Category Archives: General

World’s economic perspectives for 2010-2040

Map of developping countries, without least ad...
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The old economic order is shifting. As the global economy recovers some emerging markets are likely to grow faster than traditional economic powers. At the industry level, these shifts are even more apparent with accelerating capital flows, fundamental demographic changes, and the rise of state capitalism reshaping the world map for many sectors.

PwC’s Macro Consulting team has developed a tool to map future clusters across the world. As a result, they have highlighted the geographical locations that will host the largest clusters in five industries:

• Pharmaceuticals;
• Automobile assembly;
• Asset management;
• Filmed entertainment; and
• Tertiary education.

Key findings:

• The large increase in the share of world GDP represented by Asia over the next 30 years, helped by the expected rapid growth of economies such as China and India, should aid the development of dominant clusters in the region. This is likely to be especially apparent in industries that can benefit from large economies of scale. The top locations within Asia of some of these clusters have not yet come to light.

• In the pharmaceutical industry the cluster In Shanghai will grow to become one of the world’s most significant. However, the current leading clusters in New York and London to remain the largest. The increased affluence and aging populations in emerging markets will benefit centres such as Shanghai through boosting demand for healthcare.

• Growing automotive assembly clusters around Tianjin, Nanjing and Sao Paulo may rise to be amongst the world’s largest by 2040. The growth of the middle classes in China, India and South America will add hundreds of millions of potential car owners to the world market between now and 2040. This will require an enormous increase In production capacity in these regions.

• In asset management the existing large clusters in New York, London and Boston will be joined by Singapore, which May become the leading cluster in the Asian region. Tighter regulation and higher taxes are currently working against clusters in the United States and Europe but the key factor will be the increase in public and private capital available in Asia – which will fuel growth in asset management in the region.

• In the filmed entertainment sector Hollywood will retain its position up to 2040. However, it will face growing competition from rising film production clusters around Mumbai and Shanghai which are increasingly moving into mainstream productions.

• New York, London and Boston will remain the principal tertiary education clusters over the next 30 years due to the depth of quality universities they currently host, as well as offering environments in which these clusters can flourish. Many emerging and developing nations are investing heavily in tertiary education clusters, which are likely to improve significantly over the next 30 years. However, they will not surpass the existing top tertiary clusters in this timeframe.

For more details, click here.


Technology, Entertainment, Design: ideas worth spreading

TED (short for Technology, Entertainment, Design), started in 1984 as a conference bringing together people from these three worlds. The TED Conference, held annually in Long Beach, gathered more than a thousand people at its last event and the content has expanded to include science, business, the arts and the global issues facing our world. Over four days, 50 speakers each take an 18-minute slot, and there are many shorter pieces of content, including music, performance and comedy.

Over the years, TED has spawned some extensions:
TEDGlobal is TED’s twin conference. It was held in Oxford, UK, in 2005, and then in Arusha, Tanzania, in 2007. TEDGlobal is now held annually in Oxford, starting July 2009. The themes of the global conference are slightly more international in nature, but the full TED format is maintained.
TEDIndia will be held in November 2009 in Mysore, India, celebrating and exploring the beckoning future of South Asia.
The TED Prize is designed to leverage the TED Community’s exceptional array of talent and resources. It is awarded annually to three exceptional individuals who each receive $100,000 and, much more important, the granting of “One Wish to Change the World.” After several months of preparation, they unveil their wish at an award ceremony held during the TED Conference. These wishes have led to collaborative initiatives with far-reaching impact.
TEDTalks is an attempt to share what happens at TED with the world. Under the moniker “ideas worth spreading,” talks were released online. They rapidly attracted a global audience in the millions. Indeed, the reaction was so enthusiastic that the entire TED website has been reengineered around TEDTalks, with the goal of giving everyone on-demand access to the world’s most inspiring voices.
The TED Open Translation Project brings TEDTalks beyond the English-speaking world by offering subtitles, interactive transcripts and the ability for any talk to be translated by volunteers worldwide.

