The business environment is highly susceptible to influence by global changes. Global forces and trends regularly change, and as such influences how businesses interact with consumers and deal with competition. From changing global economy to shifting mindsets, business environment has been transformed by events dictated by the changing global forces and trends, leaving companies with no choice but to adapt to the new dynamics. While globalization had brought larger markets and uniformity, businesses have had to develop strategies that increase their compliance with the existing market changes. In this respect, the article “How Global Changes Can Affect the Business Environment”, by ERM Initiative Faculty and Chris Cox list the effects of five megatrends that affect business environment and the impact of each trend.
The article, “How Global Changes Can Affect the Business Environment” identified five key megatrends that are driving change in the business environment. They include: Growing urban Population, Demographical changes, Rise of the emerging markets, technological advancements and Climate Change (ERM Initiative Faculty and Chris 1). The authors defined megatrend as a global change that is verifiable through factual data; as such, they relied on data that had been produced over the years by PricewaterouseCoopers (PwC).
According to the authors, the global urban population is expected to increase significantly, by up to 72 percent in 2050. The growth will mainly be fueled by African and Asia that will witness the rise of new cities. However, developed nations like the U.S. will find it difficult to meet the infrastructural needs of the rising population. As a result, the article identified two effects of the urban population growth; first is increased political power due to the large numbers and increased demand for resources. Global warming is another megatrend that is likely to have serious effects on the business environment. According to the authors the world is already experiencing its effects in the form of rising sea levels and extreme weather. As a result of these changes the authors predicts that there will be increased conflict globally over scarce resources and increased regulation on conservation and sustainability (ERM Initiative Faculty and Chris Para. 3).
Moreover, demographic changes are also expected to have an effect on the business environment. The article stipulates that in developed countries the population is getting older due to low birth rate, while those of emerging economies are increasing dramatically. As such, this change will significantly impact the labor force. Also, according to the authors emerging markets will gain more power and reducing the influence of western countries in the market. This change could impact growth, which would see western countries stagnate economically, while emerging economies thrive. Technological advancements are expected to have a major impact on the business environment. According to the article, new technology will transform many industries.
The article does indeed describe megatrends that are likely to affect the business environment. However, the article’s definition of megatrends is shallow, it is not just any change on a global scale; megatrends are social, macro-economic and environmental force or trend that changes how companies approach future planning and decision making (Dean and Peterson 67). The article is important to all businesses, as it will enable them to establish the global megatrends enabling them to plan for the changing business environment. However, it is remarkable how there is little statistical data to highlight actual effects on the business environment; while this makes it easy for an average reader, more advance readers may find the substance lacking. In spite of these, the article offers relevant and current examples from global enterprises that are actively confronting the changes.
In conclusion, global changes will have significant effects on the business environment. Organizations that identify global megatrends and makes advance planning for the changing world may become future market leaders. As such, business leaders should develop new ways of thinking to ensure their business remains successful and relevant by responding in the right time to these emerging issues.
Dean, A., and D. J. Peterson. “Embracing global megatrends. “NACD Directorship (2015): 64-68.
ERM Initiative Faculty and Chris, Cox. How Global Changes Can Affect The Business Environment. North Carolina State University, 2014