International Business

Chapter 14
Geoeconomics, Emerging Trends and Global Strategy Integration

Professional Masters Program in Business Administration
International Business   •   Masters

Geoeconomics, Emerging Trends and Global Strategy Integration

Introduction

International business is increasingly shaped by the interaction of economics, politics, security, technology, demography and environmental change. Firms no longer compete only through price, quality, innovation and branding. They also compete within systems of sanctions, export controls, investment screening, industrial subsidies, data regulation, resource nationalism and strategic alliances.

This interaction is commonly described as geoeconomics: the use of economic instruments to pursue geopolitical objectives, and the use of geopolitical power to influence economic outcomes. Governments deploy tariffs, financial restrictions, technology controls, infrastructure finance, aid, standards and market access to influence other states. Firms, in turn, must decide where to invest, from whom to source, which technologies to adopt and how to organize operations across politically differentiated markets.

The central managerial challenge is not simply to predict the future. It is to build strategies that remain viable under several plausible futures. This requires integrating global strategy with political-risk analysis, supply-chain design, sustainability, demographic intelligence, digital governance and organizational resilience.

Learning Objectives

By the end of this chapter, readers should be able to:

  1. Explain geoeconomics, deglobalization, regionalization and strategic interdependence.
  2. Evaluate how geopolitical rivalry affects trade, investment, technology and supply chains.
  3. Analyse demographic change and climate transition as drivers of international strategy.
  4. Assess technological sovereignty, digital regulation and emerging trade patterns.
  5. Construct and compare alternative global scenarios.
  6. Integrate political, economic, technological, environmental and social factors into international strategic decisions.
  7. Recommend resilient and ethically defensible responses for multinational enterprises.

1. From Globalization to Geoeconomic Competition

1.1 Globalization was never purely economic

Globalization involves the increasing cross-border movement of goods, services, capital, data, knowledge and people. Classical international business theory often emphasized efficiency: firms locate activities where comparative advantages, economies of scale and market opportunities are greatest. However, global value chains also create dependence. A firm may reduce production costs while increasing exposure to a single port, currency, jurisdiction, supplier, technology platform or political relationship.

The contemporary environment is therefore better understood as managed interdependence. States continue to benefit from trade, but they increasingly seek control over strategically sensitive dependencies. The result is not necessarily the end of globalization. It is a reorganization of globalization according to security, resilience and political alignment.

1.2 Geoeconomics

Geoeconomics has three related meanings:

  • the use of economic instruments for geopolitical purposes;
  • the economic consequences of geopolitical competition; and
  • the strategic management of interdependence by firms and governments.

Important instruments include tariffs, sanctions, export controls, investment screening, state-owned enterprises, development finance, currency measures, public procurement, subsidies, standards and control of critical infrastructure.

The distinction between commercial and strategic assets has become less clear. Semiconductors, cloud computing, telecommunications networks, rare earth minerals, energy systems, shipping routes and artificial-intelligence capabilities may be commercially valuable and militarily significant at the same time.

1.3 Deglobalization, slowbalization and regionalization

Deglobalization refers to a sustained reduction in cross-border economic integration. It may involve declining trade intensity, reduced foreign direct investment, shorter international value chains or greater political barriers to cross-border activity.

Slowbalization is a more cautious concept: globalization continues, but the growth of trade, investment and international production slows relative to earlier decades.

Regionalization is the increasing concentration of economic activity within regions such as North America, Europe, East Asia, South Asia, the Middle East or Africa. Regionalization may arise from trade agreements, transport economics, common regulation, political alignment or regional industrial policy.

These concepts should not be treated as mutually exclusive. A firm can experience global expansion in services and data, regional manufacturing networks, and national restrictions on strategic technologies simultaneously.

2. Theoretical Lenses for Analysing the New Environment

2.1 Comparative advantage and its limits

Comparative advantage explains why countries can gain from specialization even when one country is more productive in every activity. Yet the theory generally assumes that trade costs, political relations and security constraints are manageable. It does not imply that every dependency is strategically acceptable.

