Wednesday, November 11, 2015

Maintaining Competitive Edge in the Future Economy

In the year 2030, the world will be radically transformed. Six game changers will determine the transformation. Some of these game changers are already manifested in the current world and will continue to impact the transformation, such as the governance gap and the impact of new technologies (Global Trend 2030).

In the forecasted governance gap, power will diffuse from the current dominant countries and transition to diverse states and nonstate actors. Nonstate actors coming into play is the cause and effect of the megatrend, individual empowerment (Global Trend 2030). In the future, individuals will have greater ability to solve global challenges, and individuals, who do manifest the ability to do so, will have the power to affect the future governance of the world.

Currently, the economy is steering towards the emphasis of individual empowerment and power diffusion. Thomas Friedman’s book, “The World is Flat,” explains there are three stages of globalization. Nations are the main players in Globalization 1.0, and companies are the key drivers in Globalization 2.0.  In Globalization 3.0, individuals become the key players. As technology advances, individuals will be able to play a larger role in the global community and affect the governance of the world with their influences.

In 2030, the impact of new technologies will shape the global economic development (Global Trends 2030).  With new technologies, large new markets will open up to create more economic opportunities. Additionally, innovations in technology will assist the trend of individual empowerment. As technology becomes more easily accessible, individuals will have access to information and knowledge that were not previously available.

The impact of new technology is foreseeable. Companies are already utilizing technology to capture and to analyze market shares and customer information. The use of big data technologies has encouraged market growth in data analytics and data mining. Individuals have easy access to information through the Internet, which empowers individuals with the resources to solve global challenges. With technological advancements, companies and individuals will be able to play a large part in the global community.

With these game changers in mind, Porter’s Five Forces should consider how these factors can affect the framework. According to Porter, there are several factors that will affect the industry, including industry growth rate, government, technology and innovation, and complementary products and services (Porter).  These factors are focused on the long run, but looking into the future of year 2030, some of these factors will be amplified and influence the industry’s profitability, particularly changes in government and technology.

As individuals and nonstate actors become heavily involved in the global community, government will have less control over corporations that play substantial roles in global governance. With international economic influence, dominant corporations become some of the major economic players in the global playing field. With such great presences, the companies will have the ability to affect government regulations beyond lobbying. For corporations with such substantial power, political leverage can potentially become a new force in the framework; the companies will have the ability to increase profitability by pushing through beneficial legislations with their political influences.

Another factor that can affect the framework is technology and innovation. In the near future, companies will be able to leverage information technology to further exploit weaknesses in the five forces to achieve larger profits. Currently, companies are already heavily investing in Customer Relationship Management systems to mine data and to analyze customers. The effective use of IT will give companies the ability to add value to their products and to attract new market segments. It is in the foreseeable future that companies will utilize IT to analyze all five forces in Porter’s framework to determine the weakest force and focus on it to maximize profitability.

By the time 2030 arrives, the world will transform profoundly. Companies must be able to identify the game changers and incorporate these changes into their current frameworks to retain their competitive edges.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.