Rose,
One effective approach I've found to macro-environmental uncertainty in any strategy development, international or otherwise, is scenario planning. It is advisable that the key drivers to select in scenarios are those with high independence (one is not impacted by the other), uncertainty (if it's certain then you don't need to postulate alternatives) and impact (if it's not impactful then it's not material for strategic planning.)
Roxburgh (
http://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/the-use-and-abuse-of-scenarios) advises to develop at least four scenarios (and that they should have catchy names to make them memorable and engaging!) So, using the analysis of only two key drivers meeting the above criteria, you can easily identify four scenarios.
Let me use the example from your question.
Clearly, one driver will be - the outcome of the Trade dispute - at one end of the spectrum, an extended trade war. At the other end - a deal and a stable low tariff environment and open markets in both directions.
We need another driver. An obvious one is the US economy - bullish growth vs. recession. However, it potentially fails the independence test - an extended international trade war could trigger a recession for example. A political change in the US fails the same test in that a more moderate executive in the White House would likely impact the trade war outcome.
So I would go for something else, relating to scenario drivers within the sector of the strategist organisation. As it's a general question, I'll have to make one up, so let's go for technology. A big debate that's raging right now is tech regulation. As an international strategist in a tech organisation, the outcome of that could have a big impact on strategy. So choosing the degree of regulation provides 4 scenarios:
- Backs Against The Wall - Extended trade war, heavy regulation
- Duck and Weave - Extended trade war, self-regulation
- You're Cramping My Style - Benign international trading environment, heavy regulation
- Don't Stop The Party - Benign international trading environment, self-regulation
This is made up on the fly, obviously, more thought is required, but you get the idea. Then these imagined futures give rise to opportunities and threats which you can outline much more readily given you have developed these scenarios. These scenarios, opportunities and threats can be reviewed in the light of the strategic options to inform and validate the no-regrets bets that are robust in the face of different industry end-states.
Scenario planning is under-utilised in strategy development and can really get you ahead of the game with respect to uncertain future outcomes. Very often one of the key benefits is the discussion it prompts within your organisation in relation to opportunities and threats.
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Brian Martin
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Original Message:
Sent: 05-28-2019 15:18
From: Rose Klimovich
Subject: China vs US trade wars
As the trade war between the US and China continues, how do you take this into account when you are building your international strategy?
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Rose Klimovich
Manhattan College
Riverdale NY
9083134641
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