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2
1. Random events that have a low probability of occurrence and a major impact on the mega trendsSource: Navigate Consulting
Resources &Environment
Governance &Activism
DemographicsConsumption
Patterns
Technology &Innovation
Wildcards1
5
Global economics is being influenced by 6 mega trends
Megatrends
1Globalization
2
6
4 3
Globalizarion
1. Globalization is shaking the foundations of the world as weknow it and shifting economic power from „North“ to „South“
3
1. The term South was first coined by the UN in the 1960s to refer to those countries that were not part of the 1st World (i.e. NATO) r the 2nd World (i.e. the Soviet Union); with the collapse of the Soviet Union, the term is usually used to refer to all emerging markets
North
South1
Consumption
Patterns
Regulation &Activism
4
The old rules of sale no longer apply, as the new consumer isfully mobile, and could be anywhere at anytime
72.6% mobilepenetration globally
28%
16%
smartphonepenetration expected by2014
of US smartphoneusers makemobilepurchases
• 47% of mobile users are in Asia
• 130% penetration in Western Europe –meaning that there are more phones thanusers
2
5
… and consumers areincreasingly choosing text as acommunications medium
6.1 Trillion
64%
Text messages sent globallyin 2010
Increase expected by 2013
Social media is emerging as a bourgeoning marketplace
Social Media is mobile andprolific …
800,000,000
200,000,000
130
Active Facebook users
Users accessing Facebookthrough their mobile devices
Friends per user
Source: Media reports, Mobithinking global statistics
2
6
Nike ID has captured the market for personalized athletic footwear Burberry launched an online service for bespoke trench coats
in 2011 New sites like Threadless.com and FashionStake.com rely on
crowd-sourcing to determine assortment
Adidas established a Design Center in Shanghai in 2008 tocreate closer connection to Chinese consumer
Marc Jacobs launched a collection of sari-inspired dresses tocourt the Indian consumer and Louis Vuitton celebrated Diwali instore windows
Consumers asCo-creators
LocalizedDesign
Prada is launching a “Made in…” series, to create localizeddesigns by collaborating with artisans and using traditionalmaterials and techniques of a region
Customized offerings require a nimble supply chain to meet demand
And is giving consumers a say in developing their ownproducts and services
Goyard, Louis Vuitton and Coach allow customers to stampmonograms on their bags for a personal touch
Consumption
Patterns
Regulation &Activism
Globalization
Demographics
Technology &Innovation
Resources &Environment
Wildcards1
2
7
On the commodities market, easy access to information isallowing consumers to put great pressure on suppliers
….andenables
convenientcomparison
shopping
Consumers have a variety of new waysto search for the lowest price
Example: the mobile consumer
Ubiquitousaccess to
informationfacilitatesconsumer
pricediscovery….
-4
-6
-8
-10
-12
-2 2004 2006 2008 2010 2012 2014 2016
China
France
India
Japan
Mexico
United Kingdom
United States
While they are forced to do so by falling orslowing income growth
Real Personal Disposable Income(% change p.a.)
14
12
10
8
6
4
2
0
Source: Economist Intelligence Unit, Navigate Consulting
2
8
We are at a unique historical moment when every majorglobal power is redefining itself
The US faces a formidable arrayof challenges to its leadership
“Perhaps the greatest danger to asustainable future . . . is ourseeming inability to balance theneeds of the present with therequirements of years yet tocome.”
Center for the Study of thePresidency
With remarkable economicdynamism, China still facessignificant challenges• Stratification a major concern-
income, use of resources,environment
• How to incorporate the 900million in the interior in the otherChina
• Uncertainty about how Beijingwill reconcile its political systemwith its market capitalism
Europe’s historical experimentwith unity is being put to thetest
•Where is the EU moving post-Lisbon? Will it widen and deepen,or has it reached the limits ofintegration? Unification orfederation?