Managers must therefore distinguish between:

  • efficient dependence, where concentration creates economies of scale without unacceptable exposure; and
  • dangerous dependence, where disruption could threaten survival, bargaining power or national security.

2.2 The resource-based view and dynamic capabilities

The resource-based view argues that sustainable advantage depends on valuable, rare, difficult-to-imitate and organizationally embedded resources. In a volatile international environment, firms also require dynamic capabilities: the ability to sense change, seize opportunities and transform assets and routines.

Geoeconomic capability may include:

  • monitoring political and regulatory change;
  • mapping tier-two and tier-three suppliers;
  • reallocating production and logistics;
  • managing government relationships ethically;
  • redesigning products for multiple regulatory regimes; and
  • learning rapidly from disruption.

2.3 Institutional theory

Institutional theory emphasizes that firms operate under regulative, normative and cultural pressures. A multinational may face incompatible expectations: one government may require data localization, another may prohibit certain data transfers, and customers may expect global interoperability.

Legitimacy is therefore a strategic asset. A firm that is legally compliant but perceived as politically irresponsible may lose its social licence, public contracts or access to talent.

2.4 The global integration–local responsiveness dilemma

International strategy traditionally balances global integration against local responsiveness. Geopolitical fragmentation adds a third dimension: strategic autonomy or political alignment.

A highly integrated model may deliver scale but create political vulnerability. A highly localized model may improve resilience and legitimacy but increase cost and complexity. The appropriate objective is not maximum integration or maximum self-sufficiency; it is selective integration.

3. Emerging Structural Trends

3.1 Geopolitical rivalry and strategic blocs

Major-power rivalry influences market access, standards, investment flows and technology ecosystems. Firms may face pressure to choose suppliers, platforms or partners associated with particular political blocs. Even formally neutral firms can become exposed through subsidiaries, intellectual property, financing arrangements or customers in sensitive sectors.

A useful managerial distinction is between:

  1. compliance risk—the possibility of violating laws or regulations;
  2. operational risk—the possibility that facilities, suppliers or routes become unavailable;
  3. reputational risk—the possibility of losing stakeholder trust; and
  4. strategic risk—the possibility that a business model becomes incompatible with the emerging order.

3.2 Demographic shifts

Population ageing, declining birth rates, migration, urbanization and the growth of younger populations in parts of Africa and South Asia will reshape international markets and labour systems.

Demographic change affects strategy through:

  • the size and composition of consumer demand;
  • labour availability and wage pressure;
  • healthcare and pension expenditure;
  • migration and talent mobility;
  • the location of manufacturing and service centres; and
  • demand for automation and age-friendly products.

A country with a large working-age population is not automatically an attractive production base. Education, infrastructure, institutional quality, health, gender participation and political stability determine whether a demographic opportunity becomes an economic dividend.

3.3 Climate transition and physical climate risk

Climate change creates two distinct categories of risk:

  • physical risk, including heat, floods, storms, water scarcity and sea-level rise; and
  • transition risk, arising from carbon pricing, regulation, changing technologies, investor expectations and shifts in consumer demand.

International firms must assess climate exposure across facilities, suppliers, transport corridors and markets. A factory may be commercially efficient but strategically fragile if it depends on water availability or lies in a high-risk flood zone.

The climate transition also creates opportunities in renewable energy, storage, energy efficiency, low-carbon materials, electric mobility, adaptation infrastructure and circular-economy services. However, green technologies may themselves generate geopolitical competition over minerals, manufacturing capacity, intellectual property and standards.

3.4 Technological sovereignty

Technological sovereignty is the capacity of a state or regional system to control, develop or reliably access technologies considered strategically important. It does not necessarily mean producing everything domestically. It may mean maintaining trusted alternatives, diversified supply, domestic research capability and the ability to function if external access is restricted.

