Global Management in Todays World
Introduction
The meaning of International Business (Farheen)
The Role of GATT and WTO (Amna)
Management approaches to global activities (Subhaullah)
i) Ethnocentric Mgt (ii) Polycentric Mgt & (iii) Geocentric Management
Challenges of a Global company (Fizza)
i) Strategic confidence and stretch (ii) People as an asset and a challenge
iii) Scale and scope benefits, complexity costs (iv) Risk diversification and the loss of familiarity
Emerging issues
i) Emerging Markets (ii) Demographic Shifts ( Fazli Subhan )
iii) Rapid Technology innovation (ii) Clean tech: (Sana Badar)
Global Management in Todays World
Emerging issues in Global Management
Emerging Markets Demographic Shifts
(Fazli Subhan)
Emerging issues in Global Management
Emerging Market
Definition:
"Emerging market country is a society transitioning from
A dictatorship to a free-market-oriented-economy with
increasing economic freedom,
Gradual integration with the Global Marketplace & with other
members of the GEM (Global Emerging Market),
An expanding middle class,
improving standards of living,
social stability and tolerance,
as well as an increase in cooperation
with multilateral institutions
Dr. Kvint 1999, Wikipedia
Emerging markets increase
their Global Power
Emerging
Markets
A source of significant
revenue growth for
companies
A source of talent, true
innovation and ground-
breaking approaches to
business, which they will
leverage on a global scale
Emmanuelle Roman, Global Consumer Products
Markets Leader, Ernst & Young
Emerging Markets
New market structures arising from
Globalization
De-regulation
Digitalization &
Open-standards
Shifting the balance of economic power from the sellers to the buyers
Information is freely and widely available &
Data almost instantly accessible
To compete in these scenarios
A firm must adopt new processes based information technologies
but must keep a close watch on the
Price,
Quality &
Convenience trends
Emerging Markets
Emerging markets serve as the worlds economic growth engine but their
risks are open downplayed. Therefore, taking advantage of emerging
market opportunities requires careful planning
To compete in these scenarios
A firm must adopt new processes based information technologies
but must keep a close watch on the
Price
Quality &
Convenience trends
Emerging markets increase
their global power
Rapid population growth,
Sustained economic development and
A growing middle class are making many companies look at emerging
markets in a whole new way
These emerging market leaders represent a major shift in the global
competitive landscape
(A form of analysis how the target business can improve)
Trends in emerging markets
Leading emerging markets will continue to drive
global growth
Estimates show that 70% of world growth over the next few years will come
from emerging markets, with China and India accounting for 40% of that
growth.
The forecasts suggest that investors will continue to invest in emerging
markets for some time to come. The emerging markets already attract
almost 50% of foreign direct investment (FDI) global inflows and account for
25% of FDI outflows.
The brightest spots for FDI continue to be Africa, the Middle East, and Brazil,
Russia, India and China (the BRICs), with Asian markets of particular interest
at the moment.
By 2020, the BRICs are expected to account for nearly 50% of all global GDP
growth. Securing a strong base in these countries will be critical for investors
seeking growth beyond them.
Emerging market leaders will become a disruptive force in
the global competitive landscape
The rise of these emerging market leaders will constitute one of the fastest-growing
global trends of this decade.
These emerging market companies will continue to be critical competitors in their
home markets while increasingly making outbound investments into other emerging
and developed economies.
These companies possess a more innovative, entrepreneurial culture and have
developed greater flexibility to meet the demands of their local and "bottom-of-the-
pyramid" customers.
Rising population and prosperity drive new consumer growth
and urbanization
Most of the world's new middle class will live in the emerging world,
and almost all will live in cities,
often in smaller cities not yet built.
This surge of urbanization will stimulate business but put huge strains on
infrastructure.
Physical infrastructure, such as water supply, sanitation and electricity
systems,
and soft infrastructure, such as recruitment agencies and intermediaries
to deal with customer credit checks, will need to be built or upgraded to
cope with the growing urban middle class.
