Resources feel the strain
Depending on the depth and length of the recession, spare capacity in the oil market, which faces supply-side constraints, could, somewhere between 2010 and 2013, return to the low levels seen in 2007 when crude oil prices were skyrocketing. As well, water resources are under increasing strain from population growth, industrialization, and climate change. So plan for a future of resource price increases, volatility, and even shortages.
Globalization under fire
Growth in the globalization of goods and services may stall for a period because international trade has declined along with demand, but will pick up again and is unlikely to diminish for the long run. But globalization of talent will slow for a much longer period if governments tighten immigration restrictions in response to concerns about job losses. Still, the aging of Western populations means emerging markets will keep producing a growing share of the world's college graduates. Globalization of financial services is the most vulnerable aspect of globalization, given how increased linkages among the world's markets led to the current travails, so we can expect greater regulation and central bank co-ordination and perhaps even capital controls. Strategists should stress-test their business models under different scenarios for those three types of globalization.
Trust in business dwindling
Surveys show a precipitous decline in trust in business. For an individual company, a low-trust environment means higher transaction costs as it becomes harder to win and keep customers; lower brand value; and greater difficulty attracting, managing and maintaining talent - not to mention, in the worst case, negative publicity, consumer boycotts, and unwanted regulation. Companies must show they understand popular and political concerns related to executive compensation, risk management, board oversight and the treatment of employees facing layoffs.
Government on the rise
Increased government involvement in business in many Western countries is one of the most striking features of the crisis, as governments take part in decisions that were once the preserve of managers and boards. That means companies must prepare to compete under new regulatory regimes and also recognize that the public sector will grow as a major customer for some industries because of rapid increases in spending.
Management revisited
The financial crisis exposed the limitations of some of the mathematical models that have been pushing management from art to science. Those models will now have to incorporate more realistic visions of human behaviour and demonstrate a more dynamic, integrating real-world feedback. Decision-makers in every industry must take responsibility for understanding those quantitative tools better - how they function, their assumptions, and their limitations.
Shifting consumption
With consumer spending growth slowed, the United States may no longer remain the world's consumption engine and Asia could become the centre of gravity. The exact shape of the future global market is uncertain, but companies should expect slower long-term growth in global consumption, which will mean tougher fights for market share. They should also prepare to shift investment to Asia; focus on older consumers, given the rise in the proportion of such households in Canada, the United States and Europe; and find ways to offer luxuries to people with limited household budgets.
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MARKETING / IN PRAISE OF NON-TRANSPARENCY
In an Internet world and at a time when cynicism about business is high, companies are continually urged to be transparent.
But marketing guru Seth Godin is dubious. He questions whether Apple would become a more profitable or exciting company if it shared its ideas and plans with the world, or if main honcho Steve Jobs was more candid about his health issues.
Mr. Godin doubts we want to read the script for the forthcoming Star Trek sequel now, a year before filming begins.
"Does a magician put on a better show if you know how his tricks are done? Do you want to see how your dinner was made, farm to plate? Really?" he asks on his blog.
