Geoffrey is a strategy expert at a large multinational company that manufactures and sells food products across the globe. Until recently, he believed that food was nonpolitical in nature and that even though global tastes may vary, food was not related to culture.
Then a Danish analyst told him the story of Arla, a Danish producer of dairy products with a strong and growing presence in the Middle East until 2005, when a Danish newspaper published controversial drawings of the Islamic prophet. This led to the boycott of all Danish products in some Muslim countries. Arla’s good political connections as a provider of local jobs and quality products in these countries were of no help in this situation, and it suffered significant losses in the region due to its lack of sensitivity to the culture.
Reflecting on this story, Geoffrey begins to think about the cultural and political dimension that his firm’s products and their origin may have and also how they in turn may be impacted by cultural and political shifts. He realizes that what drives businesses across the globe are forces much deeper than the generic and seemingly interchangeable customers, competitors, and suppliers that he has seen in many strategy frameworks. He recognizes that to ensure the long-term performance of their firms, business strategists need to appreciate and understand politics and culture and their place among other geopolitical factors.
Beyond knowing their customers, competitors, and suppliers and how they evolve over time, Geoffrey recognizes that political and cultural factors also have a strong and often dramatic impact on short-term performance. As a result, he starts to ask deeper questions:
- What exactly is the factor of politics and culture?
- How does it evolve over time?
- What impact will these factors have on my company’s strategy?
The geopolitical factor of politics and culture represents a key driver of business activity that eventually impacts customers, competitors, and suppliers. Geoffrey realizes that to really grasp long-term strategic issues, acquiring a basic understanding of this driver is essential.
How comfortable are you with the increasingly complex cultural and political environment in which your company functions? The Accenture Academy course Analyzing the Impact of Politics and Culture on Finance provides you with a framework for making sound analyses that will drive good strategic and financial decisions.