Contemporary Management Issues
Globalization and demographics are two main drivers that have long-term effects in transforming the look of the world. Their effects have been experienced around for some time with likelyhood of the full impacts in the next decades. The world is becoming closely interconnected and, at the same time, a demographic divide can be seen growing. For instance, in industrialized regions like Europe and Asia, there is a shrink in population, and the regions seem to be growing older. On the other hand, emerging countries experience a continued growth of population and remain relatively young. An estimation of the population by the UN points out that there is a possibility of the world population rise by more than 30% by 205, with those already living in emerging market being 82% (UN, population division, 2012).
Globalization and demographic changes are majorly concentrated and continue to give a structural boost to growth in countries in the emerging markets. This results in an economic regaining process that is similar to the one industrialized countries experienced after the Second World War. This paper presents the concerns of national management practices in the light of population demographics. The paper also presents approaches and identifies the management systems that allowed the policy makers to develop and regulate their national strategies in the emerging business market.
Globalization has seen the world rapidly becoming closer to each other as a single place. The governments have discovered implications of globalization amidst the modernization plans. From a perspective of a socio-culture, globalization tends to form a relationship among various locales that leads to a dislocation of identities (Castells, 2006). The paper is aimed at providing an understanding of the global challenges that are created by the demography trends, both current and future. The paper is also going to identify opportunities that provide sustainable and financial benefits. In addition, it will identify those in position to benefit from the demographic challenges. The social changes have resulted into introduction of social structures, i.e. the patterns of social actions and interaction (Moore, 1967).
Globalization has seen a creation for the need of identification. For instance, societies have defined their sense of national identity in a way that has encouraged the production of cosmopolitan societies that are driven by economic forces. In many countries, national identity has been an object of government policies that has been aimed at restoring the tradition and commitment to ethnic or national identity (Eriksen, 1999).
The population dynamics of the world is in a constant change with current projections indicating a continued population increase. For instance, by 2050, the world population mark is expected to be more than 9 billion. This rapid population change is widely characterized by two elements, which include a growing population, which is demonstrated by the high population and economic growth rate experienced mainly in developing regions. In addition, an ageing population also exists in the developed countries. This population consists mainly of elderly people. These characteristic trends have significant consequences to the workforce, consumer-based behaviors extending these consequences to the environmental pressures. For instance, there is a likely shortage of skills in the developing countries which lack educational experiences and likewise in the developed countries where there is a little prospect of replacing the high working population in a retirement phase. In the demographic transition, the features of business cycles are brought together.
According to Lee, this demographic transition began a bit earlier in a number of European countries (Lee, 2003). With analysis, the results arrive at the fact that an ageing population in industrial countries reduces the growth by mid century, for example, in Japan. This is projected to begin in the next decade. As the working age population increases, the developing countries will largely benefit from demographic dividends thus resulting to a stronger growth in the next decades. This is believed to be so before ageing starts. Lastly, the analytical results show that changes in demographics have effects on savings, capital flows, and investment. Industrial countries like Japan and the fast ageing countries are likely to experience reduction in savings as the elderly will depend on their assets at retirement.
Global developments vary between the countries and regions. This is because of the difference in fertility, mortality, and the trends of migration. The fertility rate seems to have fallen in the recent decades, but it remains higher in the developing countries being below the replacement level. The fertility rate varies too in the developing countries. For instance, the replacement level fertility has been estimated to be 2.1 births for every woman in the developed countries and 2.4 births for every woman in the developing countries. This level is more than two since it is argued that more boys than girls are born. Another assumption is that some of those born die before they reach the reproductive age (Hartmut, Ernst & Hans, 2002).
A number of business-related solutions allows for sustainable and financial benefits. These solution benefits are mostly applied to sectors such as those providing educational services seeking to address the challenges of skill shortage, health care products companies targeting the ageing populations, and the utility companies that target to offer sanitation services. From a basic analysis, today markets tend to integrate the demographic trends into valuating the company’s growth prospective that is aligned to provide solutions to businesses. Nevertheless, a deep understanding of the global demographic trend will offer opportunities and solutions to businesses. At a worldwide scale, researchers are gearing up regarding the change of circumstances likely to have an effect on the business practices in the current and coming decades. These changes are caused by the rapid global changes that regard the way of interaction and response to change by the people in their environment (Edwards, 1994). Researchers have recently identified characteristics of demographic changes that affect business practices in the coming days.
The main characteristics are the following. Firstly, the actual decrease in the overall rate of growth. Analysts are concerned about the population explosion; even if the total population is on the rise, the growth rate seems to already peak but has significantly dropped across the world by about 40%. A prediction by the International Institute of Applied Systems Analysis states that the level of global population will stabilize at 9 billion in the latter parts of the 21st century after which it will gradually begin to decline. Many researchers were practically concerned about the global population explosion. Responses to significant changes suggested the revised projections would only mean a change of direction of views for both strategies and perspectives. Secondly, in various regions and countries, growth will occur in an asymmetric rate. A rapid expanding population experienced in the least developed countries characterizes this. Most regions that were economically active are now faced with a declining growth rate and ageing population as a result of an economic downturn. Lastly, according to Kevin and Victoria of the US Census Bureau, one of every five people worldwide would be over 60 years by the year 2050. This is due to the forces of declining birth rates and an increase in longevity that results in ageing. This will result in a decline in labor force and lower the national productivity rate thus increasing the financial burden.
