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 / Autumn 2007 / Issue 48(originally published by Booz & Company)


The Statecraft of Business

The anarchic corporation looks into the eye of the storm and sees opportunity. It exploits markets wherever possible, converting huge transaction costs and collateral damages into commercial activities. This is a Hobbesian company, expecting the worst and planning accordingly. This approach requires a stoic, almost fatalistic sensibility: If life is to be nasty, brutish, and short, at least a company can be profitable in the near term.

Facing widespread instability, such organizations work around impotent national governments by bribing their way into new local markets, which they move in and out of quickly. Brand development is minimal because long-lasting customer loyalty is undesirable; rather, anarchic organizations compete by offering items at the lowest possible price and level of quality to generate significant revenue. Relationships with suppliers, financiers, employees, and customers are elusive; the company knows that alliances in an unstable world should be formed only on an ad hoc basis.

An anarchic environment is traditionally the bread and butter of organized crime, but is also familiar to companies that invest in unstable republics in Africa and Asia.

As these examples illustrate, there is value in bringing the frameworks of international relations into the debate about corporate strategy and globalization, if for no other reason than to help managers un­derstand the political environment they face and the political attitudes of their own companies. Corporate strategy must be responsive to the changing world order and anticipate its dynamics to be successful. The world view of most companies provides managers with room to adapt their strategy to any or all of these frameworks; however, most managers tend to focus on the framework that fits their own aspirations most closely. Corporations are not mere objects of the evolution of international affairs. They also help to shape that evolution.

Author Profile:

Sven Behrendt ([email protected]), head of the World Economic Forum’s Metals and Mining practice, is a specialist in international relations and negotiations. The views expressed in this article are his own.
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