The Challenges of Management in the year 2020

[Type the document subtitle]

erban Adina

Management is both art & science
We live in a world that is consantly moving, changing, evolving. Whether we evolve or we devolve, we are
moving forward and we always have to be a step ahead.The same is the case of management. It can ever remain
unaffected in face of change.
The purpose of this paper is to have a look into the future and to determine the challenges that a manager might
come across. The paper will also provide some solution of how a manager has to act in order to deal with the
encountered challenges. During the presentation of what the managers might find in the colse future, I will also
describe the key relationships between management and other domains of activity.
In order
We also have to remember that the more the things change, the more they remain the same. So, even though the
managers have to respond different in some environmental context, they still have to focus on the basic
management knowledges: they should know they business as their own pocket.


The predicted environment for the year 2020

As everything is constantly changing, in 7 years from now we will encounter probably some significant
changes in global economy.

I think that for the future, when talking about managing we will have to think not globally and . We have to think
at the role of psychology in management, actually the impact that everything that surrounds us has on our
everyday decisions.

Demographic changes
The population shifts will have a significant impact on economies, companies and customers. According to the
US Census Bureau and Economist Intelligence Unit forecasts, the worlds population in 2020 will be 7.43bn.
The changes that are most probably to appear in the next decade are the aging population, the increase number
of migration and the urban growth. The aging of the population, that is largely the result of boom in births during
1946-1964 period, can lead to slower economic growth, financial-market instability and difficulties in funding
pension systems. Also, as births decline in the coming decades, so too could the number of consumers and
producers. In other words this will be a factor that will affect indirectly the role of a manager. He will most likely
face more pressure, more tasks and more stress.
The migrations will constantly grow, so they could represent a partial solution to demographic imbalances. The
migrations could provide jobs to workers from developing countries and labor for the developed world. For the
The Challenges of Management in the year 2020
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erban Adina

business environment, especially for the managers, that means that they have to deal even more often with
cultural diversities. In this context, the cross-cultural leadership will start to become a must.

Rising urbanization. Half the developing world will very soon (or already) be urban, and by some estimates, 80
percent of new economic growth will come from cities (A). Of particular note will be the rise of mega-cities: 33
cities with population over 8 million (A). There will also be a vastly increasing number of cities in the 1-8
million ranges. The housing and infrastructure challenges that accompany such urbanization are enormous.
Urban growth will be particularly rapid in developing countries, especially in Asia.
1

The world economy at a glance
The report made by the Economist Intelligence Unit in the year 2005 offers a global view of the worlds
economy. I will describe in a few words the big picture of the 2020s economy.
The Global GDP is supposed to grow at an average annual rate of 3.5% in 2006-20 (similar to the past 25 years).
The US will have a growth of almost 3% a year, compared with 2.1% for the EU25 and less than 1% for Japan,
whose population will be shrinking. The worlds two most populous states, China and India, will be among the
fastest-growing economies. But both China and India will remain poor countries.
The pace and extent of globalisation will be the single most important determinant of world economic growth.
Our baseline scenario is for gradual trade and investment liberalisation, but if protectionism were to take greater
hold, the consequences for world growth would be substantial and adverse. The prospects for faster liberalisation
are constrained by the fact that the US now stands to benefit less than others from increased globalisation.
Demographic factors and declining opportunities for raising labour force participation rates, as well as the
modest slowdown in output growth in the second half of the forecast period, will lead to a fall in the rate of
growth in global employment.
Industry
Each industry sector has different manners of evolving and also the role of the management varies from one
industry to another. The automotive sector will see a significant growth in emerging markets by 2020, notably
India and China. The same will happen in the consumer good and retailing industry. By 2020, China will match
the US as the worlds largest consumer market. There will be a rising growth in the energy demand, especially in
developing countries. Large increases in market size are unlikely at the distribution end of the industry in
developed countries. The demand for the financial services is higher in the fast growing developing countries. As
for the Western markets, the growth focus will be on the higher-end products. The healthcare industry will see
rapid growth in demand over the next 15 years, thanks to demographic trends.
2

Manufacturing
Although the industrial base in developed markets will continue to be eroded as jobs transfer to emerging
markets, fears of the demise of Western manufacturing are unfounded. Developed manufacturing economies will
still hold an advantage in high-value and capital-intensive activities; proximity to customers will also be critical
for many.

