The Formidable Challenges of Long-Term Planning in Today’s Business Climate

It is hard to remember a time in our industry when the future course of business has been more difficult to predict. The challenges involved in charting a successful path forward for a business, under current business conditions, go beyond the traditional boundaries of the strategic planning game. They are being overshadowed by uncertainty and unpredictability resulting from today’s disruptive global events. 

These events include (1) the worldwide geopolitical climate, (2) US-led global tariff initiatives, and (3) their resulting impacts on the global supply chain.

Devising and implementing a successful business plan that results in long-term profitable growth is a goal of all companies. Under normal circumstances, the variables that need to be considered in revising and adjusting an existing business strategy are ones where management can rely on past experience as a guide.

In today’s business climate, however, the ability to assess the best strategic paths going forward for the company are significantly clouded as a result of key global disruptive events.

Geopolitical Climate

Not since the period prior to the Second World War has there been such over-riding worldwide concerns about where the future is headed. The growing number of regional conflicts, aligned with various political or territorial issues, has reached a level unfamiliar to many. 

The threatening dialogue and isolated, overt actions between major global powers have reached a point where it is impossible to predict the outcomes that may result.

This geopolitical turmoil is casting a shroud of caution for most companies in our industry. Global corporations, who support multiple markets across a wide range of different geographies, are now faced with added uncertainty created by these events. 

The unpredictability of the outcomes from such events makes the strategic planning process extremely difficult. Consequences can include a slowing of investment strategies to reduce risk until the business landscape becomes more settled and predictable.

It can also force companies to alter their business strategies to expand the number of options available to them to ensure they can meet the needs of their customers. This may include considering alternative manufacturing sites, changing distribution channels, or modifying direct sales and customer service strategies.

US-Led Global Tariff Initiatives

Entering 2025, the United States announced plans to impose tariffs on most countries exporting goods into the US. Many of the countries on the target list have been long-time trading partners of the US with close political ties. The list also included countries with strained US relations of varying degrees, but who still remain important sourcing locations for many US companies.

At present, tariff agreements are being negotiated individually. As of now, most country-to-country outcomes have yet to be determined. The uncertainty and unpredictability the tariff initiative has created, however, is already being felt in the business practices of many companies. 

As a consequence, the threat of tariffs has caused many trading partners to respond with various retaliatory actions of their own. In other cases, this issue has evolved into ongoing negotiations with the US that have no certain longer-term outcome. The collective impact of the US-led tariff initiative has been a loss of trust among our traditional political allies and trading partners.

As countries begin to face the reality of US tariffs, they are responding with increased prices on the goods, raw materials, or components they export into the US. Some existing offshore sources of supply will not be able to successfully incorporate all these added costs into their export prices and may choose not to sell into the US. In cases where the US is their major customer, certain companies will be forced to go out of business. 

One of the stated goals of the tariff initiatives is for US-based companies to focus on establishing domestic sources of supply for their goods that they now manufacture offshore. Non-US companies manufacturing offshore and exporting to the US would need to consider bringing manufacturing into the US to be competitive and retain their market position. 

In either case, transitioning manufacturing does not happen quickly. The time frame required to accomplish this objective is long, costly, and carries significant risks for companies that choose to follow this path. In general, pursuing a re-shoring strategy will take time before the investment required can produce an acceptable payback.

Supply Chain

The supply chain challenges experienced during COVID may now be revisited (in some form) as a result of today’s complex global business conditions. Threatening dialogue between politically opposed governments, along with the expanding regional conflicts between various countries or factions, is being further complicated by the addition of US-led tariff initiatives.

The composite uncertainty and unpredictability of these events makes the task of supply-chain management at least as difficult as it was during COVID. The past appears to be a prologue to what we now face under current business conditions.

Among the supply chain ramifications of COVID that we may be challenged with again include:

• Ocean Shipping

Ocean-going freight is being disrupted by regional conflicts and territorial actions directly tied to major shipping channels. In the Middle East, the Suez Canal is a critical supply route for Europe, and is being disrupted by the Yemen-based Houthis. 

In Asia, China is taking territorially driven actions across the Southeast Asia region that are affecting access to certain key ports. In North America, traffic through the Panama Canal has been impacted by drought and US actions directed at gaining further control of this key Central American shipping channel. In addition, strikes by dock workers in various regions have created temporary port shutdowns.

In all the above cases the resulting delays have a cumulative effect on the scheduling and movement of ocean-going vessels. Ports become jammed with ships waiting to be unloaded. Shipping containers get out of sequence and either leave empty or are not available when needed for loading onto transports. 

• Freight and Transportation

Freight scheduling by rail or by truck becomes an additional victim of supply chain disruptions. Normal intervals for transporting goods from port cities or manufacturing locations can become invalid. Scrambling to adjust the supply and demand needs of customers becomes a more regular occurrence. For major manufacturing operations, which have an established multi-tier supplier network (which may include offshore sources), the sourcing challenges can be immense.

As the mysteries of supply grow, the availability of trucks and/or drivers to move products in a timely way becomes more uncertain and unreliable.

To compensate, companies are increasing inventories and adding warehouse locations to buffer delays in the supply of key components or raw materials. Unfortunately, these actions also add operational costs. 

• Cost of Goods – Cumulatively, as supply and demand disruptions create shortages, the costs for goods and services through the entire supply chain increase significantly. Across the value chain, the elevated prices for many raw materials, finished goods, and supporting services, once established, remain at these higher levels going forward.

 Many companies are faced with the necessity to expand their sourcing options. This adds costs and requires additional resources necessary to support an expansion of sourcing alternatives. Increasing the number of business options available to companies dealing with the uncertainty and unpredictability of today is a growing reality.