all around. Some of the smaller countries like Singapore, UAE, Mauritius and others have demonstrated the benefits of this view. These so called tax heavens and free ports are able to develop faster than the world average by using this democratization of technology, finance and information. Some of the larger countries are trying to follow suit and trying to finetune their own golden straightjackets.

Session 5 and 6 of Geopolitical Environment for Business discussed above details and threw open the subject to the students who interacted on diverse topics related to above phenomenon.

For the next class, case study on ‘Cogentrix’ has been given to be discussed in the next classes of GEB.

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