Is Your Stra­tegic Tool­box Up to Date?

At an event hosted by CBS Executive Education, Professors Michael Mol and Grazia Santangelo from the Department of Strategy and Innovation at Copenhagen Business School opened the floor to a discussion about strategic approaches that can help businesses weather the storm with minimal damage to finances and reputation.

“Apple is a Chinese company.”

Citing a Financial Times headline, Professor Michael Mol invited participants at the event Weathering the Storm: Company Strategies for Handling Geopolitical Shifts to reflect on how geopolitical developments can have far-reaching consequences for companies. Increasingly, firms must contend with a broad range of complex factors if they hope to ensure long-term survival.

A company like Apple, for example, which has spent decades building a strong value chain in China, has in recent years been repeatedly criticised for failing to live up to its social responsibility commitments. This led Professor Mol to pose three key questions:

1. What are the key factors that have contributed to Apple’s heavy dependence on China?
2. What are the risks and benefits for Apple of continuing this level of dependency?
3. And can we outline a strategy for Apple to manage the geopolitical risks it faces?

Major Shifts – Major Consequences

Professors Mol and Grazia Santangelo emphasised that businesses today must navigate an increasingly unstable world, where large-scale geopolitical changes can have widespread implications.

Trade wars, political unrest and clashes of values are forcing businesses to act with heightened strategic precision and flexibility to protect their interests and ensure continuity. As a result, these changes also prompt questions about how well-prepared companies are to handle geopolitical tension, safeguard intangible assets, and develop strategies that promote resilience.

Geopolitical Risks Must Be Accounted For

The Apple example made it clear that conflicting values can shape global business dynamics. It is therefore essential for companies to integrate geopolitical risk into their strategic decision-making – on par with considerations such as production costs, quality, supply chains, innovation, intellectual property (IP), branding, and political relationships.

Failing to address these factors risks leaving companies trapped in crises that could cost them both financially and reputationally. As Professor Santangelo stressed, many firms would do well to reconsider how they are positioned for the future.

Exit, Disengagement, Distance

Professor Santangelo pointed to three strategic options that companies may consider: Exit, Disengagement, and Strategic Organisational Distance. Each approach involves trade-offs that companies will weigh differently, depending on their specific risk profiles.

For example, Samsung shut down all of its factories in China between 2019 and 2023 due to mounting political and regulatory risks. Volkswagen scaled back its operations in China in response to the repression of minority groups, and Shell ceased all new investments in Russia after the invasion of Ukraine and began divesting from the market.

In such geopolitical storms, companies cannot rely on a one-size-fits-all model. Instead, they must assess the specific pros and cons of full withdrawal, reduced engagement, or organisational restructuring to create distance.

A seemingly attractive option like Strategic Organisational Distance may reduce a company’s local visibility, but as Professor Santangelo pointed out, it often comes at the expense of effective communication and introduces greater management friction and higher administrative costs.

Risks and Rewards

Professor Santangelo raised the following critical questions: What is the most significant trade-off businesses face when pursuing strategic organisational distance? And how can a company justify such actions to customers, investors, employees and other stakeholders?

Outcomes are far from uniform. Danish companies such as Ecco and Carlsberg have received markedly different reactions to their continued presence in Russia. As one participant noted, Ecco never positioned itself strongly in terms of values and faced little political backlash when it chose to remain. In contrast, Carlsberg had actively aligned itself with political values and quickly announced its intention to reduce its involvement, later selling its assets in the country.

Legal Disputes and Forum Shopping

As Professor Santangelo observed, threats are coming from many directions – and legal action is increasingly being used as a strategic weapon. Disputes, including those over IP infringements, are now often brought before unexpected courts and jurisdictions. Many companies today engage in forum shopping: deliberately choosing the legal system or jurisdiction that offers the greatest chance of a favourable outcome.

While forum shopping can be effective, it also brings side effects and potential downsides. Pursuing a case in one’s home country – such as for IP violations – may offer home advantage but doesn’t necessarily strengthen rights in practice. Litigating abroad may carry high risk and offer little deterrence, especially if the rulings lack credibility.

A more neutral option is to pursue cases in an impartial, internationally recognised court – for example, in the Netherlands. This can send a strong signal that the company is confident in its rights and capable of winning on neutral ground.

But forum shopping is not for everyone. As Professor Santangelo pointed out, it is expensive, primarily accessible to large firms, more effective in some industries than others, and highly sensitive to political shifts.

Strategies and Practical Advice

Unpredictability is a defining feature of today’s geopolitical turbulence. As Professors Mol and Santangelo noted, companies respond in different ways – but their choices are anything but trivial.

Some companies rely on the passage of time, hoping the dust will settle. Others say one thing and do another – for instance, many promises made between 2016 and 2020 to bring production back to the US were never fulfilled. Still others try to localise problems to prevent them from affecting the entire organisation.

Every company must carefully assess its risks before selecting a strategy. But at a minimum, they should have a clearly defined geopolitical strategy – one that accounts for differences between countries, industries and organisational levels. And crucially: how can that strategy be put into action?

As Professor Mol highlighted, the first step is to build internal expertise and ensure analyses are robust. Second, companies must improve their understanding of risks in both current and potential investments – and temper past optimism where necessary. Third, they must develop and evaluate multiple scenarios, incorporating them into impact assessments and decision-making, whether considering entering or exiting foreign markets.

Is Your Strategic Toolbox Up to Date?

So, what does your toolbox contain? Professors Mol and Santangelo closed by encouraging leaders to consider the following questions:

• Have you perhaps leaned too heavily on a comfortable, pro-freedom worldview?
• What cognitive biases are preventing you from recognising and addressing geopolitical change?
• How can – and should – you shift those mental frameworks?
• How can you and your organisation sense, adapt to and even leverage geopolitical transformation?