What Global Turmoil Means for Company Structure

The international order is undergoing structural transformation. War in the Middle East, the prolonged conflict in Ukraine, and major shifts in U.S. trade and foreign policy that have altered the country’s traditional alliances are manifestations of a broader reconfiguration of power.

Tariffs, export controls, sanctions, and the vulnerability of strategic choke points as diverse as maritime straits and semiconductor ecosystems are exposing the fragility of globally optimized supply chains and production networks.

The previously invisible contest over information flows is transforming as moves by state actors to establish digital sovereignty lead to significant technological consequences for multinational corporations. The European Union’s General Data Protection Regulation and Data Act, for instance, required social media and technology companies to redesign cloud infrastructure, reorganize compliance teams and legal entities, and relocate data storage and processing to ensure that European user data remains under EU jurisdiction.

Meanwhile, consider the recent controversy in Chile, which, under U.S. pressure, rescinded approval of an undersea cable that would link Santiago to Hong Kong. That situation illustrates how digital infrastructure projects in middle-power countries have become geopolitical flash points.

In fact, the very concept of neutrality has become fragile. The war in the Middle East shows that hitherto politically neutral countries are not immune to attack. Big Tech companies such as Amazon, Google, and Microsoft have invested hundreds of billions of dollars to develop gigantic data centers in the United Arab Emirates, Qatar, and Oman only to see them damaged by drones and missiles.

Why Traditional Options Now Look Different

How are businesses operating across borders adapting to this evolving reality — or, how should they be? Our research into waves of globalization and deglobalization since the beginning of the 20th century has found that the main options traditionally available to multinational corporations facing geopolitical turmoil — exit, relocate, or reorganize — are manifesting somewhat differently now than in previous crises.

Exit: Is it advisable? In the past, companies operating in a country where their policy risk was increasing were likely to reassess and reduce their exposure or even exit the country altogether. Such decisions are never easy, since they often mean relinquishing valuable assets and abandoning lucrative opportunities. As the exit of BP, Shell, and Equinor from Russia soon after its invasion of Ukraine shows, divestitures can entail significant financial write-downs, legal complications, contractual disputes, and reputational spillovers. Host governments can use their coercive and regulatory power to make it far more costly for a foreign company to exit the market than it was to enter.

Divestitures can also cause a multinational company to permanently lose access to markets in regions that may remain strategically important over the long term. To avoid such a scenario, it may be wise to maintain a calibrated, minimal presence in those countries. In practice, this could consist of a legal entity and basic operational presence sufficient to preserve relationships, regulatory standing, and market intelligence while limiting commitment. This may be achieved through asset relocation or structural reorganization. For example, automakers, including Nissan and Volkswagen, have reduced R&D investment in China and slowed expansion plans there without fully exiting the market. By maintaining supplier relationships and distribution networks, they can preserve the option to reengage more fully if political or competitive conditions stabilize.

Not surprisingly, then, many multinationals are exploring ways to maintain broad international scale and reach despite tectonic shifts in the global order. But what are the alternatives?

Reorganize: Polynational structures and corporate diplomacy. The ongoing political turmoil is causing many leaders to question the traditional approach to organizing multinational operations, which is based on centralizing strategic direction and technology development and optimizing supply chains and technology flows. Traditional multinationals also tend to prioritize commercial considerations over political considerations, and efficiency over resilience.

As geopolitical tensions increase and disruptive events intensify, multinationals are adopting new structures to build resilience through separation, redundancy, and local embeddedness. In 2024, for instance, HSBC restructured its global operations by splitting its business into Eastern and Western divisions. The bank also joined China’s cross-border interbank payment system, strengthening its Eastern operations while separating their governance from Western operations.

Globally integrated operations are now giving way to polynational organizations — networks of semiautonomous units with strong in-country leadership, regional supply chains, and strong ties with local stakeholders. Interestingly, this signals a partial return to the multidomestic organization that some multinationals adopted in the pre-globalization era.

Nestlé and HSBC offer two examples of this approach. Both companies have distributed strategic authority and the monitoring and analysis of political and regulatory issues across regional hubs. They have also embedded operations deeply within local economic and regulatory systems to reduce their exposure to political shocks in specific locations while preserving their presence in multiple geopolitical blocs. Doing so allows Nestlé and HSBC to remain globally coordinated but politically adaptable.

The local anchoring that characterizes polynational organizations can also be pursued by localizing ownership — that is, by directly involving local actors in the ownership and governance of operations. Ceding significant ownership to the host government (as McDonald’s did in China) or listing local operations on the national stock exchange (as Hindustan Unilever did in India, and Heineken did in Malaysia) helps create local accountability and signals alignment with local interests. It also helps companies introduce legal and operational separation between a local subsidiary and the global parent.