Emerging markets will become the new battleground
The BRICs are having a major impact on their regional trading partners and more distant,
resource-rich countries, an increasing number of which are being pulled into their
economic orbit.
In 2009, emerging-to-emerging (E2E) trade reached US$2.9 trillion. This massive flow of
investment among emerging markets is well on its way to creating a second tier of
emerging market leaders.
As pressure for resources increases, we expect a battle for first-mover advantage among
emerging heroes, global players and emerging market governments in regions such as the
Middle East and Africa.
Global influence grows
Inevitably, the BRICs' growing economic strength is leading to greater power to influence
world economic policy.
In October 2010, for example, emerging economies gained a greater voice under a
landmark agreement that gave 6% of voting shares in the IMF to dynamic emerging
countries such as China. Under the agreement, China will become the IMF's third-biggest
member.
Demographic shifts transform
the global workforce
Never before has demographic change happened so quickly. Global
employers face the challenge that, despite a growing global
population, they will soon have to recruit from a shrinking workforce
due to an aging population.
Despite a growing global population, the availability of skilled workers
is actually shrinking, and no longer just in advanced, aging countries
such as Japan and Italy. Now, some emerging markets, such as China
and Russia, are also feeling a demographic pinch.
Trends in demographic shifts
Labor force demographics will shift profoundly
Despite projected growth in the global population from 6.9 billion in 2010 to 7.6
billion in 2020, the working-age population is expected to decline in many
countries.
Japan already has more people exiting the workforce than there are workers
prepared to enter it.
In the European labor market, 2010 marked the first time more workers retired
than joined the workforce. While this labor gap is a relatively manageable
200,000, it will surge to 8.3 million by 2030.
By the end of this decade, other large economies such as Russia, Canada, South
Korea and China will also have more people at retirement age than are entering
the workforce. Other, younger countries stand to profit from those trends.
One-third of Indias population is now under the age of 15.
Other emerging market economies with young labor forces such as Brazil, Mexico
and Indonesia may benefit from a demographic dividend, a surge in productivity
and growth as those workers join the labor pool.
But the dividend pays off only if the country provides its youth with adequate
educational and economic opportunities to develop their skills.
There is a growing mismatch between the skills employers need and the
talent available
An estimated 31% of employers worldwide find it difficult to fill positions
because of talent shortages in their markets, reports the 2010 Talent Shortage
Survey from Manpower, an international employment agency.
When it comes to attracting employees with critical skills, the task becomes
even more challenging. Today, 65% of global companies and more than 80% of
companies in fast-growth economies are having problems finding employees
with the skills they need.
Why cant companies find the required talent?
Rising skill level needed in evolving global economy
the failure of educational systems to produce an adequate base of talent to
meet these changing needs.
The talent market is increasingly global and
mobile
Economic development and greater integration across markets in the past few
decades have caused many talented people to explore career opportunities
overseas.
Higher unemployment in developed markets has discouraged many migrants
recently. Between a lack of opportunity and local hostility to migrant
workers, more would-be migrants are staying home.
The dramatic growth of emerging market countries is also beginning to
change migration patterns. Although developed markets are still a top choice
for economic migrants, we are increasingly seeing reverse migration as well.
According to the World Economic Forum, The return migration of highly
skilled workers to their home countries is a growing trend for emerging
countries.
Employees gain more bargaining power
Over the past 20 or 30 years, the bond between company and
employee has weakened, even in corporate cultures where loyalty
was once prized.
Fast-changing company needs and a desire to cut costs led first to
more frequent layoffs, and then to nontraditional relationships where
the expectation was not decades of service, but only a few years.
The employer will no longer define the workplace; rather, employees
priorities and preferences will dictate what the future workplace will
look like, particularly now that technology makes it easier than ever
to design a variety of flexible arrangements.
