Economic and Social Issues

in Management

The Changing Environment

The Economic Environment
Economic Growth & Change Areas
Emerging Opportunities in various sectors
The Global Political Situation
The Global Competitive Environment
 The Popular Prophets: Alvin Toffler
``As we hurtle towards super-industrialism, a new ethos emerges
in which other goals … supplant those of economic welfare’’

``One of the healthiest phenomena has been the sudden

proliferation of organizations dedicated to the study of the
future.’’

``To improve education… there should be a `council of the future’

in every school and community.’’

``There should be whole new curricula, designed by futurists…’’

(`Future Shock’, 1970)
 Toffler: The Third Wave

• The First Wave: Agrarian revolution

• The Second Wave: Industrial revolution
• The Third Wave: Global (village) era
 John Naisbitt—Megatrends
Trend 1: Shift from blue-colored society to industrial
age

Trend 2: Balancing technology with human touch

Trend 3: Emergence of global economy replacing

national ones

Trend 4: Management focus shifts from short-

term to long-term—sustainability

Trend 5: Decentralization of politics, culture, business

 Contd…
• Trend 6: Shift from institutional help to self-help

• Trend 7: Shift form representational to participatory democracy

• Trend 8: Shift from hierarchies to network—the pyramid

structure collapses

• Trend 9: Shift form North to South (California, Texas & Florida)

• Trend 10: More roles for women, flexi-time, specialty foods,

cable/satellite television
 John Naisbitt’s 1982 Megatrends
Industrial Society to Informational Society: 60% of Americans now
work as programmers, teachers, clerks, secretaries, accountants, stock
brokers, managers, insurance people, bureaucrats, lawyers, bankers,
technicians, or in healthcare. Manufacturing too now has more
information workers

Forced Technology to High-tech/High-touch: the trend away from

factory-like production systems to “high” technology robots, computers,
and cutting edge automation requires a greater sense of self and
closeness with others

National Economy to World Economy: although we’re more likely to

compare industries between nations, industries are becoming global.
Example, automobiles share components made worldwide

Short-term to Long-term: we are becoming more aware of the long

term implications of short term fixes and strategies
Centralization to Decentralization: best performing companies
increase the autonomy of workers across organizations, at all levels in
the hierarchy. Control is maintained through a nucleus of shared
values (common culture).

Representative Democracy to Participatory Democracy: People must

be a part of the decisions affecting their lives. Employees assert their
rights as citizens @ work

Hierarchies to Networking: this trends means a shift away from

emphasis on the formal, vertical structure of reporting relationships
toward a lateral, diagonal, and bottom-up style of management and
interaction.

Institutional Help to Self-help: for decades institutions such as government, the

medical establishment, and the school system were America’s buffers against reality
— the need for food, education, and healthcare. We are slowly weaning ourselves
from our collective dependence, as we learn to trust ourselves and become more
self-reliant.
North to South: An irreversible restructuring of America is rooted in
3 other Megatrends: a.) the change from industrial to information,
b.) the move from national to global, c.) the reorganization from a
central to a decentralized society. In 1980 118mn. Americans lived in
the South and West, and 108mn. in the North and East. In 1982, 17
House seats went South and 2/3 new jobs were created in the
sunbelt. Of 18.4mn. new jobs created from 1968 to 1978 the North
and Midwest got 6.1mn. and South and West got12.3mn.. At the
same time the North lost jobs from Massachusetts to Minnesota
now marred by vacant factories & warehouses

Either/Or to Multiple Option: Personal choices for postwar America

remained limited through much of the 1960s. It was an era of
“Leave It to Beaver” and “Father Knows Best,” men went to work,
and women kept house and raised 2.4 children. Phones were black,
bath tubs and refrigerators were white, and checks were green. Ford
or GMC; vanilla or chocolate. Sometimes a 3rd choice was added:
strawberry. Homogenous tastes nurtured by mass markets
 Where is Technology Going?
 Science leads technology: scientific advance makes new things possible,
and these are the things that technology creates.
 The needs of humanity direct technology: engineers work on products
and problems for which demand exists. (This demand can be expressed
either through the marketplace (market signalling) or by the elected
representatives of the people.)
– How much time, energy, or money should the sender spend on sending the
signal?
– How can the receiver trust the signal to be an honest declaration of
information?
– Assuming there is a signalling equilibrium under which the sender signals
honestly and the receiver trusts that information, under what circumstances
will that equilibrium break down?

INTERNET OF THINGS
 Where is Technology Going?

 Managers direct technology: those who run enterprises

choose which technologies to develop, then create a demand
for their products

(Illustration: the conviction of GM, Standard Oil and Firestone,

March 1949, for having criminally conspired to destroy the
electric trolley system in Los Angeles and replace it by gasoline
or diesel-powered buses)
 Where is Technology Going?
Military goals lead technology, which in turn
leads to new military goals

Illustration: any arms race

 The Ecosystem Linkages

Wider Environment Infrastructure

YOUR
Suppliers Channels Customers
BUSINESS

Partners Competitors

Complements

13
 THE FUTURE:
SIX DRIVERS OF GLOBAL CHANGE
(Albert Arnold “Al” Gore)
 Global economy
Instant Communication
Shifts in Power
Bio-technology
Demographics
Climate Change (Humans and
the eco-system)
 The Future: Six Drivers of Global Change

• WORK - The ever-increasing economic globalization (Earth Inc.)