Localizing ownership can also be an extreme response to widely diverging regulatory regimes and local concerns with data sovereignty. As the case of TikTok in the U.S. shows, redesigning internal governance and technological architectures may be insufficient to address a host government’s concerns about how data will be collected, processed, and used. Radically restructuring ownership to create a separate legal entity to manage American operations, with majority ownership by non-Chinese investors, was the only way the social media platform could continue operating in the U.S. The Chinese parent, ByteDance, retained a 19.9% stake in TikTok.

Multinationals are also investing in more preemptive measures. Corporate headquarters are developing geopolitical capabilities that enable them to actively and constantly monitor political risk and take strategic action in real time. Such actions include creating or strengthening dedicated government-affairs corporate functions and developing specialized tools, such as BlackRock’s Geopolitical Risk Indicator, Allianz’s Political Stability Grid, and Siemens’ Value at Stake methodology. Such capabilities help multinationals formulate explicit geopolitical strategies, anticipate potential disruptions to supply chains and operations, and orchestrate responses to crises when they occur.

Some multinationals are also engaging in corporate diplomacy, a sign that they are moving from treating geopolitics as an external constraint to engaging proactively as independent actors. In 2025, Apple simultaneously lobbied the U.S. government against instituting tariffs, reassured local officials in China about its presence, and strengthened ties with Indian authorities, effectively using manufacturing investments as diplomatic currency. Also in 2025, Microsoft made five major commitments to support Europe’s digital stability, including expanding data center operations in 16 European countries, supporting digital sovereignty, defending its legal right to operate in Europe, protecting data privacy and cybersecurity in the region, and ensuring open access to its European AI and cloud platform and to infrastructure across Europe. The purpose of such efforts is twofold: to shelter companies from the consequences of political tensions between home and host governments, and to unlock opportunities for local investment by conveying a neutral stance.

Relocate: From optimization to compliance. For decades, gradual regulatory alignment, integration of financial markets and payment systems, and the proliferation of free trade agreements encouraged multinational companies to let cost advantage and economies of scale dictate location choices. Now, fragmentation of regulatory regimes and the return of trade barriers are forcing a renewed emphasis on regulatory compliance and risk mitigation.

This is what happened in post-Brexit Europe. The United Kingdom’s withdrawal from the EU limited the free movement of goods, services, and labor and threatened the European operating licenses of multinationals whose regional headquarters were in the U.K. This forced them to reconsider European residency, relocate subsidiaries, and rebalance regional headquarters. Increased cross-border transaction costs disrupted integrated value chains and constrained labor mobility, prompting companies to restructure reporting lines and shift assets to preserve market access.

To reduce the risk of supply chain disruptions, many companies are increasingly adopting strategies such as reshoring (moving production to the home country to avoid tariffs and other barriers), near-shoring (moving production closer to home), and friend-shoring (moving production to friendly nations to increase control over foreign operations and decrease exposure to potentially hostile countries). Several North American manufacturers in electronics and automotive components have near-shored production from China to Mexico to reduce tariff exposure and shorten supply chains. By relocating assembly and intermediate production closer to the U.S. market, these companies are sacrificing access to low-cost producers to avoid tariff wars and logistics problems.

Multinational manufacturers in apparel, consumer electronics, and industrial goods are adopting a middle-power anchoring strategy. This means that they are relocating production to countries that are less strongly aligned with blocs embroiled in trade tensions. Apple is shifting the bulk of iPhone production to India from China. Samsung built solid relations with Vietnam’s political authorities, which enabled the company to influence the development of industrial parks where it now produces the majority of its Galaxy smartphones. Intel has chosen to establish a manufacturing hub in Malaysia, taking advantage of the Southeast Asian country’s geopolitical neutrality and existing semiconductor expertise to establish a production base outside the U.S.-China rivalry.

Such moves allow multinationals to maintain access to low-cost supply networks while reducing their dependence on a single geopolitical bloc. The companies also benefit from early positioning within emerging middle-power corridors of trade.

The current geopolitical landscape reflects a rupture within globalization itself. Countries are trying to weaponize networks they cannot fully dismantle: They engage in techno-nationalism, impose sanctions in trade and finance, create data sovereignty regimes, and compete on the basis of industrial policy. At the same time, this competition and fragmentation are occurring within a context of deep economic interdependence.

To stay on top of this new landscape, companies need to redesign their portfolios, supply chains, data architectures, and governance models. Multipolarity is reshaping the strategic options of exit, relocation, or reorganization. Resilience now depends on adaptability to fast-changing geopolitical restructuring.