My last course in the MBA was a subject called Global Risk Analysis. The course gave us an amazing insight into the volatile world of macroeconomics. All of us study the subject some time or the other, but this time it was very practical and we could actually relate it to everyday events. The fact that the course was taken by a visiting faculty from MIT, made it all the more special. He introduced a concept called 'teleology', where managers should be able to look forward a few steps from any event and hence make strategic decisions accordingly. He ighted the example of Nokia, the cell phone giant, and the collapse of the Berlin Wall. Managers at Nokia, sensed an opportunity that with two nations coming together, there would be need for seamless communication. Nokia put all its eggs in the Cell Phone basket. And the rest as they say, is history. It was riveting stuff. Given below are his predictions for the year 2006 and the future in general:
Global Trade: It is in danger, thanks to an unstable dollar (undermined by Bush's twin deficits), and US's undermining of the WTO. Global trade, the main driver of global growth, might slow down.
Trade Blocks: The future shapes up not as a common world market, but a set of three trading markets, with single currencies - Asia (yuan), Americas (dollar) and Europe (euro). There will be therefore only three exchange rates. There may well be tough non-tariff barriers between the blocks. Any country not in the three blocks is doomed to stagnate.
Accounting: There should be one set of global accounting rules. Its happening already.
Global Teams: Teams will continue to get more and more global. Companies which use global teams will leverage each country's competitive advantage. Experts in America will define customer requirements, British will define product attributes, Australians will define technology architecture, Indians will do the software, Germans the manufacturing and the Taiwanese will take care of the packaging. Happening? Oh ya!
Nanotechnology: The next big thing. Will be used in laptops,tennis racquets, glass and suntan lotion.
Global optimism and values: An economic survey shows 34% of respondents think 2006 will be better than 2005. Optimists outnumber pessimists 2 to 1. Still 29% expect the dollar to tumble and 41% predict the house prices to tumble. Basic values remain strong. When asked 'what is most important to your personal happiness?' in 2006, 78% said health, 62% said family relations and only 13% said material well being. 'I'm a material girl', sang Madonna '..in a material world'. Happily, only 2 in 15 people think the same.