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Management article
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Reference no. R0907E
Published by:
Harvard Business Publishing (2009)
 
in "Harvard Business Review"
Length:
12 pages

Abstract

Executives are beginning to look to the future after spending a full year in crisis mode. As they reengage in strategic thinking, they will need to continually assess the changing economic landscape - and they can effectively do that by keeping a close watch on the underlying forces outlined in this article. The authors, from McKinsey & Company, discuss the current trajectories of 10 particularly important trends: (1) strains on natural resources; (2) a damper on globalization; (3) the loss of trust in business; (4) the growing role of government; (5) investment in quantitative decision tools; (6) shifting patterns of global consumption; (7) the economic rise of Asia; (8) industry structure upheaval; (9) technological innovation; and (10) price instability. Companies' strategic behavior should be tied closely to these trajectories. For instance, given recent reversals in what had seemed to be an unstoppable trend - globalization - managers should reassess their business models under different future scenarios. Would they fare as well in a more protectionist world as they would in one with free and fair movement of goods, capital, and talent? Or would certain production locations no longer make sense, certain overseas business units lose value, or certain core activities be harder to perform? Meanwhile, as the US ceases to be the engine of global consumption, businesses should increasingly set their sights on China and India, where consumer spending is growing faster. In mature markets, they should refocus their offerings on the remaining sweet spot of demand: consumers over age 50.

Topics

Economic forecasts; Recession

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