TED’s website provides the best talks and performances from TED and partners available to the world, for free. For enyone interested, more than 400 TEDTalks are available at:

Book review: “The Fat Tail – The Power of Political Knowledge for Strategic Investing”

“The Fat Tail: The Power of Political Knowledge for Strategic Investing”, written by Ian Bremmer and Preston Keat of Eurasia Group, is the first book to identify the wide range of political risks that global firms face and show investors how to effectively manage them. It reveals that while the world remains exceedingly risky for businesses, it is by no means incomprehensible.

The authors show that political risk is easier to analyze and manage than most people think. Applying the lessons of world history, the authors survey a vast range of contemporary risky situations, from stable markets like the United States or Japan, where politically driven regulation can still dramatically effect business, to more precarious places like Iran, China, Russia, Turkey, Mexico, and Nigeria, where private property is less secure and energy politics sparks constant volatility.

The book sheds light on a wide array of political risks-risks that stem from great power rivalries, terrorist groups, government takeover of private property, weak leaders and internal strife, and even the “black swans” that defy prediction. But more importantly, the authors provide a wealth of unique methods, tools, and concepts to help corporations, money managers, and policymakers understand political risk, showing when and how political risk analysis works.

In recent years, investors have increasingly recognized that politics matter at least as much as economic fundamentals in many markets. To succeed in the current global marketplace, investors must look beyond reassuring data about per-capita income or economic growth and assess the political risk of doing business in particular countries-sector by sector and project by project.

Eurasia Group proposes four essential dimensions of political risk to examine in a country:

1) the stability of a regime and strength of its government;
2) personal and state security, and how prepared government is for future potential disasters;
3) social trends, such as demographic shifts and growing income gaps; and
4) economic factors, such as unemployment, debt, and the openness of the economic regulatory environment.

More details at:
Available on Amazon at:

Real estate trends in Europe: the top six investment markets for 2009 are Munich, Hamburg, Istanbul, Zurich, London and Moscow

A recent report of Urban Land Institute (ULI) and PricewaterhouseCoopers – “Emerging Trends in Real Estate Europe” (now in its sixth edition) provides an outlook on European real estate investment and development trends, real estate finance and capital markets, property sectors, metropolitan areas, and other real estate issues.

As the report concludes, the top six investment markets for 2009 are Munich, Hamburg, Istanbul, Zurich, London, and Moscow. German markets in general are relatively stronger compared to most other cities in Europe. Istanbul and Moscow are still underserved by high-quality product in many sectors and have better growth potential than all other cities.

London is correcting rapidly and will offer opportunistic plays later in the year. Zurich is a relatively stable market and prospects there have not fallen as much as those in other markets, raising its relative rank. Development prospect ratings place Istanbul in first place, followed by Zurich, Munich, and Moscow. Moscow is rated as the riskiest city, followed closely by Dublin and Madrid.

For individual property types, most of them are viewed as offering “fair” prospects. Retail is the leading major property sector, followed by hotels, mixed use, rental apartments, office, industrial/distribution, and residential for sale, in that order.

The range amongst the top six of these is very narrow and none really stands out. Looking at subsectors, central city office clearly is preferred over suburban office. The concern about quality is reflected in the preference for deep liquid markets and city centre locations.

For more details you may download the full report from:

“Business Management” month-end statistics: “Managing IT costs during crisis,” most popular article as ranked by weblog counters

The “Business Management” weblog has been alive for a month so I looked over month-end statistics: 2,165 visitors belonging to the business community, mainly LinkedIn and Xing members. During the month I published 21 articles on 11 categories and the most popular ones, as ranked by readers’ views are:

1. Managing IT costs during crisis: four suggestions on how to generate revenue growth that exceed traditional cost-cutting – 260 views
2. Five trends that will shape business technology in 2009 and five tips for a successful CIO during crisis – 222 views
3. A glimpse of recent economic history: the wake of the global financial crisis – 167 views
4. Values are proven during crisis – 158 views
5. Global opportunities of crisis – 143 views

Among the most read articles, I should also mention:
IBM to acquire Sun for $6.5bn in cash; the two companies account for two-thirds of the global market of high-end servers – 136 views
Social Private Partnerships: innovation in public service delivery – 113 views
McKinsey: only 45% of companies say they will decrease their marketing spending in the next 12 months – 102 views

Articles published on “Business Management” have been quoted by,, as well as by other websites and weblogs.