Relevant domains include semiconductors, artificial intelligence, cloud infrastructure, quantum technologies, biotechnology, telecommunications, cybersecurity and satellite systems.

For firms, technological sovereignty creates several strategic questions:

  • Can a critical platform be replaced if access is withdrawn?
  • Where are data stored and processed?
  • Who controls key intellectual property?
  • Are algorithms explainable and auditable across jurisdictions?
  • Do export controls restrict future sales or technical support?
  • Can the product operate under different national standards?

Artificial intelligence intensifies these issues. AI can improve demand forecasting, scenario analysis, compliance screening and supply-chain optimization, but it also creates risks involving privacy, bias, cyberattack, intellectual-property infringement, model dependency and erroneous automated decisions. Human accountability remains essential for high-impact decisions.

3.5 The future of trade

Future trade is likely to be more diversified in form and more contested in governance. Major developments include:

  • growth of digitally delivered services;
  • increased trade in data-enabled products and software;
  • regional supply-chain ecosystems;
  • greater use of services, licensing and franchising instead of physical exports;
  • stronger environmental and labour conditions in trade agreements;
  • more scrutiny of subsidies and state support;
  • expansion of South–South trade; and
  • continuing importance of maritime logistics alongside selective nearshoring.

The phrase friend-shoring describes locating activities in politically trusted countries. It can reduce geopolitical exposure but may exclude efficient suppliers, increase costs and create new concentration risks if many firms choose the same supposedly trusted locations.

4. Strategic Analysis Tools

4.1 The geoeconomic exposure map

A practical exposure map evaluates each important activity across five dimensions:

DimensionDiagnostic question
ConcentrationIs activity dependent on one country, supplier, route or platform?
SubstitutabilityHow quickly can an alternative be found and qualified?
Strategic sensitivityCould the activity affect security, data, health or critical infrastructure?
Political volatilityCould regulation, conflict or sanctions change rapidly?
Recovery capabilityHow quickly could operations be restored after disruption?

The map should cover direct suppliers and indirect dependencies. A company may have ten approved suppliers but discover that eight obtain the same critical input from one upstream processor.

4.2 Measuring concentration

A commonly used concentration measure is the Herfindahl–Hirschman Index (HHI):

HHI = ∑ᵢ sᵢ²

Here, sᵢ is supplier or country i’s share of total sourcing, expressed as a decimal between 0 and 1. HHI ranges from near zero with many small sources to 1 when all sourcing comes from one source. The measure assumes that shares are comparable and that concentration is a reasonable proxy for exposure. It does not capture political differences, substitutability, inventory, transport time or common upstream dependencies.

For example, if sourcing shares are 0.50, 0.30 and 0.20, then:

HHI = 0.50² + 0.30² + 0.20² = 0.25 + 0.09 + 0.04 = 0.38

A lower HHI generally indicates greater diversification, but diversification is not automatically resilience. Three suppliers in the same flood zone or political bloc may fail together.

4.3 Scenario planning

Scenario planning is not a prediction exercise. It develops internally coherent accounts of alternative futures and tests strategic choices against them.

A useful process is:

  1. Define the strategic decision and time horizon.
  2. Identify predetermined trends, such as ageing or digitalization.
  3. Identify critical uncertainties, such as sanctions or climate regulation.
  4. Construct two or more contrasting but plausible scenarios.
  5. Test the firm’s strategic options against each scenario.
  6. Identify signposts that indicate which scenario may be emerging.
  7. Select robust actions, contingent actions and no-regret investments.

A two-axis scenario matrix might use geopolitical openness on one axis and climate-transition speed on the other. This produces four environments: open and fast transition; open and slow transition; fragmented and fast transition; and fragmented and slow transition. Each would imply different choices concerning location, technology, procurement and capital allocation.

