International Strategy in a Time of Global Disruptions
JORDI CANALS
Boards of directors around the world are trying to understand the new world order and their implications for corporate strategy. We are moving away from an international order based on well-established multilateral institutions -such as the UN and the WTO- and widely recognized international rules on trade and foreign investment. In its place, a new era of trade wars, weaponization of the dollar, exorbitant government subsidies to private firms, and the prohibition of foreign investment by certain companies in some countries is emerging. Major powers -mainly, the US and China- are trying to shape the world according to their own unilateral rules. This marks the end of globalization and international economic integration as we have known them over the past few decades.
For many companies, globalization has meant access to new markets and global supply chains networks distributed around the world in search of efficiency. The strategy rested on the belief that international economic integration and the ongoing reduction of barriers to trade and investment was irreversible. In fact, they weren’t, and many strategic decisions that companies have adopted in recent years need to be reconsidered in this new context.
History suggests that this trend could endure for many years. Boards of directors and senior management teams need to reflect on these radical changes and take thoughtful action, particularly companies with international operations. In doing so, boards should consider the short-term, as well as mid and long-term effects of their decisions. Short-term decisions. These decisions reflect the need to protect the company from sudden disruptions and their negative effects. These may include dwindling sales in certain countries, inefficiencies in the global supply chain or new barriers to exporting to, or importing from, certain countries. Such changes not only directly impact short-term profitability, but also the viability of the strategy and the business model. Understanding and accepting changes, and their effects, as the new normal in today's business landscape requires that boards and top management teams (TMT) reassess the value of their international strategy.
In particular, three critical areas should be examined. The first area involves assessing how new conditions may be changing the firm’s access to some markets, in terms of sales, manufacturing and the global supply chain. The second area concerns global supply chain resilience and the company's capacity to keep serving customers on time and effectively. The third focus is on assessing the strength and adaptability of the firm’s business model, with the global supply chain and market access being crucial factors. Mid and long-term decisions. These decisions look beyond protecting the company in the short term and consider how the board and the TMT can define a new corporate strategy for this new world. In this process, there are four basic areas that boards may want to examine.
The first area is value differentiation and the need to be unique for local customers. Some Western food and beverage companies operating in emerging markets are losing market share not only because of protectionism, but also due to a failure to adapt to local needs. Strong brand recognition in major Western countries is no longer enough to compete in emerging markets. A clear and compelling value proposition tailored for local customers is indispensable.
The second area is the need to strengthen the firm’s presence in certain markets. In recent decades, many companies have expanded into too many markets, often, attaining only a minimal market share, resulting in wide breadth but shallow depth. It is clear that these strategies have been largely ineffective. A credible international strategy is not about having many countries in the portfolio, but, instead, focusing on the those countries where the company can effectively reach and serve local customers with a clear competitive advantage. Wishful thinking is never a useful strategy, especially in a world with major disruptions.
The third area centers on organizing and promoting entrepreneurship locally or regionally. The globalization process is not only broken because of political reasons. It is also broken because each country has different cultural values and historical traditions. As many of them leave poverty behind, natural factors often reinforce deep-rooted differences. In this context, companies should better adapt to local environments by seeking to understand and respect them. Adaptation and local learning from a distance were often nice objectives of international companies, but very tough to achieve. This means that global operations should no longer be led by a group of managers based in headquarters far away from actual customers and markets. Companies with sound international strategies should have clear overall goals and policies, while developing strong local management teams that can make decisions that build a relevant presence in their respective markets. This implies a significant shift in the mindset of boards of directors and CEOs, a change that should precede organizational redesign.
Empirical evidence clearly shows that strong local teams are better at understanding local customers and organizing operations to serve them. This does not exclude sharing past experiences and best practices across the organization. The new international strategy calls for developing a redefined balance between what should remain centralized and global, and what needs to be decentralized and more locally driven. Companies need to make these decisions sooner rather than later - and move on from a past that no longer exists.
NEWS&TRENDS.
In a recent contribution to the Harvard Law School Forum on Corporate Governance, Miguel Antón and Mireia Giné highlight key insights of the paper “Common Ownership Around the World”, co-authored with F. Ederer and G. Ramirez-Chiang. First presented at the 2025 IESE–ECGI Corporate Governance Conference, the study examines how common ownership shapes corporate governance. Read more here.
The Net Zero Banking Alliance has suspended its activities after several major European and UK banks withdrew, following earlier U.S. departures in late 2024 and early 2025. It now plans to transform into a framework initiative centered on regulatory guidance. This shift points to greater divergence in climate disclosures and reassessment of the efforts to establish international standards and practices to safeguard transparency, comparability, and accountability. Read more here.
Executive pay remains a contentious issue, with shareholders increasingly challenging compensation practices in the latest AGM season. In response to investor calls for greater transparency, Glass Lewis has updated its pay-for-performance analysis which also incorporates the SEC’s new pay-versus-performance tables. While this shift may reinforce the trend toward pay standardization in the U.S. and beyond, it also risks sidelining more tailored compensation structures and approaches that, as we have noted in previous newsletters, can be more effective in driving long-term shareholder value. Read more here.
The current economic outlook is prompting boards of directors to revisit their strategic frameworks and organizational structures, often by undoing past mergers to sharpen operational and financial focus while positioning for growth. A recent example is Kraft Heinz, which recently announced plans to split into two independent public companies—one focusing on grocery products and the other on condiments—effectively reversing elements of its 2015 merger. This trend is echoed in similar restructurings, such as Warner Bros. Discovery, which plans to separate just three years after the 2022 Warner Media–Discovery merger. Read more here.
Shareholder activism during the first half of 2025 increased in the U.S. but declined in Europe compared to previous years, with board changes emerging as a key priority in many campaigns. Read more here.
SHAREHOLDERS' ROLE AND RESPONSIBILITIES IN TIMES OF CORPORATE DISRUPTION
The 2025 IESE-ECGI Corporate Governance Conference gathered distinguished academics and board members from leading global companies to explore how different types of shareholders influence governance and strategic decision-making during periods of major disruptions.
We care about sending you only the information that matters to you. Click the button below to access your preferences page and tailor the content you want to receive from us.
