Inside the Strategy Room 248. Taking a proactive approach to geopolitics
Apr 24, 2025
Shubham Singhal, a Senior partner and co-leader of McKinsey's Geopolitics Practice, Cindy Levy, the global co-leader of the same practice, and Olivia White, a director at the McKinsey Global Institute, discuss the proactive strategies businesses can adopt in a shifting geopolitical landscape. They emphasize the importance of scenario-based planning and understanding trade dynamics, particularly with rising powers like Vietnam. The experts highlight risk-adjusted value creation and the necessity for resilience against sudden changes brought on by advancements like AI, urging companies to adapt and strengthen their governance.
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Build Scenario Analysis Muscle
- CEOs should map specific geopolitical scenarios to direct business impacts like top line and supply chain.
- Building in scenario analysis expertise helps translate macro trends into actionable enterprise strategies.
Balancing Cost and Resilience
- Leaders must weigh resilience costs against the potential valuation benefits of diversified supply chains.
- Building capital and governance for resilient entities can attract market recognition despite higher upfront costs.
Emerging Cost and Labor Trends
- Some new manufacturing locations may match or beat current costs while offering geopolitical advantages.
- Shifts in demographics and labor policies are prompting companies to reconsider their people operating models.