Strategy Drivers for International or Global Business - Business Environment

by John F. Williams

Editor’s Note-

This is the second installment of a five -part series on global corporate leadership . This article focuses on Environmental Factors

1. Economics (Debt)
2. Environmental Factors (This Article)
3. Political Factors
4. Technology
5. Social Factors

The series taken as a whole should help you define the answers for your company to these nine questions:

1. Who are the customers of the future?
2. How will my company distribute its product or service in the future?
3. Who will be my competitors in 10 years? 25 years?
4. What will the source of my company’s competitive advantage be in the future?
5. What skills or capabilities will make my company unique?
6. What role will strategic alliances/ mergers/acquisitions play in its strategy?
7. How will my firm alter the nature of competition in its industry?
8. How will my organization redefine the boundaries between industries?
9. What can my company do to create a new industry?

The Opportunity

I recall a quote from a business associate on a previous large-scale project, “This project will succeed or fail based on how well we handle the communications. Internal and external to the project.“ This could have been said about the new business environment. Major portions of the markets will be “baby-boomers” and Generation X consumers. These demographic groups have opposing viewpoints and require different approaches from business. The current world political environment notwithstanding, these groups, and technology, will force the change to the new business environment.

The Solution

The supplier, manufacturer or producer business environment of the future will be something quite different from the environment of the past 5 to 15 years. It will be quite different even from our migration into the Internet era and “e-Commerce.” The Internet, satellite based wristwatch phones, and other forms of communication will cause consumers, suppliers, manufactures and producers to become much more closely linked. They will be linked in ways that heretofore have either been verboten, unimaginable or quite impossible because of the lack of instant global communications.

The majority of goods will be purchased via some form of communications from the purchaser direct to the manufacture or producer. The goods will be assembled, manufactured or otherwise customized per the purchasers’ instructions, and shipped direct to the purchaser. In the majority of the cases, the consumer will not have seen, touched, or otherwise inspected the item purchased. The consumer will be incented to purchase in this manner by significantly lower cost. I suspect there will be regional “showcase” centers for various categories of products. These centers will generally be used to display products in various categories – or clusters. Although customers could purchase products from these centers, the cost would be prohibitive, and the wait would be even longer than a purchase via the Internet or whatever replaces it. In general, the price to the computer / communications illiterate population will have increased significantly.

This concept presupposes some major changes in international and global corporate business environment. Once in place, fewer salespeople and fewer distributors will be needed. Thus margins for manufactures and producers will improve even though they cut prices for electronic media purchases. An example would be the Amazon.com Corporation.

Integrated information systems and automated shop floor equipment will be required in this new business environment. This will be necessary for the consumer to obtain the product built to his specifications – in other words, it will be built to order. This will obviously integrate the JIT capabilities of manufacturers and suppliers as well as transportation. These corporations must also be capable of providing fast, high quality service to the products they sold. Without this, they will ultimately fail.

Workers in the new business environment will be displaced by shop floor automation networked together with information systems and world communications links. If this concept works anything like major changes in the past, these displaced workers will find opportunities in the floor automation or information systems areas, et. al. But it remains the corporations’ responsibility to provide the option to train and reuse these workers, rather than terminate them.

Conclusion

The typical customer is changing. The majority of customers will fall into one of two demographic groups. The aging “baby-boomers” and the “generation X” have the greatest numbers of consumers, and the greatest amount of available disposable income. The propensity for “baby-boomers” to be influenced by marketing will probably not be as great as for generation X consumers. Marketing to generation X consumers requires a whole new, different approach. They are young and don’t buy the “top selling” product. These are not the so called ‘opportunuers’, but rather they are business savvy and technology literate, and many scoff at a college education because they are making a six-figure income now – working from home or on the beach or from a ski resort. Even if their companies fail, they will use their experience to land jobs in other small or midsize corporations. They have learned how to run companies via high technology.

This I see as the emerging market. These are the folks that may be in line to take control of major corporations in the future. If not, then the college educated must understand and be able to work with this segment of society, because they will be running the new business environment.