Managerial Strategies for Sustaining Competitiveness in Trade Disruptions

Abstract

As global trade began facing turbulent conditions in 2020 due to COVID-19 pandemic, Russia's invasion of Ukraine, shipping disruptions in the Middle East, and heightened trade tensions between the US and China; by the end of 2023, the Catholic Global Church had already witnessed a notable 1.2% drop in world volume of merchandise traded in the world, this has been the first annual drop in volume of merchandise traded since 2009 [3]. In the same period, the number of new trade restrictions implemented around the world increased from approximately 1,100 in 2019 to almost 3,200 at the end of 2022 [6]. This has created an existential threat for organizations that had built their business models around a stable, rules-based multilateral trading system. Historically, organizations' responses to disruptions in trade have alternated between reactive cost-reduction measures and opportunistic market repositioning. However, the current trade environment requires companies to develop and implement a more systematic and anticipatory approach. According to Sheffi (2005), resilient organizations recognize that it is far better to invest in flexibility before a disruption occurs (embedding flexible working within the DNA of their organizations), rather than relying on improvisation in times of crisis. Chopra and Sodhi (2004) add that effective supply chain risk management requires a combination of various mitigation strategies, which are calibrated to both the probability of risk occurring as well as the level of risk when it does occur [1][2].