1
Long-Term Global Demographic Trends: Reshaping the Geopolitical Landscape
https://www.cia.gov/library/reports/general-reports-1/Demo_Trends_For_Web.pdf
2
Foresight 2020, by Economist Intelligence Unit http://graphics.eiu.com/files/ad_pdfs/eiuForesight2020_WP.pdf
The Challenges of Management in the year 2020
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erban Adina

Telecoms
Telecoms services are being commoditised. Asian companies are leading investment in mobile broadband, which
could give them an edge in developing new software and services that they can then sell to service providers in
other regions.
The most important contribution management needs to make in the 21st century is similarly to increase the
productivity of the knowledge worker. Peter Druker

Power to the people?
Companies will be subject to a variety of centrifugal forces over the next 15 years. Outside suppliers will reach
more deeply into companies internal processes, increasing external dependencies. Revenue will become more
diversified across new geographic markets, as will customer preferences. Customers will expect personalised
service and will put a premium on the quality of local relationships. Employees will be spread across more
territories and a clear majority of executives expect an increase in the number of remote workers spending at
least one day a week outside the office.
Head office will look less uniform too: managers from emerging markets will not only displace expatriate
managers in multinational firms in their own countries, as they already do today, but will begin to fill high-level
positions in corporate headquarters in the developed world.
All of these forces point to the erosion of hierarchical or centralised corporate structures. Twothirds of the survey
respondents say they will give their employees greater autonomy to make important decisions; almost as many
agree that there will be fewer layers of management between the CEO and the
Facing Challenges
The challenges for

The outlined presentation of the environment of 2020 shows where the future managers will need to

Challenges:
-decision making process
In the business environment things are moving a lot much faster than a couple of years ago, and the decisions
have to be taken a lot more quickly.
The first challenge that we need to consider comes from the spreading of multiculturalism. The fact that people
are migrating all over the world, especially from emerging countries to
-cultural
-competitivity
The Challenges of Management in the year 2020
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erban Adina

-people (how they respond to change & multiculturalism)
-communication (the time for communication will shrink)
-some challenges will remain the same: the communication, motivating people, leadership
Cultural challenge
Nowadays the migration is in a continuously growing process.
Knowledge management.
Running an efficient organisation is no easy task but it is unlikely on its own to offer lasting competitive
advantage. Products are too easily commoditised; automation of simple processes is increasingly widespread.
Instead, the focus of management attention will be on the areas of the business, from innovation to customer
service, where personal chemistry or creative insight matter more than rules and processes. Improving the
productivity of knowledge workers through technology, training and organisational change will be the major
boardroom challenge of the next 15 years.


The human touch will become more central to competitive advantage. A large majority of executives expect
simpler tasks, such as airline check-in procedures or processing expense claims, increasingly to be handled by
machines. As production processes and these routine transactions become ever more commoditised and
automated, value will lie in hard-to-replicate personal relationships between employees, customers and suppliers.
The vast majority of executives think that knowledge workers will be their most valuable source of competitive
advantage (compared with other roles) in 2020, whether in outward-facing functions such as sales or inward-
facing ones such as knowledge management.

Collaborative relationships will multiply and intensify. A majority of executives believe that high-quality
relationships with outside parties will become more important as a source of competitive advantage between now
and 2020. Collaborative problem-solving is expected to increase in volume inside and outside the organisation,
as customers and suppliers become more involved in product development, as cross-functional and crossborder
teams work together more frequently and as partnerships with other organisations proliferate.