The management issue is not whether geopolitics matters, but how much decision authority should shift when market access, regulatory exposure and supply continuity diverge by country. For leaders, the real test is whether the operating model can make slower, higher-quality calls about where to stay, where to shrink and where to re-anchor without fragmenting the enterprise.
That has direct governance consequences. A multinational that treats every geography through the same approval chain will likely miss fast-moving constraints on sanctions, ownership, data transfer and local licensing. The question for CIOs, CTOs and business leaders is which decisions stay global โ standards, identity, core platforms, capital allocation โ and which must move closer to market, including sourcing, legal entity design, and customer-facing technology commitments.
Portfolio choices also change. In this environment, โefficiencyโ projects can become hidden risk transfers if they increase dependence on a single corridor, cloud region, contract manufacturer or regulatory regime. Leaders should ask whether the programme portfolio is now weighted toward resilience, optionality and continuity-of-operation metrics, not only cost takeout. That can mean funding parallel suppliers, regional platform variants or minimum viable local presence even when payback is less tidy.
The trade-off is disciplined decentralisation, not drift. Too much autonomy creates duplicated technology, inconsistent controls and weak enterprise visibility; too much centralisation creates brittle response times and political exposure. The practical next questions are: which exposures are existential, which can be tolerated, and what triggers a structural change in ownership, sourcing or operating jurisdiction? Organisations that cannot answer those questions crisply will struggle to adapt before external constraints decide for them.
The rules of global business have changed โ so too should strategies for steering multinational operations.
The international order is fracturing. War in the Middle East, the prolonged conflict in Ukraine and seismic shifts in American trade and foreign policy have upended decades of assumed stability. Tariffs, export controls, sanctions and critical chokepointsย โ from maritime routes to semiconductor supply chains โ are exposing just how fragile business networks have become.
As we wrote in MIT Sloan Management Review,ย multinationals need to redesign traditional strategies โ exit, relocate or reorganise โ in this new world order. Firms that remainย globally connected yet decentralised will be better able to compete in a geopolitically fractured world.
Why traditional responses look different now
Research into successive waves of globalisation and de-globalisation since the early 20th century reveals that the strategic options historically available to multinationals โ exit, relocate, or reorganise โ have not disappeared. But they are manifesting in different ways.
Exit: A costly and often inadvisable path
When political risk rises sharply, the instinct is often to run. Yet exit is often painful and rarely clean. The departure of oil majorsย BP,ย Shell andย Equinor from Russia following the invasion of Ukraine shows firms face steep financial write-downs, contractual disputes, legal entanglements and lasting reputational damage. Host governments can wield regulatory and coercive power to make departure far more expensive than entry ever was.
Firms that will compete effectively are those that redesign their portfolios, supply chains, data architecture and governance structures for the world that is taking shape, not the one that existed.
Whatโs more, a clean exit can permanently forfeit the firmโs access to markets that may remain strategically significant for decades. A wiser response might be to maintain a calibrated minimal presence โ a legal entity and basic operational footprint sufficient to preserve relationships, regulatory standing and market intelligence without deepening financial exposure.ย Nissan and Volkswagen have pursued exactly this in China, pulling back R&D investment and slowing expansion without fully withdrawing, preserving the option to re-engage if conditions improve.
Reorganise: The return of the poly-national
Geopolitical pressure is calling into question the dominant model of multinational organisation, one built around centralised strategic direction, globally optimised supply chains and the primacy of commercial logic over political considerations. That model prized efficiency. What the current era demands is resilience.
Many multinationals are restructuring around poly-national architectures: networks of semi-autonomous units with strong in-country leadership, regional supply chains and deep ties to local stakeholders. This represents a partial return to the multi-domestic model of the pre-globalisation era โ though now driven not by the absence of global integration but by the deliberate unwinding of excessive dependence on it.
HSBC’s 2024 restructuring is instructive. The bank split its global operations into Eastern and Western markets and separated their governance accordingly, producing a firm that remains globally coordinated yet politically adaptable. Nestlรฉ has pursued a comparable path, distributing strategic authority across regional hubs and embedding operations deeply within local economic and regulatory systems to absorb political shocks without systemic damage to the broader enterprise.
Local anchoring can also take the form of localised ownership. McDonaldโs ceded significant ownership in China to domestic partners; Hindustan Unilever and Heineken listed local subsidiaries on national stock exchanges. In the most extreme cases, as TikTok’s fraught negotiations in the United States demonstrated, restructuring ownership entirely may be the only route to continued operation in a hostile regulatory environment.
Beyond structure, multinationals are investing in geopolitical capabilities as a distinct corporate function. BlackRock, Allianz and Siemens have each developed proprietary tools to monitor political risk continuously and anticipate supply chain disruption. The most ambitious firms have moved further still, into corporate diplomacy, treating geopolitics not as a constraint to be absorbed but as an arena for proactive engagement.ย
Last year, Apple simultaneously lobbied Washington against tariffs, reassured Chinese officials of its commitment to the market and cultivated ties with Indian authorities. Microsoft, meanwhile, made five significant pledges to European digital stability, expanding data centre operations across 16 countries in the region and committing to defend its legal right to operate on the continent.
Relocate: Compliance over optimisation
For decades, regulatory convergence and proliferating free trade agreements allowed multinationals to let cost efficiency dictate location decisions. That calculus is now broken. Regulatory fragmentation and the return of trade barriers are forcing firms to prioritise compliance and risk mitigation over pure cost advantage.
Post-Brexit Europe made this plain, compelling multinationals headquartered in London to relocate subsidiaries and restructure reporting lines to preserve European market access. The response to USโChina tensions has taken a different form: reshoring, nearshoring and friend-shoring โ moving production back home or to allied or neutral nations to reduce exposure to adversarial environments. Apple is shifting the bulk of iPhone production to India; Samsung manufactures most of its Galaxy smartphones in Vietnam; Intel has established a hub in Malaysia, exploiting the country’s neutrality and semiconductor expertise.ย
Each decision trades some cost efficiency for reduced dependence on a single geopolitical bloc, while positioning the firm within emerging corridors of middle-power trade.
Designing for adaptability
The current landscape reflects a fundamental rupture within globalisation itself. Nations are weaponising the very networks they cannot fully dismantle. They are deploying techno-nationalism, sanctions, data sovereignty rules and industrial policy as instruments of competition, even as they remain deeply interdependent.
Firms that will compete effectively are those that redesign their portfolios, supply chains, data architecture and governance structures for the world that is taking shape, not the one that existed. Resilience now belongs to those capable of rapid yet considered adaptation to a geopolitical order that shows no sign of stabilising.
This article is adapted from โWhat Global Turmoil Means for Company Structureโย published in MIT Sloan Management Review.
Edited by:
Seok Hwai Lee
About the author(s)
is a Visiting Professor at INSEAD and an Associate Professor of Strategic Management at IE Business School.
is a professor and the director of the UCL School of Management.
is the Solvay Chaired Professor of Technological Innovation and a Professor of Strategic Management at INSEAD. He is also a director of the
ย Strategy Execution Programme, part of INSEADโs suite of Executive Education programmes.
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https://knowledge.insead.edu/leadership-organisations/new-blueprint-competing-fractured-world
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