Demographic changes, according to researchers, will have a significant impact on the global environment of business. For instance, the nature of economic activities and growth rate, growth of market, capital flow, labor availability, and the use of strategic resources will be challenged. The global asset adjustment, due to demographic change, is reflected into the exchange rates. A number of factors drive this exchange rate (Bryant & Fleurieu, 2005). It is assumed that all the goods going into the consumers’ consumptions are identified by the original country. This means that a reduction of supply of goods from one country will result in an increase of the prices of the goods, thus subjecting to all other factors presented. Similarly, as the labor force drops in country, lesser goods are produced that makes the relative price of the goods rise.
The real exchange rate in the developing countries has a close to 60 percent depreciation rate. This is because a large increase of supplies exists in the developing countries in the world markets. In addition to these factors, the global capital flows seem to add weight to the effects. As the income is traced back to the countries consisting of ageing population from the expanding population countries, the exchange rate for the ageing economies appreciates. In a broader look, the government and cooperation are likely to be pressured from the ageing labor pool faced with financial strain from the pension systems and, most of all, a changing lifestyle and consumer preference with continued world ageing population. The companies that struggle to cope with increasing urbanization and immigration are likely to experience a change in labor supply. Demographic changes may lead to a shift in geopolitical balance. The outcome would affect the risk premiums for doing business in less stable regions, which may result in a negative implication for global growth output. The younger generations, however, are faced with responsibilities for their care as the older workers retire. This may result in a potential inter-generation conflict.
The world resource institute and international finance cooperation estimated that the base of pyramid consumer market is approximately USD 5 trillion. This provides a clear picture showing that a number of products and services are specifically meant to provide solutions to the base of the pyramid demographic. The ability to provide services to markets regardless of the operation sector is by finding innovative ways to overcome poor infrastructure and low income populations. These strategies, if successful, would allow for larger market share gains and establishment of brand thus ensuring products and services are viable in the long-term (Nayak, 2003).
In the backdrop of the growing population, the unemployment problem has been registered to be in an increasing trend for the last few decades, but very little attention has been given to the long process of demographic change. The problems of demographic change affecting the financial health and social systems of protections have since attracted public attention despite the relationship between the elderly and the young working generations. These problems are associated with such things as higher life expectancy and retirement at early stages. There is no much attention given to consequences that the demographic changes pose to the labor market and the global business market.
The issue of the changing demographics has moved to be the main agenda of the public concern especially in Germany where the politicians, social partners, and a number of companies at large have since shown interests in the ageing workforce related issues. For instance, in an article by Steinmeier (2001), he welcomed the idea of ageing workforce concerns receiving the attention that it deserves. He states that the work performance into the old age depends on the willingness to be in a lifelong learning. The changes of labor market offer a new perspective for trade unions and potential employers concerning restructuring the world labor market (Steinmeier, 1998). There is a larger potential in middle class growth in Asia where a rapid economic growth is experienced that is coupled by a raising population from a low-income base.
The World Bank estimated that there is a likely growth of global middle class from 430 million to 1.2 billion by the year 2030 attributing to the bulk of the expansion to China and India. The rising middle class, therefore, presents a global consumer market opportunity since they are characterized by the incomes that are discrete to purchase more consumer-end products. Because of the demographic changes, there can be an identification of pattern shift, namely increased urbanization and immigration. These effects will be more experienced in the least developed regions that have a high population growth rate. There is an acceleration of urbanization in the developing countries. An example is China where millions of people have moved to urban centers such as Hong Kong. This has resulted into strain to the resources in trying to manage this population flow (Cooper, 1996).
The migration and immigration patterns, on the other hand, have a significant effect on the developing countries. The National Intelligence Council points out that immigrants account for more than 15% in more than 50 countries’ population. This increases mainly from countries where the population growth results in unemployment. This normally results in stricter immigration laws, which subsequently cause illegal immigrations. Additionally, the developing countries are likely to experience a brain drain process, which poses a major challenge in trying to keep a productive workforce in the country. Countries that experience a less developed economy with a large number of ageing workforce adapt to immigration laws that enable them to maintain the working-age population that is more productive.
In a similar way, this pattern towards urbanization and immigration changes the supply of labor and certain services demands. Businesses anticipate the management of these changes and as a result organize their operational services that enable them to gain the competitive advantage and thus exploit the world market conditions (King, 1991). The increasing socio-economic factors of globalization have encouraged a number of governments across the world to invest in ways that are more secure aimed at improving identity management system to realize an identification and legitimacy of the population within their countries. This becomes an important need since it enables a balance of growth against the possible challenges of globalization such as foreign residence and labor influx, international crime and global terrorism. Castells (2004) stated that a construction of identity to be fundamental to the dynamic of societies. This identity is observed as being a central force of humanity (Erikson, 1963). Tajfel (1977), the founder of social identity theory, stated that the cultural identity of any society is containing power, status, and social group difference, which become an important part of self-definition.
The impacts of globalization and modernization have resulted in a number of socio-cultural implications. The rapid population growth rate has led to subsequent immigration patterns that have allowed the foreign dominance in the workforce. The migrant workforce has been an important force behind the modernization pace in many countries. However, the patterns are observed to have a negative impact on the national cultural values and the social structures. The government has played an active role in developing long-term structural changes that are aimed at shaping and stabilizing their societies.
The countries have been able to address the sources of their need to continued economic markets that have addressed the sources of cultural, economic, and political instability. A strong leadership to enable an achievement of enhanced homeland security and an improvement of service delivery can support the initiatives. A fundamental planning of identity management system would provide reliable sources to population demographics that will enable an improved decision-making process. This will enable the regional government to regulate and manage their national strategies in the world market in a more convincing approach. The issues associated with demographic changes have raised serious debates in many regions with the issue of immigration taking the lead concern. A section favors the immigration of the workforce putting more emphasis to the need of more workers to enable deal with the workforce gaps rather than drawing more concerns on how to put in place the reliable framework conditions to the immigration processes.