Forecasting changes in the international business environment is critical for the constituents in the policy, corporate, and academic communities. As the importance and impact of international business overall has increased, there is a commensurate need to identify, as early as possible, emerging issues and assess their potential contributions to change. While there are many individual broad visions as to the future business environment, a more specific way to engage in this activity is to get the business, policy and research communities to interact in the process of outlining possible scenarios and resulting actions. Since no one region or location can be the only origin of change, a diversity of opinion across geographies secures a more balanced portfolio of comments.
For all concerned, the possibility to identify, analyze, and debate changes allows for the timely preparation of strategies in response. While some of the issues presented may already be emerging, the ideal results identify early warning of outlying phenomena thereby allowing policy makers and business leaders to execute proactive responses. Similarly, academics can be prescriptive in their research rather than analyzing what may have already occurred.
Interestingly, most agree that international trends are more important than they were only a few years ago, yet action on these trends is lagging. In their survey of 1,136 executives, McKinsey and Co. (2008) found that relatively few companies act on the trends identified. In addition, the cross-over of information between the ?silos? of disciplines is very limited. For example, top management publications show an insignificant share of articles focused on the international and policy dimensions. On the average only 5 percent of articles present an international focus (Werner & Brouthers, 2002). At the same time, only 11 percent of policy articles focus on international issues (Sprott & Miyazaki, 2002).
This study used the Delphi technique, which has been called the cornerstone of future research. The method integrates the opinions of experts using multiple waves of data collection. The 50-year old method is used by leading corporations and organizations to develop strategic guidelines (Duboff, 2007). Results of the technique have been used to guide decisions into investing in new technologies and markets.
A growing emphasis on national interests and local culture will increase terrorism and lead to higher security standards. There are likely to be growing policy-triggered restrictions in global transportation and corporate linkages. Firms and policy makers have a very clear understanding that terrorism is an ongoing phenomenon to be confronted. Combating terrorism was seen as a fact of life and history, resulting in a continuous job for push-back to be conducted multi-laterally and without compromise.
Counter-terrorism needs to preclude the failure of the will of the people and governments opposing the terrorists. The root causes of terrorism were identified as policies towards immigrants and the sometimes dividing roles taken on by advocates of specific religions, cultures, regions, or races. Approaches proposed to address these root causes were education, improved nourishment, and the ability to control one?s own destiny. But there will also be a growing emphasis on national interests accompanied by limited readiness for multilateral solutions. It will be a key task for governments to diffuse such desires rather than coddle to popular demands. Only with the collaboration of all parties concerned can local and regional protectionism and de-globalization be avoided. The greatest imperative will be to develop and maintain the power to execute peace.
Key gains of globalization are achieved by consumers, intermediaries, and originators, since those participating in the supply chain can move to different locations to benefit for low costs or other advantages. The key issue is mobility. Workers are not necessarily able to take advantage of this since the cost of moving may be quite high due to different environments and cultures.
Education and training are crucial for better and more rewarding tasks for workers. When asked how countries can move up on the globalization chain, our panelists consistently rated education as the most important component, followed by competition and investment. A discussion forum with former Latin American presidents fully supported this perspective (Pino, 2007). However, there was a sharp divide between panelists when it came to the content of education. Some stressed the importance of keeping up with learning both quantitative and qualitative knowledge. Others believed that learning of difficult knowledge ? say physics, mathematics, chemistry ? could be outsourced to those who revel in such materials. Quality education time could then be dedicated to other pursuits, such as music, art, or poetry. Repeatedly, the question arose whether learning was to serve an inner spiritual desire or society and whether, for example, the implantation of a ?knowledge chip? would be better or worse than the stepwise acquisition of knowledge under difficult or even unpleasant conditions. A key point was: Are we really all dumb since the invention of the calculator?
