Business Strategist: January 2024

Thursday 25 January 2024

Managing surge capacity is vital

Surge capacity is simply the ability to get men & materials together with machinery & equipment on one hand and system & structure on the other to meet up with the unexpected uptick in demand for goods & services.

Although surge capacity was generally identified as pressing issue in the health sector earlier, today it is more relevant in military warfare and geoeconomics. The Ukraine war taught a bitter lesson in strategic management for the Global North, who thought that America and NATO would be able to pool all their military might under harness in terms of stocking of Soviet Era weaponry and their own modern systems in the fight against Russia.

The assumption was Russia won’t be able to marshal production and technology to go in parallel with what the west showcased. There was a missing link: surge capacity. As the war raged most munitions were run through steeply and replenishments were hard to come by. It was the question of “gun without bullets”. On the other hand Russia put its factory on war footing and production went unhindered in order to supply and re-supply used up munitions.

The problem for the West later developed into inadequacy of hard assets such as tanks and heavy materials that were destroyed in the process that cannot be resupplied. The buck returned to Washington and NATO to put up their surge capacity to counter the degree and potency of Russian attack. The fact of the matter is US arms manufacturers could not cope up with the snowballing demand dynamics.

In the short term it was still possible to cut corners and re-allocate resources that were meant for other needs. What dogs the management of these arms manufacturers was the non-availability of specialised materials and skilled labour along with urgent financing. The absence of outsourcing weighing upon them in general and US military in particular decision was made to dip deep into the existing stocks or resort to shipping out dated and outmoded weapons and/or munitions that later sank in the battle field when pitted against the fierce onslaught of the Russian Army.

Unsurprisingly, this lowered the image of western weapons in the global arms bazaar. Russia won the war twice over one in the military space and other in geoeconomics space.

I understand that most Asian & African nations are signing up with Russia to provide them with sophisticated state-of-art weapons and related munitions. The big blow for the Global North is the unpalatable fact of the re-emergence of North Korea once again becoming arms supplier with good business opportunity knocking on her door. Surely she has the surge capacity along with Russia to provide all of the arms requirements. Once again it is geoeconomics that is stupid!

Cheers!

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog: Business Strategist

Tuesday 23 January 2024

Two pitfalls in business warfare

Among the pitfalls in business warfare two prominent ones are noted as miscalculation and misjudgement. When combined these could lead to major catastrophe for one or for both sides that are involved in business warfare. Here is a short preview:

Miscalculation is basically not adding up the sum total correctly of number, quantum, tools & techniques in play and the degree of what is latent and what is hidden in the battle space. Before commencing any type of business warfare the attacker must evaluate the strength of the enemy as well as his weaknesses in the tactical sphere. Strength lies upon the physical assets and human resources and the relevant technology opponent has at present and what could be forthcoming in due course.

Second aspect is the type of moves opponent makes on & off. Simply speaking miscalculation generally occurs, as I said, on the tactical side. For each move you or the opponent make there could possibly corresponding moves. Yet, not every move requires a reaction, of course. This can be further analysed into outcome & reaction. Depending on the outcome both sides can adjust their individual position. In the cola war, both Coca-Cola and Pepsi Cola do this counter play.

Misjudgement is more about unearthing the real intention of the opponent when he makes his manoeuvres, and not the cosmetics surrounding it. Is this manoeuvre a shadow play is the right question to be asked? Will this move alter the strategic balance between the two parties is the next question. There is nothing good to prejudge the manoeuvre as threatening one when it is simply shadow boxing. Here is the deception or maskirovka as Russians call it.

Look at what happened when the Global North targeted Russia’s geoeconomics by sanctioning her oil & gas exports and fixed the ceiling on the price of barrel of oil. The global North misjudged only when they fixed the price ceiling. For all intents purposes they diluted the bite of the sanctions hinting that these could be relaxed if Russia stick to the price ceiling.

In business sense and in the broader geoeconomics scene, misjudgement is devastating to the side that makes the faulty strategic manoeuvre. Both Lukoil and Gazprom detected how this misjudgement could be played positively into their hands and began discounting oil & gas prices to much lower than the ceiling initially and as demand is being gradually built upward, the ceiling figure was rubbished and ultimately sanctions were ingloriously busted.