Monday, June 5, 2017

4 Global Forces breaking all Trends. How to strategize?

The impacts of the industrial revolution are still very fresh in today's age and world order. World population reached better standard of living at the expenses of a degraded natural environment. Nevertheless, nothing prepared me to the scale of disruption projected by the McKinsey article on  the “Four Global Forces Breaking All the Trends “. 
Acting concurrently, those forces could generate 3000 time the impact of industrial revolution. As such, individual and corporation are expected to adjust to the new reality where past experiences and assumptions provide little or no help.
The following is an attempt to understand those 4 fundamental forces in the light of a few strategy planning concepts.

Shift to emerging Market
As per article, continuous shift in economic activity and dynamism will cause that half of large companies from fortune global 500 will be headquartered in Emerging Market by 2025. As per article on "Why and where headquarters move?”, relocation in metropolitan areas is driven by the following characteristics:
  • Good airport facilities
  • Low corporate taxes
  • low average wages
  • High level of business services
  • Same Industry specialization

Metropolitan areas as well labor supply are projected to compete on an international scale. Therefore, companies should strategize on finding ways to make diversity a more meaningful asset.


Accelerating technology changes.
With unprecedented amount of data and processing power in their hands, businesses and leaders are in position to anticipate clients needs, unleash breakthrough solutions, and deliver solutions on demand. Accelerating technology changes could trigger an era of individual empowerment materialized by poverty reduction, growth of the middle class and health care. On an individual level, lifetime learning strategy would be necessary in order to adjust and stay competitive. Assumptions related to the training-working-retiring cycle should be challenged because technologies is changing the working landscape. On an organizational level, strategy development with a more visionary spin should be considered.


Aging population
With 60% of the world living in countries/areas with aging population and decreasing fertility rate, the expected fallouts are:
  1. Smaller workforce commanding higher individual wages hence causing inflation. 
  2. Pressure on government spending regarding health care and pensions. 
New financial strategies have to be deployed in order to support the elderly. On a brighter side, companies that strategically position themselves could tap enormous opportunities in the projected booming market of goods and services linked to the elderly.


Much connected World 

With a world much more connected through trades and movements in capital, an era of unmatched opportunities and unexpected volatilities is expected. But, how can companies strategize against long established patterns in specific market or sector? 
In such a volatile environment, companies have to acknowledge their needs of more experts. And most importantly, they will have to emphasis strategic collaboration while making innovation a focus.

Supplemental sources:
http://www.iese.edu/research/pdfs/DI-0650-E.pdf
http://www.economicshelp.org/blog/8950/society/impact-ageing-population-economy/

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