Corruption is a major detractor from global welfare and local economic development. Its consequences are shoddily built roads, structures that collapse, clinics with equipment purchased at high prices or inappropriate specifications. In all such circumstances vast public expenditures do not achieve the envisioned use and local interest suffer.
Typical side payments are 10-15 percent of all major expenditures, with much higher levels in the developing world. ?It is human nature to lubricate relationship with gratuity? was a typical statement, with more diversion attributed to high-context cultures (e.g., Latin America, Latin Europe, and Asia) and less to low-context ones (e.g., United States, Northern and Germanic Europe). Yet, the social acceptance of corruption was seen as a bigger danger because it protects the elite from domestic scrutiny and control. Therefore, the ongoing impact of the U.S. Foreign Corrupt Practices Act and the OECD discussions were seen as instrumental in reducing or at least containing such misappropriations. More multilateral action is seen as necessary to ensure broad, continuous and relentless enforcement of measures against violators. Beneficiaries of excessive wealth from bribery will eventually be pursued globally to return their ill gotten gains.
There is a strong belief that cultures around the globe will become more similar to each other, particularly in the area of macro issues such as accountability, performance expectations, freedom accorded within society, and product preferences. Such cultural assimilations were also seen to be profoundly influenced by the United States, threatening less-dominant cultures. At the same time, it will be more difficult to export overwhelmingly uniform ways of thinking due to an increase in regional and local sovereignty and calls for cultural protectionism even by multilateral organizations such as UNESCO.?
History indicates that cultures rise and fall over time, with conflict in the process, regardless of information flows, insights, and learning. Otherwise, the world would now be speaking Greek, Latin, Turkish, or Arabic. Already today, the use of English as a business language can create resentment and hostility. Companies are discovering that language also conveys cultural norms, which, in turn, reduce the creativity and local connections of their employees. It appears to be quite likely that firms will increasingly develop a norm stating ?we did not hire you for your English? which will introduce a new multi-polarity to global management.
Even though a greater diversification of information sources may typically provide for better knowledge evolution, there is an expectation of fewer data sources offering increasingly larger quantities of data due to mergers and acquisitions, cost cutting, or limited user willingness to pay. Such developments are likely to affect accuracy and reliability making data use heavily trust-dependent. To a growing degree data users may demand more insights into the origin of information in order to gauge its validity. Just like butchers are expected to label the meat they sell with precise origins, information providers need to offer data locale and source of origin. Under such conditions, the locality of data can be systematically used to enhance credibility; e.g., through increased use of local debt-rating agencies.
Due to more transparent sourcing, there will be a decrease in the willingness of firms and people to offer information. Nebulous laws and restrictions may be increasing the threat of law suits. Also, the gains from free information that have greatly helped businesses and individuals in the past 10 years are likely to shrink.
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?In terms of geography, emerging market economies will continue to increase their impact on the global economy. The treat of polarization and an increase in regional and the local trade and finance relations will encourage an eventual completion of the Doha Round of trade negotiations. Countries will focus on those issues which are most relevant for their economies, thus leading to a differentiation of players which grow, make, create and coordinate things. Significant new opportunities will develop within emerging economies. At the same time, growing efficiency in these countries will also present them with new markets in developed countries. There will be more cooperation between there emerging nations, resulting in more integration among them, and perhaps more protectionism outside of their sphere. Developing nations will welcome more diversity of partners and will welcome increased competition among larger players. For some countries, this collaboration is also likely to introduce new global moral positions, raising the relative precedence of business, politics, human dignity and freedom. While efficiency will gain in importance, there will also be more incorporation of Eastern business practices into overall methods. Overall, economic power is likely to shift globally to Asia, both in terms of investment and output.
China will be the player to watch. For firm?s who are planning to enter the global market, China will become the new New York on the basis that ?if you can make it there, you can make it anywhere.? Due to domestic pressures fueled by weaknesses in the banking system, urban/rural imbalances, and regional political dissonance, top Chinese corporations are likely to expand significantly overseas. Multinational firms from third world countries will expand in general, and the Fortune 1,000 will soon include a significant number of China-headquartered companies. There will also be a significant increase in mergers and acquisitions lead by Chinese companies.
