Eaquals Training for Excellence: Adjusting to global changes - effects at local level, Kevin Valenzia

Eaquals Training for Excellence: Adjusting to global changes - effects at local level, Kevin Valenzia

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  Eaquals Training forExcellence, 17 – 18 November 2017, Malta www.pwc.com/mt Restricted use Adjusting to global changes - effects at local level Kevin Valenzia – PwC Malta
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  Disruptive and transformative scenarios 2 Howare my customers changing? How do I plan in a world of change? Who are my new competitors? How is my business model changing? What capabilities do I need to stay relevant?
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  The five megatrends Shiftin global economic power Demographic and social change Technological breakthrough Rapid urbanisation Climate change and resource scarcity 3
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  PwC 9 facts andpredictions about demographic and social change 4 1.15 billion increase in the world’s population by 2030… The average baby born in 2016 will live for 12 weeks longer than one born in 2015 Half of the world’s population growth between now and 2050 will come from Africa 390 million of that increase will be from those aged 65 or more In 2020 for the first time the majority of births that take place in both North America and Europe will be to a mother aged over 30 There will be a 50% increase in global mobility by 2020 The world’s 85richest individuals own as much wealth today as the poorest 3.5 billion people 70%of household budgets in the G7 are controlled by women 400 schools are shut in Japan each year due to its ageing population
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  PwC 0 2 4 6 8 10 1970 1980 19902000 2010 2020 2030 2040 2050 Billions We’ll add another 1.15 billion people to the world’s population by 2030, making the total 8.5 billion 97% of this population growth will come from emerging or developing countries 5 Source: UN Population Division, World Population Prospects 2015 More developed countries China India Less developed countries Least developed countries CAGR = 1.8% CAGR = 1.3% CAGR = 1.0% CAGR = 0.7% World population 1970–2050(f ), billions Forecast July 16
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  PwC 59 65 71 75 78 0 10 20 30 40 50 60 70 80 1975 1995 20152035 2055 0 0 5 10 15 20 25 30 35 1970 1980 1990 2000 2010 2020 2030 2040 2050 Crude Birth Rate Crude Death Rate At the same time, we are living longer and having fewer children… The average baby born in 2016 will live for 12 weeks longer than a baby born in 2015 6 World average life expectancy at birth World birth and death rates per 1,000 people Source: UN Population Division, World Population Prospects 2015 CAGR = -1.2% CAGR = -0.8% CAGR = -1.1% CAGR = 0.5% Forecast Forecast
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  PwC -3% 10% 67% 0-14 15-6465+ America – change in population by age 2015–2030 -4% -8% 30% 0-14 15-64 65+ Europe – change in population by age 2015–2030 -3% 11% 75% 0-14 15-64 65+ Asia – change in population by age 2015–2030 29% 49% 67% 0-14 15-64 65+ Africa – change in population by age 2015–2030 7 …making the fastest growing population segment the over 65s There will be 390 million more over 65s in 2030 than there were in 2015 Source: UN Population Division, World Population Prospects 2015
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  PwC 8 Median ageswill also diverge: Japan’s median age will reach 53 by 2050, while Nigeria’s will be 23 38 42 North America Median ages 2015 and 2050 29 41 Latin America 19 25 Africa 42 46 Europe 30 40 Asia 33 37 Oceania Source: UN Population Division, World Population Prospects 2015
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  PwC But the paceof change will vary immensely across different regions and countries… Africa’s population will double by 2050, while Europe’s will shrink… 9 21% North America 109% Africa 20% Asia 44% Oceania -4% Europe 24% Latin America Population change 2015–2050 Source: UN Population Division, World Population Prospects 2015.