• COMMUNICATION - The worldwide digital communication (connects intelligent machines, robots

and databases)

• POWER - The balance of global political, economic and military power is shifting (emerging centers
of power, nation-states, political systems and markets)

• DEMOGRAPHICS - A flawed economic compass: unsustainable growth in consumption, depletion of

the planet’s topsoil, freshwater, living species

• BIO-TECHNOLOGY - Genomic, biotechnology, neuroscience and life science revolutions:

transformations in the fields of medicine, agriculture, molecular science, and placing control of
evolution in human hands

• CLIMATE CHANGE - Radical disruption of relationship between humans and the earth’s ecosystems:
energy systems, agriculture, transportation and construction worldwide
 WORK: The Economic Globalization
o Financialization of the economy
o New Relationships to labor, capital, resources and nation-states: shifting of
power from national governments to corporations, but also to guerilla and
rogue organizations
o The Rise of China
o The relative decline of the U.S.A and the E.U.
o Decline of poverty
o Increased living standards
o Increased trade flows, powered by oil and increased cross-border flows—
trade blocs, the container-ship revolution
o Advertising driven consumerism
o Consumption related to “happiness” and “well-being”
o Return of “localism”?
o Transformation of the factors of production: high-frequency trading, stock
market volatility
o Robo-sourcing
o shift towards automation (drone delivering pizza!)
 COMMUNICATION:
The World-wide Digital communication

• Cultural, political and social disequilibrium

• Advertising, e-commerce, banking, health, publishing, warfare
• Crowd sourcing
• Education, e-learning
• GPS
• Post 9-11 surveillance
• Brain interface – effects on memory, addiction
• Behavioral changes – texting while driving, Use Before Getting Out of Bed
• Overthrowing Dictatorial Regimes – Tahrir Square (Wael Ghonim)
• Reforming established democracies
• The dangers of the internet: Cyber security – wiki-leaks, Ed Snowden
(Glenn Greenwald & Laura Poitras)
 When Snowden met with representatives of human rights
organizations, he said:
o The 4th and 5th Amendments to the Constitution of my
country, Article 12 of the Universal Declaration of Human
Rights, and numerous statutes and treaties forbid such
systems of massive, pervasive surveillance

 While the US Constitution marks these programs as illegal,

my government argues that secret court rulings, which the
world is not permitted to see, somehow legitimize an illegal
affair....

 I believe in the principle declared at Nuremberg in 1945:

"Individuals have international duties which transcend the
national obligations of obedience

 Therefore, individual citizens have the duty to violate

domestic laws to prevent crimes against peace and humanity
from occurring."
 POWER: Power in the Balance

• Dysfunctional Global Governance

– Lack of leadership/statesmen
– No obvious alternative to the U.S.A.
– Post-WW-II institutions struggling – Boeing Inc.
– International agreements become “zombies”
– Democratization
• Inter-connectedness across borders
• The Rising Power of MNCs
• Overthrowing dictatorial regimes – Tunisia (Ben Ali), Egypt (H
Mubarak), Libya (M Gadaffi), Syria (Assad)
 DEMOGRAPHICS:
A Flawed Economic Compass

• Population increases
• Displacement of Peoples: Xenophobia & Urban
Stress
• Environmental Stress
• Techno-optimism
• Techno-pessimism
 BIO-TECHNOLOGY:
Bio-tech, Neuroscience & Life Sciences Revolution

• Biotechnology in food production

– Genetically Modified Food

• Biotechnology in medicine
– Cloning
 CLIMATE CHANGE:
A Radical Disruption between humans
and the Ecosystems
• Climate Change
– The Problem to food and freshwater sources
– Displacement of peoples
– Kyoto Protocol – 37 countries
• United Nations Framework Convention on Climate Change (UNFCCC): signed
December 1997, effective February 2005
• Reduction in emission of greenhouse gases, Renewable energy, Reduction of
deforestation, Improving energy efficiency
– Sustainable Development – Earth Summit
• development that meets the needs of the present without compromising the
ability of future generations to meet their own needs (Brundtland Commission)
• Focuses on economic, ecological, political, and cultural sustainability
• Monsanto (Roundup Brand), Rainforest Alliance (SmartWood program-Forest
Stewardship Council)), Genentech
 Conclusions
 We can’t know the future if we don’t know the past

 Knowing the past will not allow us to know the future

 …but a knowledge of the past will help show us the range of

possibilities

 The final thought: Re-establishing democratic responsibilities,

and ensuring that issues are debated and decided consciously
and deliberately on what we want to allow and what we do
not want
You actually remember Harsha Bhogle from an era
when he had no hair...
... and Virender Sehwag from the era he had
hair