4.4 Real-options thinking

In uncertain environments, flexibility has value. A firm may deliberately maintain multiple qualified suppliers, lease rather than purchase capacity, or invest incrementally in a new market. These choices may appear more expensive in the short term but preserve the option to expand, switch or delay as information improves.

Real-options reasoning should not become an excuse for indecision. Flexibility has costs, and managers must compare the cost of optionality with the expected cost of irreversible exposure.

5. Integrating Global Strategy

An integrated international strategy should connect five layers:

  1. Purpose and risk appetite: What geopolitical and ethical risks will the firm accept?
  2. Portfolio choices: Which countries, regions, products and technologies deserve investment?
  3. Operating architecture: Where should research, production, data, inventory and decision rights be located?
  4. Stakeholder legitimacy: How will the firm meet expectations of governments, communities, employees, customers and investors?
  5. Learning and control: What indicators will trigger strategic adjustment?

5.1 The regional hub model

Many firms are moving from a single globally optimized network toward regional hubs. A regional hub may contain manufacturing, distribution, service, data processing and local management capabilities. The model can reduce border friction and improve responsiveness while retaining selected global platforms and intellectual property.

The model is not universally appropriate. It may increase fixed cost, duplicate capabilities and reduce global scale. It is most valuable where markets are large, regulation differs materially, logistics are vulnerable or political disruption is costly.

5.2 Supply-chain resilience

Resilience is the ability to anticipate disruption, absorb its impact, recover performance and adapt the system. It differs from redundancy. Resilience may involve inventory, alternative suppliers, modular product design, visibility, contractual flexibility, local repair capacity and collaborative relationships.

Best practices include:

  • mapping critical dependencies beyond tier-one suppliers;
  • classifying inputs by criticality and substitutability;
  • conducting disruption simulations;
  • qualifying alternatives before they are needed;
  • designing products around interchangeable components;
  • balancing efficiency metrics with recovery metrics; and
  • establishing cross-functional crisis governance.

5.3 Public affairs and ethical political engagement

Government relations are increasingly strategic, but firms must distinguish legitimate advocacy from corruption, coercion or improper influence. Strong practice includes transparent lobbying, documented decision processes, anti-bribery controls, respect for human rights and consistent standards across countries.

A firm should not use “national security” as a pretext for suppressing competition or avoiding accountability. Nor should it treat compliance as sufficient when business activity contributes to forced labour, surveillance abuse, environmental damage or conflict financing.

6. Illustrative Case: Meridian Mobility Systems

Background

Meridian Mobility Systems is a fictional manufacturer of electric buses operating in Europe, North America and Southeast Asia. Its competitive advantage depends on battery cells, power-management software, charging infrastructure and public-sector contracts. Its original strategy concentrated battery procurement in one low-cost country and used a single cloud platform for fleet analytics.

Problem

New export controls restrict certain battery technologies and advanced computing components. A regional conflict threatens shipping through a major maritime route. At the same time, public customers demand low-carbon production, secure data handling and evidence that minerals are not associated with forced labour. Meridian’s finance team prefers the existing low-cost network, while operations leaders argue for regional redundancy.

Analysis

The firm identifies four exposures:

  • input concentration: a small number of upstream processors supply most battery materials;
  • technology dependence: fleet analytics rely on one foreign cloud and software ecosystem;
  • regulatory divergence: data, procurement and carbon rules differ by market;
  • reputational exposure: customers may cancel contracts if supply-chain due diligence is weak.

The firm calculates its direct battery-cell sourcing HHI using shares of 0.60, 0.25 and 0.15:

HHI = 0.60² + 0.25² + 0.15² = 0.36 + 0.0625 + 0.0225 = 0.445

The result indicates substantial concentration, although it does not by itself prove that the network is unacceptable. Management also discovers that two nominally different suppliers depend on the same upstream chemical processor, making effective concentration higher than the direct calculation suggests.

