#158 Hope for the best, prepare for the worst

Trade wars, lawsuits, viruses – the last several weeks and months have clearly shown that even the mightiest global companies can easily been shaken by the external environment in global markets. Let’s take Amazon in India as an example. For years, the eCommerce behemoth has tried to break into the market. It created jobs, brought Western-style consumption, certainly advanced technology, and it even sent its founder and CEO, Jeff Bezos, on a good will tour during which he was often seen wearing an Indian-style vest. And yet, he’s up against politics and the law. Triggered by negative sentiment among India’s general population and pressured by the 70-million member strong Confederation of All-India Traders, Prime Minister Modi’s government launched an antitrust investigation alleging that Amazon (and its competitor Flip-Kart, partially owned by Walmart) engage in anticompetitive behavior. While Amazon is far from abandoning India, this has certainly put a dent into what must have been a well-thought out plan. More unpredictable even, the ongoing health crisis triggered by the Coronavirus in China has impacted many foreign companies operating there. Retailers like Starbucks had to shut down stores in certain locations, manufacturers like Mondelez are already predicting low sales, and airlines had to discontinue flights to / from certain destinations. And then, of course, there is the trade war that the U.S. is wielding against several countries, especially China. Despite a recent Phase I trade deal (which really is nothing but a temporary commitment to not making things worse), U.S. companies are still hurting and have put expansion plans and investments on halt. None of these changes in the external environment for globally operating companies should be surprising. Experience has taught us that international strategies are fragile and exposed to unknown risks. Events in the macro-environments of politics, law, or health can happen, but one can never now when and with what force they strike. “Hope for the best, prepare for the worst’ still applies…

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