Businesses need dynamic approaches to weather complex geopolitical storms

The Israel-Hamas war has taken the world by surprise, and shock. At a time when the Russia-Ukraine conflict has created substantial disruption in global trade, the current event has the potential to further complicate the business environment. Amid a slowing western economy, India remains a bright spot. However, this can face severe challenge if the Israel-Hamas conflict spills over to a broader West Asian region considering that oil prices have already started to harden. If there is no immediate solution to the current conflict then there is a likelihood that India may have to bear higher crude oil prices in the current and coming quarters.

This can very well derail the fiscal arithmetic of the country’s economy. Barring crude oil prices, Indian businesses have strong presence in the West Asian region. That is the reason that share prices of many companies with Israel and West Asian presence have begun to react negatively. IT majors such as TCS, Wipro, Tech Mahindra and Infosys, among others, have a presence in the economically important Israel. Similar is the case with SBI and L&T. Sun Pharmaceutical, which owns a majority stake in Israel’s Taro Pharmaceutical, is under investors’ radar while Dr. Reddy’s and Lupin are also being watched. Leading jewelers, Kalyan Jewellers and Titan have an Israeli connection. It has to be seen how the conflict impacts these companies’ operations.

Should other countries join the war, one way or the other, it is certain that the West Asian region will be on razor’s edge. This doesn’t augur well for Indian economy as many Indians work there and send billions of dollars as remittances back home. It should be noted that the interconnectedness between Indian and Israel economies have grown in recent years. Like India, even Israel has a vibrant startup ecosystem. Many of these startups collaborate in many areas including high-tech space. Similarly, Israel is one of the major exporters of arms and ammunition to India. So, the collaboration between state-run agencies and startups are growing in the military-tech space in recent years. This could be disrupted if the conflict gets prolonged.

The biggest impact of such conflicts will be on the startups. The global startup ecosystem has already been undergoing through a severe funding winter. There was a hope that the situation will improve from 2024 onwards as investors come out of their risk-off mode. However, the present geopolitical situation casts a shadow over this likely recovery. Post Russia-Ukraine war, the world has seen much disruption coming in the way of businesses. It is, therefore, essential that companies prepare for such events through adequate cash reserve, resilient business model and agile operating model. If one has to survive in this ever-changing world, businesses have to gear up for the unexpected with some timely alternative initiatives.

One need not look beyond the ‘survival of the fittest’ maxim. Business continuity plans have also become important to navigate through such a complex geopolitical environment. Every crisis throws open many opportunities. It is up to the business leaders to adapt to these dynamics suitably and stay in the race.