Approach

The board approves a three-part strategy:

  1. establish a second battery-cell source in another region and qualify a lower-risk chemistry where product specifications permit;
  2. deploy a multi-cloud architecture with a portable data layer and region-specific data controls; and
  3. create regional integration hubs for Europe, North America and Southeast Asia, while preserving global standards for safety, engineering and human rights.

Meridian also introduces a supplier due-diligence programme covering labour conditions, mineral traceability, emissions, cybersecurity and business continuity. It negotiates contracts that include information-sharing, audit rights, substitution procedures and emergency allocation rules.

Outcome

The new structure raises unit costs initially and requires duplicated engineering and inventory. However, it reduces the probability that a single political or logistics event will halt all production. Meridian wins two public contracts because it can demonstrate data governance and responsible sourcing. It also gains flexibility to adapt battery chemistry as regulation and technology evolve.

The strategy does not eliminate risk. Regional hubs can be exposed to common climate events, alternative minerals can create new environmental pressures, and multi-cloud systems increase management complexity. Meridian therefore adopts quarterly scenario reviews and leading indicators such as regulatory proposals, supplier financial health, port congestion, climate alerts and technology-access restrictions.

Learning points

The case demonstrates that resilience is multidimensional. Supplier diversification, technology portability, regional operating capability, ethical governance and scenario monitoring must work together. A narrow focus on purchasing cost would have concealed strategic exposure. Conversely, complete self-sufficiency would have been financially unrealistic. The appropriate solution was selective integration combined with credible alternatives.

7. Limitations, Risks and Governance Challenges

7.1 The cost of resilience

Resilience may require duplicate facilities, higher inventories, alternative suppliers and additional compliance systems. These costs can reduce short-term efficiency and may be passed to customers. Managers should therefore distinguish between essential resilience and symbolic duplication. Investments should be linked to credible disruption pathways and measurable recovery benefits.

7.2 Fragmentation and inequality

Regionalization may increase the bargaining power of some states while excluding smaller or poorer economies. Export controls can restrict access to technology needed for development. Climate-related trade measures may protect the environment but also burden producers with limited capacity to comply. International strategy must consider distributive effects, not only shareholder returns.

7.3 Data, privacy and cybersecurity

Cross-border data flows create value but also expose firms to surveillance, cyberattack and conflicting legal obligations. Governance should include data classification, privacy-by-design, access controls, incident response, vendor assessment and clear accountability for automated decisions.

7.4 Greenwashing and transition credibility

Climate claims must be supported by reliable measurement, appropriate boundaries and transparent assumptions. Firms should avoid presenting minor operational improvements as transformational decarbonization. Supply-chain emissions, product use, end-of-life impacts and possible rebound effects should be considered where material.

7.5 Political neutrality is difficult

A multinational may seek neutrality, but its technology, taxes, employment and supply relationships can have political effects. Silence may be interpreted as support, while public advocacy may threaten market access. Senior leaders need explicit principles for human rights, lawful cooperation with governments, crisis communication and withdrawal from unacceptable activities.

8. Managerial Implementation: A Strategic Road Map

A practical implementation sequence is:

First, establish an exposure baseline. Map revenue, assets, suppliers, data, intellectual property, logistics and regulatory obligations by jurisdiction.

Second, classify strategic dependencies. Identify activities that are concentrated, difficult to replace, politically sensitive or essential to safety and continuity.

Third, develop scenarios. Combine major uncertainties into a small number of plausible futures and test the business model against each.

Fourth, select a portfolio of responses. Use no-regret actions, contingent actions and transformational investments. No-regret actions may include visibility, cybersecurity and supplier due diligence. Contingent actions may include relocating capacity when a signpost is reached.

Fifth, align incentives. Procurement should not be rewarded solely for lowest price if its decisions create unacceptable exposure. Performance measures should include resilience, ethical sourcing, emissions, recovery time and regulatory readiness.

