Module 1: Impact of Macro Environmental Factors in

Leadership and Management

Dr John Walsh, June, 2009, Mekong Institute, Khon Kaen

Contents

Notion of competitiveness in the era of globalization and its impacts on today’s organization

Relationship between these factors and transformation of leadership

Competitiveness

Based on presence of competitive advantage

May not be sustainableMay be createdMay not be productive overall (i.e.

negative effect)Agriculture – Manufacturing – Services –

Knowledge (Knowledge Based Economy = KBE)

Porter on Competitiveness

• Competitiveness and economic development are directly connected

• The success of a company depends on the context of the external environment in it which it operates - this is particularly relevant as all businesses operate within some form of Cluster - if one part of the cluster breaks down, or fails, this can invariably have repercussions on a business

• Businesses need to operate in a collaborative environment to be successful

• “Competitiveness is much misunderstood. It is not about low wages. It is measured by productivity. Competitiveness and productivity are synonymous” - Porter

• Companies are spreading their value chains globally. Vertically integrated businesses no longer really exist - instead they have been transformed into firms that outsource

• Production is a function of efficiency which sometimes means that businesses need to upgrade the value of what they do - more often than not in workplace processes, infrastructure etc

(http://www.nswbusinesschamber.com.au/?content=/channels/Building_and_sustaining_business/Sustainability/Sustainable_business/michael_porter.xml)

Globalization

A series of different effects – economic, social, political

Internationalization, Regionalization, Globalization

Mediated by technologyInternational best practice and cultural

convergence (in some fields)

Modern Organization

Moving towards: Network (or hub-and-spoke) structure Low capital asset expenditure Importance of innovation and creativity in the

KBE Labour market development passed on to

people Portfolio working, remote working, outsourcing

and contractual relations

Shin Corporation PLC

Vision "We are the leading value creation asset management company in telecom and media”

Business Mission

1. To develop professionalism and best practices in our core competencies in order to be an organization that delivers sustainable growth and long-term value to shareholders

2. To recover our corporate image by strengthening our CSR in order to have our staff be proud of our organization, become one of the most admired companies, and regain our status as an employer of choice

3. To reinforce best practices in our corporate governance to promote trust and confidence among the investment community

4. To turn our office into an inspiring workplace, which will enable our staff to carry out their assignments creatively and to the best of their ability

(http://www.shincorp.com/CI/templateCIen.asp)

Macro-Environmental Factors

Natural environment change (climate change, water shortages, pollution and degradation)

Declining oil supplies and increased demand = high prices and need for efficiency (and biofuels)

Information technology makes citizen journalists and activists

Disconnection of products and costs

Environmental Analysis

Socio-CulturalTechnologicalEconomicPolitical

Change can be catastrophic (i.e. unpredictable, very rapid, wide-reaching)

Leadership Paradigms

Warrior General (Donald Trump)Strategist (Kiichiro Toyoda)Wizard (Bill Gates)Priest (Clinton/Bush)

Drucker on Leadership

Successful leaders don't start out asking, "What do I want to do?" They ask, "What needs to be done?" Then they ask, "Of those things that would make a difference, which are right for me?" They don't tackle things they aren't good at. They make sure other necessities get done, but not by them. Successful leaders make sure that they succeed! They are not afraid of strength in others.

Drucker’s Advice

Effective leaders check their performance. Leaders communicate in the sense that people

around them know what they are trying to do. Don't travel so much. Organize your travel. Develop your priorities and don't have more than

two. I don't know anybody who can do three things at the same time and do them well.

(http://www.forbes.com/2004/11/19/cz_rk_1119drucker.html)

Environmental Change: Impact on Leadership

Need for communicationCommitment to empowerment of peopleAbility to let go of the pastTransparent values to negotiate

unprecedented changeUnderstanding of technology

1.2. Current Issues in Greater Mekong Sub-Region (GMSR)

The Decline of the East Asian Economic Model (EAEM)

Export-oriented, import-substituting, low labour cost competitiveness

GFC (global financial crisis) reveals weakness of the EAEM

Switch to promoting domestic consumption and capital formation

Remaining open but balancing efforts internally

Impact on education and labour markets

Urban Change and Development

Increasing urban sprawl and slums (global urbanisation = glurbanisation)

Majority of people will live in citiesManagement of mega-cities (including

security issues)The role of the informal economy

Corruption and Maldevelopment

Increasing emphasis on corruption – but usually on the individual rather than the systemic level

Public participation is important in reducing the effect of maldevelopment

Public scrutiny and environmental degradation

Infrastructure

Physical infrastructure (road, rail)Technological infrastructure (internet,

satellite)Business infrastructure (market research,

advertising, design, legal services etc)The Noodle Bowl

Environmental Change

Global climate change affects rivers, ice sheets, sea levels and weather patterns

Changing climatic conditions affects spread of diseases (e.g. mosquitoes) and public health issues

Migration and conflictChanges in residential patterns

Demographic Changes

People live longer, fewer children bornPressure on marriagesWhat role will there be for older people?Lifelong learning and personal

development

Internationalisation of Economies

Increasing role and influence of Chinese organisations

Changing competitive advantages related to consumer tastes

Ownership and sovereignty issues[limited] globalisation of production and of

consumptionCultural hegemony?

Global Financial Crisis

Arose from excessive deregulation of derivatives markets in USA

Spread around the worldBiggest impacts in poorest countriesMillions of jobs lost, billions of dollars of

inwards investment lostRecovery not possible for years

The End