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  PwC 0 10 20 30 40 1970 1980 19902000 2010 2020 2030 2040 2050 Asia crude birth vs. death rates (per 1,000) Death rate Birth rate 0 5 10 15 20 1970 1980 1990 2000 2010 2020 2030 2040 2050 Europe crude birth vs. death rates (per 1,000) Death rate Birth rate 0 10 20 30 40 50 1970 1980 1990 2000 2010 2020 2030 2040 2050 Africa crude birth vs. death rates (per 1,000) Death rate Birth rate 0 10 20 30 40 1970 1980 1990 2000 2010 2020 2030 2040 2050 Death rate Birth rate Europe’s population will contract because death rates will rise significantly above birth rates. In Asia and Latin America birth rates will stay above death rates until around 2050 +26 per 1,000 +2 per 1,000 -4 per 1,000 +6 per 1,000 +27 per 1,000 +17 per 1,000 +24 per 1,000 +2 per 1,000 Forecast Forecast Forecast Forecast Source: UN Population Division, World Population Prospects 2015. Note: Crude birth rate is defined as the number of live births occurring in a population during a given period of time, per 1,000 mid-year total population of the given geographical area during the same period. Latin America crude birth vs. death rates (per 1,000)
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  PwC Some of thebiggest consumer markets today will be overtaken by countries with booming populations Nigeria’s population will exceed the US’ by 2050, while the ‘100 million’ club will include six new entrants – how well positioned is your brand in these countries? 11 Countries with populations greater than 100 million 2015 2030 2050 Source: UN Population Division, World Population Prospects 2015. Note: 2010 countries are (down and right): Nigeria, Russia, India, China, Japan, Indonesia, US, Pakistan, Philippines, Mexico, Bangladesh, Brazil. 2025 countries are: Vietnam, Egypt, the Democratic Republic of Congo and Ethiopia. 2050 countries are: Tanzania and Uganda
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  PwC All countries willneed to implement bold policies to cope with these demographic changes… While ageing will be ubiquitous, old-age dependency will rise most significantly in Asia, Latin America and Europe. Today, Asia has 9 working age people to support each elderly person – by 2050, there will be just 4… 12 Africa2015 2050 65+ population 2015 Working age population (15-64) 2050 Working age population (15-64) Asia2015 2050 Latin America2015 2050 Europe2015 2050 Source: UN Population Division, World Population Prospects 2015
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  PwC 9 facts andpredictions about rapid urbanisation 13 60,000 people added to the Chinese urban population every day Halfof global GDP is generated by the 300 largest metropolitan areas. $8trin infrastructure spending will be needed in New York, Beijing, Shanghai and London over next 10 years. $16bn the expected cost to develop the desert city of Masdar in the UAE 2/3of New York City’s rooftops are suitable for solar panels, which could generate halfof the city’s peak demand for electricity. By 2025, there could be nearly 40 cities with population of 10+m The number of people living in urban slums since 1990 has increased by a third Sources: PwC analysis of multiple sources (see storyboard to follow). Income inequality in the 50 biggest cities in the US is 20% higher than the US average 1.5 million people are added to the global urban population – every week
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  PwC 9 facts andpredictions about climate change and resource scarcity The global population is expected to demand 35%more food by 2030 53years’ supply left of proven oil reserves assuming current levels of demand continue (based on R/P ratios*) Average temperatures are predicted to increase by over 2°Cin the 21st century, a threshold beyond which scientists believe significant changes to the environment will occur A fifth of worldwide energy consumption could be saved through energy efficiency measures The global population is predicted to demand 50% more energy by 2030 6% annual reduction in carbon intensity is required to meet the 2oC target, well above historic trends Only around 3%of all water in the world is fresh water, and three quarters of this is locked in glaciers There is almost3times as much carbon in known coal, oil and gas reserves than scientific evidence suggests that the climate will be able to bear without temperature increases going beyond 2°C by 2100 It takes 7 units of fossil fuel energy to produce one unit of food energy 14
