© Henley Business School 2017 www.henley.ac.uk

Henley Global Masterclasses 2017

Masterclass 05: BREXIT: The New Normal

12th May 2017

Dr. Elena Beleska-Spasova Associate Professor in International Business

Subject Area Leader

Head of Post-experience Postgraduate Programmes

e.beleska-spasova@henley.ac.uk

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All truth passes through three stages:

First it is ridiculed.

Second it is violently opposed.

And third it is accepted as self-evident.

(statement attributed to Arthur Schopenhauer,

German philosopher, 1788-1860)

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What is BREXIT?

B – British decision to

R – Review, revise, and reform its

E – Eco-system from EU-centric to Glob-centric, inducing

X – External/macro economic and

I – Internal/micro firm-specific

T – Transitions within 2 years (and beyond)

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What does BREXIT mean?

Changing our relationship with:

the EU

AND

the rest of the world!

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Economic (dis)integration

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Free Trade Area

Customs Union

Common Market

Economic Union

Political Union

Free Trade Area: barriers to trade (such

as tariffs) among member countries are removed (e.g. NAFTA).

Customs Union: tariff between member countries are eliminated

and a common trade policy toward

nonmember countries is established.

Common Market: elimination of trade

barriers among member countries, a common

external trade policy and mobility of factors of production among member countries.

Economic union: A deep form of

integration characterised by free movement of goods services, and

factors of production among member

countries and full integration of economic

policies.

Political union: An economic union in

which there is full economic integration,

unification of economic policies and a single

government.

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PRELIMINARY FINDINGS BASED ON 803 COMPLETED SURVEYS TO DATE

Henley Survey on BREXIT

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Respondents’ sector demographics

0% 5% 10% 15% 20% 25% 30%

Professional and technical activities (legal, accounting, tax,…

Real estate activities

Information and communication

Financial and insurance activities

Other (please specify)

Education

Manufacturing

Wholesale and retail trade

Human health and social work activities

Public administration and defence

Scientific activities (research & development, etc.)

Transport and storage

Administrative and support service activities (renting, leasing, HR,…

Construction

Arts, entertainment and recreation

Agriculture, Forestry and Fishing

Utilities

Mining and Quarrying

Accommodation and catering activities

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Respondents’ size demographics

Number of employees Revenues

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Respondents’ location demographics

British owned with no foreign operations

Not British owned with a subsidiary/office inthe UK

British owned with subsidiaries in foreignmarkets

British owned with exports to foreign markets

Not British owned and no subsidiary/office inthe UK

0% 5% 10% 15% 20% 25% 30% 35% 40%

In the UK 50%

In the EU 29%

Other 21%

Where is your current job located?

Company ownership

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BREXIT implications to date

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0%

5%

10%

15%

20%

25%

30%

35%

None Contracts Partners Employees Exchangerate

Domesticcustomers

Domesticeconomy

Other

Challenges 66%

Opportunities 34%

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BREXIT implications 2017-18

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What do you see as the main challenges for your organisation in the next two years (2017-18) as a result of BREXIT?

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BREXIT implication 2019-22

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Based on your current understanding of BREXIT please rank the perceived level of impact on your organisation in the first 2-3 years when the UK leaves the EU: (+3 =extremely positive, -3 = extremely negative)

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Are we getting ready?

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How is your organization currently approaching the assessment of BREXIT implications?

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Facing BREXIT

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What kind of assistance or support do you think would be helpful for your organization in the period leading to BREXIT?

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… creating a major strategic challenge:

Responding to rising short-term pressures while simultaneously preparing the organization for a

fundamentally different future.

The New Normal

There is a fundamental shift in the global economic, political and social paradigm…

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The ambidexterity paradox

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The New Normal

Long-term growth and sustainability pressures

Short-term performance pressure

Shifting internal and

external environment

How can a leader address

this gap?

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New rules, New tools – Dynamic Capabilities

A firm’s capacity:

(1) to sense and shape opportunities and threats,

(2) to seize opportunities, and

(3) to sustain competitiveness through enhancing, combining,

protecting, and, when necessary, reconfiguring the business

enterprise’s intangible and tangible assets.

[Teece, SMJ 2007: 1319-1320]

The New Normal

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New rules, New tools – Dynamic Capabilities

A firm can sustain, augment or renew its competitiveness by

reconfiguring its assets and capabilities:

① internally, within the firm,

② externally via

A. partnerships

B. contractual relationships

C. acquisitions

[Teece, SMJ 2007: 1319-1320]

The New Normal

Vijay Govindarajan: GE and the Paradox of Reverse Innovation https://www.youtube.com/watch?v=JHotKr_05bw

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Facing the New Normal - Pragmatic strategising

• Ascertain what you know, own and/or control

• Simplify processes and context

• Safeguard stability

and use these to build pragmatic strategies.

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Operationalising pragmatic strategising

Ask the WHY questions before the HOW!

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What do these two species have in common?

What is the difference?

Cyanobacteria, or blue-green algae Nyasasaurus parringtoni

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QUESTIONS?

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