Sixth, institutionalize learning. Conduct exercises, review near misses, update assumptions and ensure that regional managers can escalate information rapidly.

Contemporary Strategic Perspective

The international business environment is moving toward a form of plural globalization: several overlapping economic, technological, regulatory and political systems coexist. Firms may need global brands but regional operations, international research but localized data governance, and worldwide sustainability principles implemented through country-specific mechanisms.

The most capable multinational enterprises will not simply choose between globalization and localization. They will design modular organizations that can connect where interdependence creates value and decouple where dependence creates unacceptable vulnerability. Their advantage will come from disciplined flexibility: the ability to change configuration without losing identity, standards or strategic coherence.

Chapter Summary

Geoeconomics explains how economic tools and interdependence are used in pursuit of political and strategic objectives. Contemporary international business is characterized less by the disappearance of globalization than by its selective reorganization. Deglobalization, slowbalization and regionalization may occur simultaneously across different activities.

Geopolitical rivalry affects market access, technology, finance, supply chains and reputation. Demographic shifts influence labour, consumption and innovation. Climate change creates physical and transition risks while generating new markets. Technological sovereignty makes data, semiconductors, cloud systems and AI matters of both commercial and national significance.

Effective strategy requires exposure mapping, concentration analysis, scenario planning, real-options thinking and selective regionalization. The HHI can identify direct concentration, but managers must also examine common upstream dependencies and political substitutability. Resilience requires more than inventory: it involves visibility, alternatives, modularity, governance and learning.

The central strategic principle is integrated flexibility. Firms should preserve the benefits of international specialization while reducing dependencies that threaten continuity, legitimacy or strategic autonomy. Ethical conduct, human-rights due diligence, transparent political engagement, privacy protection and credible climate action are essential parts of international competitiveness.

Key Terms

Geoeconomics: The use of economic instruments to pursue geopolitical objectives and the strategic management of economic interdependence.

Deglobalization: A sustained reduction in cross-border economic integration.

Slowbalization: Continued globalization with slower growth in international trade and investment.

Regionalization: Concentration of economic activity within geographic or political regions.

Managed interdependence: International integration shaped by deliberate security, regulatory and political constraints.

Strategic autonomy: The capacity to make critical decisions and maintain essential functions without unacceptable external dependence.

Technological sovereignty: The ability to develop, control or reliably access strategically important technologies.

Friend-shoring: Locating activities in politically trusted or aligned countries.

Supply-chain resilience: The capacity to anticipate, absorb, recover from and adapt to disruption.

Dynamic capabilities: Organizational abilities to sense change, seize opportunities and transform resources.

Institutional legitimacy: Stakeholder acceptance that an organization’s conduct is appropriate and responsible.

Physical climate risk: Operational damage arising from climate-related physical events and conditions.

Transition risk: Risk arising from policy, technology, market and social changes during economic decarbonization.

Scenario planning: A method for testing strategies against multiple plausible futures.

Real option: The value created by preserving the flexibility to make future strategic choices.

HHI: A concentration index calculated as the sum of squared supplier or market shares.

Selective integration: Combining global scale with regional or local autonomy where strategically necessary.

Political risk: The possibility that political developments adversely affect business value or operations.

Digital sovereignty: A state or organization’s capacity to govern and control critical data and digital infrastructure.

No-regret action: An action beneficial across several plausible future environments.

Review Questions

5 Short Answer Questions

  1. Define geoeconomics and identify three instruments through which governments pursue geoeconomic objectives.
  2. Distinguish deglobalization, slowbalization and regionalization.
  3. What is technological sovereignty, and why is it relevant to multinational enterprises?
  4. Explain the difference between physical climate risk and transition risk.
  5. Why does supplier diversification not necessarily guarantee resilience?

