The McKinsey Quarterly recently published a web article on the top ten trends in the coming years. If you are interested, you can subscribe to their online version for free. I think it's worth mentioning that these trends help determine any investment impact.
Trend 1: The economic activity center will undergo major changes, not only globally but also regionally. Asia's gross domestic product [excluding Japan's 13% of world GDP and Western Europe's 30%] will catch up with Western Europe in the next 20 years. Therefore, as people in these countries gain more disposable income, we should see a growing demand for consumer goods.
Investment philosophy: A consumer company with strong influence in Asia and a globally influential transportation company with strong influence in the region.
Trend 2: Public sector activity will proliferate, so increasing productivity is critical. An unprecedented ageing population in developed countries will require the public sector to increase efficiency and creativity. The need for health and retirement protection will overwhelm a country's ability to support these services through taxation. A proven private sector approach may prevail in the provision of social services in both developed and developing countries.
Investment philosophy: Companies that can provide these services in a cost-effective manner; companies that can leak technology outsource these services to low-cost countries.
Trend 3: The consumer landscape will undergo major changes and expansions. As the economic growth of emerging markets exceeds the threshold of $5,000 for annual household income, people usually start spending on discretionary goods, so nearly 1 billion new consumers will enter the global market in the next decade. By 2015, consumers' spending power in emerging economies will almost match the spending power of Western Europe. It is estimated that by 2020, 100 million Chinese families will reach European income levels. In addition, the Hispanic population in the United States will consume 60% of the total number of Chinese consumers.
Investment philosophy: Consumers and luxury goods companies with strong influence in Asia and other developing countries that are economically successful. A company that recognizes and positions the consumer market that will continue to evolve. Easily transfer raw materials and finished products to transportation companies around the world.
Trend 4: Technology connectivity will change the way people live and interact. We are still in the early stages of this revolution. Geography is no longer a major constraint on social and economic organizations. With the advent of new developments in biotechnology and nanotechnology, people around the world will find new ways to make the most of their commitments. More transformative than the technology itself is the behavioral shift it brings. We not only work on a global scale, but we also work in an instant. We are forming communities and relationships in new ways [in fact, 12% of American newlyweds met online last year]. More than 2 billion people use mobile phones now. We send 9 trillion emails a year. We do billions of Google searches a day, and more than half search in languages other than English. Sometimes, for the first time in history, geography is not a major constraint to social and economic organization constraints.
Investment philosophy: A software company with the expertise to bring together a variety of capabilities to create new products and services.
Trend 5. The continued change in workforce and talent will far outweigh the widely observed shift in employment to low-wage countries. The shift to knowledge-intensive industries highlights the importance and scarcity of well-trained talent. However, the increasing integration of the global labor market is opening up a vast source of new talent. The 33 million young college-educated professionals in developing countries are more than three times as many as developed countries. For many companies and governments, the global workforce and talent strategy will become as important as global sourcing and manufacturing strategies.
Investment philosophy: Outsourcing all kinds of professionals, not just low-paid workers, with well-educated talent pools and well-educated talent pools in India and China.
Trend 6. The role and behavior of large companies will be subject to increasingly rigorous scrutiny. As companies expand their global reach and as their economic needs for the environment intensify, society's suspicion of large companies may increase. The principles of current global business ideology - for example, shareholder value, free trade, intellectual property and profit repatriation - are not understood in many parts of the world, let alone accepted. Scandals and environmental disasters seem inevitable, as these accidents may then be disproportionately blown, fueling resentment and triggering strong political and regulatory resistance. This trend is not just the past five years, but the past 250 years. The ever-expanding pace and scope of global business, as well as the emergence of truly large multinational companies, will intensify the pressure for the next 10 years. Business, especially big companies, will never be loved. However, you can pay more attention to it. Business leaders need to more powerfully demonstrate and demonstrate business knowledge, social and economic cases in society, and the enormous contribution of business to social welfare.
Investment philosophy: Seeking companies that are profitable and socially responsible.
Trend 7. Demand for natural resources will increase and pressure on the environment will increase. As economic growth accelerates – especially in emerging markets – we are using natural resources at different interest rates. It is expected that oil demand will increase by 50% in the next 20 years. If there is no major new discovery or radical innovation, supply will be illegally kept up. We have seen a similar surge in demand for various commodities. For example, in China, demand for copper, steel and aluminum has almost tripled over the past decade. The resources of the world are increasingly restricted. Water shortages will be a major constraint to growth in many countries. And one of our most scarce natural resources - the atmosphere - will require a huge shift in human behavior to prevent it from running out. Innovation in technology, regulation and resource utilization is critical to creating a world that can drive strong economic growth while maintaining environmental demand.
Investment philosophy: water filtration, pollution control and energy companies, especially those that offer new clean energy.
Trend 8. A new global industrial structure is emerging. Even basic structural assumptions have been subverted: for example, the emergence of strong private equity financing is changing corporate ownership, life cycle and performance expectations. In many industries, there is a barbell-like structure with a giant at the top, a narrow middle in the middle, and then a small, fast-moving player at the bottom. Similarly, corporate boundaries are becoming increasingly blurred due to the interconnected "ecosystem" between suppliers, producers and customers. Even basic structural assumptions have been subverted: for example, the emergence of strong private equity financing is changing corporate ownership, life cycle and performance expectations. The gains that the winning company will gain from using the new structural capabilities will take advantage of these shifts.
Investment philosophy: Companies that provide special capabilities in key process networks and supply chains can deliver substantial improvements and high profits.
Trend 9. Management will move from art to science. Today's business leaders are using highly sophisticated software to run their organizations. Larger, more complex companies need new tools to run and manage them. In fact, improved technology and statistical control tools have produced new management methods that have even made large organizations viable.
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What has long since passed is the day of "intuitive" management style. Today's business leaders are adopting algorithmic decision making techniques and using highly sophisticated software to run their organizations. Scientific management is shifting from the ability to create competitive advantage to the bet that gives the company a game of rights.
Investment philosophy: Methods and tools [software] that match skills to job requirements and training requirements. Enterprise software and business consulting companies that provide special features that help manage large companies.
Trend 10. The ubiquitous access to information is changing the economics of knowledge. More and more knowledge, and more and more specialized. The most obvious manifestation of this trend is the rise of search engines [such as Google], which can provide almost unlimited information in real time. Getting knowledge is almost universal. However, the transition is far more profound than simple, broad access.
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New knowledge production, acquisition, distribution and ownership models are emerging. We see the rise of open source methods of knowledge development because communities, not individuals, are responsible for innovation. Knowledge production itself is growing: for example, global patent applications have grown at a rate of 20% per year from 1990 to 2004. Companies need to learn how to take advantage of this new area of knowledge - or risking a lot of information.
Investment philosophy: A company that provides new ways to capture and distribute expertise. and also,...
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