•Financial crisis in Greece hasshown cracks in the broader EUarchitecture
Delineating the boundaries ofthe next Russia•Evolving legitimacy role in
Federation and in relations withNear Abroad countries
•Raises overarching questionsabout what kind of Russia itwants to be—democratic or lessthan democratic—and where itwants to be (i.e., oriented towardEurope or Asia?)
3
9
We are entering an era of heightened global demand for
Source: Energy Information Agency, Food and Agriculture Organization
200
100
0
2000
Oil Price
Food Price
2010
Volatile and rising natural resourceprices• The FAO warns that there are permanent factors
underpinning prices that will work to keep them at bothhigher average levels than in the past and reduce thelong-term price decline in real times
FAO Food and Oil Price Indices, 2000-2010(Base=2002-2004)
300
food, water and energy
Strong demand pressures
• We will see a doubling of demand for food, water andenergy by 2050
• Energy demand continues to grow with non-OECDcountries driving the bulk of the growth
• Unsustainable water use has already led to aquifer andgreat lake depletion
World Marketed Energy Demand: OECD and Non-OECD, 1990-2035(quadrillion btus)500
Non-OECD
400
300
200
100
01990
OECD
2035
4
10
Only sustainability will allow 8 billion people in 2040 to live athigh standards on our planet2040: 8 billion people striving to …
… consume
We will need 5 planets …… be mobile
… communicate
… use energy
… or become “sustainable”… be healthy
Source: Navigate Consulting
4
Contribution of knowledge industries to GDPin selected high-performing OECD countries
Knowledge work is an increasingly important component ofthe global economyRatio of intangible to tangible investments1,US companies
136
110
82
606254
40
20
0
60
100
80
140
120
1950s 2000s1990s1980s1970s1960s
394040
414242
4343
0
10
5
25
20
15
30
35
45
40
KoreaNetherlandsFranceUKGermany Sweden BelgiumUS
5
Investment priorities bycorporations show a shift towards
knowledge activities
1. Intangible investments are R&D, software, design and new product development; tangibles are machines and buildings Source: US Federal Reserve, OECD, Navigate
The supply of educated workers is increasingly coming from
445542
425605
416
1034
467621651
EgyptChina
7071
12001000
2000
South IndonesiaThailand TurkeyFrance Germany JapanUKUS
800600400
Tertiary Graduates, 2010 (000s)
7200
2782
2600240022002000180016001400
= Established market
= Emerging market
Korea
68% of US engineering doctorates in 2007 were awarded to foreign students,three-quarters of whom are from Asia, up from 51% in 1999
Source: UNESCO, National Science Foundation, Navigate Consulting
5
the developing worldEmerging markets such as China, Egypt, South Korea, Indonesia, Thailand and Turkey are producingas many or more university graduates as established markets
Developed countries are investing heavily in R&D to stay
Japan 3.4
Finland 3.5
Mexico 0.5
Russia
South Africa
1.1
0.9
China 1.5
France 2.1
Germany 2.5
Switzerland 2.9
Source: OECD Science and Technology Industry Outlook , Navigate analysis
Mexico 1.2
China
South Africa
1.6
1.5
Switzerland 7.0
Russia 7.2
Germany 7.5
France 8.2
Japan 11.1
Finland 16.6
…and have a large pool of knowledgeworkers
R&D Personnel per 1,000 total employment, Selectedcountries
6
competitive in global economy
Knowledge centers like Finland, andJapan spend large percentages of theirGDP on R&D…
Gross Expenditure on R&D as a % of GDP, Selectedcountries
however their number is enormous
Iran closes theStraits of Hormuz
Global Pandemic
Power Strugglein Beijing Currency Collapse
Nuclear Detonation Confrontation withNorth Korea
NaturalDisaster
BioterrorAttack
Viruses Disable GPSSatellites
Carbon SequestrationBreakthrough
CropPandemic
QuantumLeap
What if two of these wildcards would happen by 2025?
Source: Navigate
Wildcards are random events with low probability to happen,
Wildcards