The Monroe Street Journal

The Monroe Street Journal – News
Issue: 11/1/04
World Out of Balance
By Akash Randhar, MBA2

What is one element of strategy that should be an integral part of all the major corporations in the world? A plan for the emerging economies. That is the answer that came out of the enlightening talk by Paul Laudicina, the managing director of the Global Business Policy Council of AT Kearney and the author of the book World Out of Balance.

Mr. Laudicina says that there are five major forces that the business and political leaders of tomorrow should be cognizant of – globalization, changing demographics, strain on natural resources and environment, changing consumer preference, and the need for new regulations and activism.

Globalization is a force that can not stopped. In 1970 $10B used to change hands everyday. Now nearly $10B change hands every second! The break neck speed of trade will not slow down. Success in future depends on how well companies and countries adapt to globalization, not resist it.

Changing demographics in the world will intensify the war for talent in the time to come. In less than 10 years, USA will again experience a severe shortage of talent. We will have two options to maintain our position – import labor or export jobs. Closing our doors now does not bode well for our needs in the near future. Similarly, the demographics trends in India indicate that it will be the only major country with expanding working age population. This will give tremendous competitive advantage to India. A question to ponder is how will the US keep its creative edge? The changing demographics does not favor the US and less foreign students are interested in coming to the US. This is evident from the lower percentage of GRE taken by the foreign students.

Similarly, with consumptions in China increasing at a phenomenal rate, the level of carbon dioxide emission from China will soon surpass any other country. At the same time, shortage of natural resources like oil and steel will only intensify. The bigger threat is looming shortage of water in the world of tomorrow. The list of dwindling natural resources goes on and on.

Also, consumer preference in the advanced economy is shifting from buying experience instead of buying “stuff”. Corporations will do well to adapt to the evolving preference.

Finally, changing times require a different approach to leadership. Solutions are becoming more global whereas the dialog is becoming more local. Leaders of tomorrow need to think and strategize with the world as their oyster. All these changes bring opportunities as well as threats and insecurities. For instance, globalization results in job losses in the transition phase and increases the threat of calamities like SARS and West Niles. This has led to people looking to government for more protection. New form of public policy and issues and different long term challenges will emerge.

At the end of the talk, the question on everybody’s mind was that with all the corruption and lack of transparency will the emerging economies realize their potential? Mr. Laudicina says that all the factors are already incorporated in the global index that shows that by 2025 US and China will be the economic super powers, with countries like India playing a major role as well.

What should you do? Learn Chinese!