5 Long Answer Questions

  1. Critically evaluate the claim that globalization is ending. Use the concepts of managed interdependence and plural globalization.
  2. Explain how geopolitical rivalry changes the global integration–local responsiveness framework.
  3. Analyse the strategic implications of demographic ageing and youthful population growth for international firms.
  4. Discuss how scenario planning and real-options thinking can improve international investment decisions.
  5. Evaluate the ethical and governance challenges associated with sanctions, AI, data localization and critical technologies.

3 Analytical / Application Questions

  1. A firm sources 50% of a critical component from Country A, 30% from Country B and 20% from Country C. Calculate its HHI and explain why the result should not be interpreted without investigating upstream dependencies.
  2. Design a two-axis scenario matrix for a global food company using geopolitical openness and climate-transition speed. Recommend one no-regret action and one contingent action for each scenario.
  3. Using the Meridian Mobility Systems case, recommend two additional strategic indicators that should be monitored quarterly and explain how each could trigger a management response.

Multiple Choice Questions with Answers

Question 1

Which statement best defines geoeconomics?

A. The study of consumer preferences across national markets

B. The use of economic instruments to pursue geopolitical objectives

C. The process of eliminating all trade barriers

D. The measurement of national income through trade statistics

Correct Answer: B. The use of economic instruments to pursue geopolitical objectives

Question 2

What is the principal difference between deglobalization and slowbalization?

A. Deglobalization concerns services, while slowbalization concerns goods

B. Deglobalization reduces integration, while slowbalization describes slower growth in integration

C. Deglobalization is regional, while slowbalization is always global

D. Deglobalization concerns governments, while slowbalization concerns only firms

Correct Answer: B. Deglobalization reduces integration, while slowbalization describes slower growth in integration

Question 3

Which of the following is an example of transition risk?

A. A flood damages a production facility

B. A heatwave reduces worker productivity

C. A carbon-pricing policy makes an emissions-intensive product less competitive

D. A storm closes a port for two weeks

Correct Answer: C. A carbon-pricing policy makes an emissions-intensive product less competitive

Question 4

If three suppliers have shares of 0.50, 0.30 and 0.20, what is the HHI?

A. 0.19

B. 0.29

C. 0.38

D. 0.75

Correct Answer: C. 0.38

Question 5

Why can a low supplier HHI fail to demonstrate resilience?

A. HHI measures profitability rather than concentration

B. HHI ignores common upstream dependencies and correlated disruption

C. HHI can only be used for financial markets

D. HHI always increases when suppliers are diversified

Correct Answer: B. HHI ignores common upstream dependencies and correlated disruption

Question 6

Which capability most directly enables a firm to respond to geopolitical disruption?

A. Dynamic capability

B. Product standardization alone

C. Permanent dependence on one low-cost supplier

D. Elimination of scenario analysis

Correct Answer: A. Dynamic capability

Question 7

What is friend-shoring?

A. Moving all production to the firm’s home country

B. Locating activities in politically trusted or aligned countries

C. Using informal personal relationships with foreign officials

D. Replacing international trade with charitable exchange

Correct Answer: B. Locating activities in politically trusted or aligned countries

Question 8

Which action is most consistent with selective integration?

A. Making every operation completely self-sufficient

B. Using one global supplier for all critical inputs

C. Retaining global standards while creating regional operating alternatives

D. Withdrawing from all politically complex markets

Correct Answer: C. Retaining global standards while creating regional operating alternatives

Question 9

What is the primary purpose of scenario planning?

A. To predict one exact future

B. To eliminate uncertainty from strategic decisions

C. To test strategies against multiple plausible futures

D. To replace managerial judgment with historical averages

Correct Answer: C. To test strategies against multiple plausible futures

Question 10

Which issue is most directly associated with technological sovereignty?

A. Seasonal fluctuations in tourism demand

B. Control and reliable access to critical digital infrastructure and technologies

C. Differences in retail store design

D. Changes in packaging colour preferences

Correct Answer: B. Control and reliable access to critical digital infrastructure and technologies

International Business
Chapter 14 of 14