Another important participant will be India. That country?s opening will rival the growth of China, due to its wide spread facility with the English language, its close alignment with the rule of law, a well developed commercial infrastructure and a democratic government. Companies are likely to see India as both a primary place for outsourcing and as an important market for their goods. In particular, Indian linkages in the communications and information sectors are likely to soar.
China will demonstrate only limited concern towards the environment, even though environmental problems will have a major effect on its ability to compete as a global manufacturing center. Medical, environmental and other social costs will dramatically reduce the advantages of firms to manufacture in China ? therefore leading to a move of FDI to other locations, including the U.S. and Europe.
One consequence of China?s and India?s rapid growth will be an ongoing depletion of natural resources. Aspirations for economic progress and better lifestyles will cause shortages in the natural resources. In consequence, the sourcing and controlling of important raw materials will be a key strategic issue, often leading to preferential bilateral agreements perhaps even in contradiction to multilateral arrangements. Governments will attempt to put more land into grain production and also use tools such as subsides and price controls. Scarcity will also drive up the price of consumer alcohol. Protection of materials within society from theft will become a key issue (e.g. cutting electrical wires to steal copper). Recycling and recovery will grow as vital business opportunities. Farming will become highly attractive and profitable again as fuel production from food accelerates. The global shortage of potable water will be re-discovered as a key issue and a key constraint on global advancement and wellbeing. There will be much higher government investments in desalination and reverse osmosis technologies and more emphasis on water conservation.
In light of public concern about climate change, there will be growing preference for energy saving technologies and a reduction and limit to energy use. A stream of scientific and non-scientific proof will be offered for global warming, with any unusual natural phenomenon being blames for global warming. Public impressions and perceptions will lead to changes in living patterns, ? for example the population of dry arid and hot climate areas may well shift due to water shortages and, say, limits to the use of air conditioning technology. Such effects will occur even if it becomes generally accepted that global warming is only slightly dependent on human activities ? given the overriding argument of: what can it hurt?
Africa may well emerge in the offering the most opportunities for green investments and the accumulation of carbon credits. However, is the transfer of resources resulting from carbon trading grows; such trading will become, in the eyes of governments, non-sustainable and therefore prohibitive. There is more likely to be an increase in international agreements (both multilateral and bilateral) which set a framework for corporations, promotion and subsidies for technologies and products which protect the environment. Rich countries will give more importance to this concern, and most internationally operating companies will take this concern seriously.
The aging of populations of North America and Europe will be joined by those of Asia and Latin America. These older populations will become a growing customer segment for the financial-services sector as well as to providers of health care and appropriate household products. In particular, the lack of public support for the disabled and needy ? often the result of cultural traditions ? will create problems for generations caught in transition. At the same time, there will be major opportunities as older generations will expect more education, entertainment and involvement to enjoy their increased leisure time.
As baby-boomer societies experience waves of retirement, companies will shift to increase employee longevity and loyalty. New and substantial incentives will be designed to maintain expertise within and to reduce the need to find specialists outside the firm.
Three dimensions were seen to drive a future vision of globalization. These were first, the reduction of global inequality; second, new and widely enforced global rules which would provide stability and consistency of basic rights and obligations across borders; third was the support for individual freedom. There was an expectation that over time, nations, institutions, and individuals around the world will increasingly accept these dimensions as the foundation of the good life. In reciprocal causality, freedom is seen to cause and facilitate international marketing, while international marketing is a key pillar in support of the cause of freedom.
Adam, Karla, ?Archbishop Defends Remarks on Islamic Law in Britain,? The
Washington Post, February 12, 2008, ?
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Source: http://www.globalwarmingsolution.org/trends-and-changes-in-international-business.htm
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Public release date: 18-Feb-2012
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