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  PwC 9 facts andpredictions about technological breakthroughs 15 177 min average US smartphone or tablet user spends using their devices a day 90% of the data that exists today was created in the last two years Around half of US jobs are at risk of being computerised over the next two decades Seven times more connected devices than people by 2020 76 years Is the time it took the TV to reach half of US households; the smartphone did it in less than 10 If Facebook was a country, it would be the most populous in the world By 2020digital natives will be the majority population segment in the UK Sources: PwC analysis of multiple sources (see storyboard to follow) Only 0.5%of data is currently analysed Almost 7,000 houses could be powered everyday with just the energy burned by active users of the Nike + app
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  PwC The ‘sharing economy’uses digital platforms to allow customers to have access to, rather than ownership of, tangible and intangible assets. 16 Summary Technological breakthroughs reshaping the economy Understanding the digital potential Appendix Power of digital PwC’s perspective on the next digital wave 4 pillars to realise the digital potential Sources: PwC Analysis
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  PwC Businesses are transitioningfrom a transaction-based relationship with consumers to a consumption-based relationship 1990s Digital is transforming the relationship we have with our consumers Understanding and enabling customers to engage across firms functions is key to retaining customer in a digital age Internet SMAC 1960s 2010s 2020s Internet of everything G G G G G GERP SCM MRP HR Back Office Front Office Traditional Focus: Transactionrelationship Emerging Focus: Consumptionrelationship CRM: Sales force automation, marketing automation, customer support Web applications Mobile applications Social applications Out of Office Understanding and enabling the Customer’sconsumptionexperiences Service G G G G G GERP SCM MRP HR Back Office Front Office Traditional Focus: Transactionrelationship Emerging Focus: Consumptionrelationship CRM: Sales force automation, marketing automation, customer support Web applications Mobile applications Social applications Out of Office Understanding and enabling the Customer’sconsumptionexperiences Service G G G G G GERP SCM MRP HR Back Office Front Office Traditional Focus: Transactionrelationship Emerging Focus: Consumptionrelationship CRM: Sales force automation, marketing automation, customer support Web applications Mobile applications Social applications Out of Office Understanding and enabling the Customer’sconsumptionexperiences Service 17
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  PwC Digital is transformingthe industries we operate in and blurring the boundaries between them None of the five biggest global mobile handset manufacturers in 2000 featured in the same list in 2012 Pharma Nutrition‘Functional food’ ‘Sport with purpose’ Fashion‘Wearable devices’ Technology Sports Health care Examples of sector blurring Vitamin and supplement- enhanced food (Nestlé of France acquired Pfizer’s baby nutrition business). Vitamin, and supplement enhanced food (Nestle of France acquired Pfizer’s baby nutrition business). In 2013 Apple hired Burberry’s ex-CEO to lead its Retail arm and bridge the gap between technology and fashion in making wearable devices. Disruptive innovation Sources: Gartner dataquest (2012), “Strategic Choices in Converging Industries” MIT Sloan Management Review (2013). Note: based on quarterly sales figures (total units sold) Nokia, Siemens, RIM and Ericsson, once among the largest phone makers, have given way to smartphone makers such as Apple and Google. Platforms such as iTunes online store have replaced traditional music record sellers such as HMV, which went bankrupt in 2013. iTunes sold more than 1.2 billion units of digital tracks in 2013. Video streaming platforms such as Netflix have made the traditional movie-renting business exemplified by Blockbuster obsolete. From a $5bn business, Blockbuster went bankrupt in 2013. 18
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  PwC …stimulating, innovative anddisruptive business models and new entrants to emerge across industries Source: 19 Home Mobility Work Education The disruptors Active consumer- driven management of healthcare will replace healthcare consumption Homes will become more efficient and sustainable. Citizens will generate their own energy and share any excess with the local communitiy Mobility will be seamless and integrated through common navigation and planning platforms People will more likely see themselves as members of a skill or collaborative professional network The curriculum and learning environments will become more customisable, personalised, collaborative & done on the go @ Media In music, film and TV, over-the-top services have grown rapidly as technology enables content to be aggregated and accessed rather than owned Healthcare Examples of areas where connected devices are starting to be used