A glimpse of recent economic history: the wake of the global financial crisis

PwC decided to analyse the responses received each week during their 2009 CEO Survey to establish just how CEOs reacted to different economic events. Their findings reveal a steadily increasing gloom. In early September, most CEOs were still relatively sanguine; only 29% were extremely concerned about the prospect of a downturn in the world’s major economies. But with the collapse of Lehman Brothers and the sale of Merrill Lynch to Bank of America on September 15, the level of anxiety soared.

Between 46% and 49% of the CEOs that PwC interviewed during the first three weeks of October were deeply worried about the prospect of a global recession – a fear that persisted even when the G7 nations announced a five-point plan to unfreeze the credit markets on October 11. In late October, news that China’s economic growth had fallen below 10% proved conclusively (if any doubts still remained) that the emerging markets were suffering, too.

Barack Obama’s election as president of the US, on November 4, briefly improved sentiment; the percentage of CEOs extremely concerned about the state of the global economy fell to 37% that week. But the respite was very short-lived. On November 6, the British Chambers of Commerce announced that the UK was in recession. By the end of the month, the euro zone economies, Japan and the US were also formally in recession, leaving between 36% and 44% of CEOs seriously worried about how to weather the storm.

Anxiety about some of the other issues that have recently featured prominently in boardroom discussions dwindled. Between 21% and 29% of the CEOs PwC interviewed in September were extremely concerned about energy prices, for example. Between 17% and 21% were also extremely concerned about the scarcity of natural resources. In late November, by contrast, the percentage of CEOs worried about energy prices and natural resources had dropped to single digits, although lower commodity prices probably helped to allay their concerns. Between early September and the end of November, petroleum spot prices more than halved. The global iron ore spot price also fell from approximately US$150 to US$70 a tonne.

The battle for brains slid equally rapidly down the corporate agenda. Forty-two percent of the CEOs PwC surveyed in early September were seriously concerned about the availability of key skills but, by late November, the figure had shrunk to just 11%. Rising unemployment may have played a part in changing the priorities of some CEOs. In the three months to the end of November, the percentage of unemployed civilians in the US population rose from 6.2% to 6.8%.

The level of unemployment is increasing elsewhere, too. The number of people out of work in the UK has soared to more than a million for the first time in seven years, while the number of jobless in China is thought to be well above the official figure of 8.3 million, following the closure of an estimated 670,000 small firms in the wake of the global financial crisis.

For more details on the Global CEO Survey:

Financial Times: More than 1 million British workers will lose their jobs over the next 2 years

Brian Groom and Nicholas Timmins published an interesting article in today’s Financial Times. According to them, more than a million British workers will lose their jobs over the next two years as unemployment figures are expected to show a widespread rise in UK joblessness, taking the national total above 2 million.

Here are some other trends mentioned in the article:

  • Industrial production is falling faster than at any time since 1981, while financial services have so far escaped lightly.
  • Unemployment has risen fastest in the West Midlands, north of England and Wales. London gained 33,000 jobs in last year’s final quarter.
  • The pattern of job losses has forced Oxford Economics to tear up forecasts it made only a few months ago. It now foresees 1.3 million job losses from 2008 to 2010. While London and the south-east are expected to regain pre-recession employment levels within five years, it warns that the West Midlands, north-east and Wales may not have recovered within a decade.

As John Philpott, Chief Economist at the CIPD, commented on February reports, “the final quarter redundancies figure of 259,000 is fairly horrendous and suggests that the CIPD forecast of 300,000 redundancies in the first quarter of 2009 will, if anything, turn out to be an underestimate. The normal lag between redundancies being made and people joining the unemployment count also indicates that, whatever comfort might be taken from today’s jobless figures, unemployment remains on course to rise above 3 million before the economy recovers.”

Global opportunities of crisis

“Crisis is a blessing for countries and people for it magnetizes progress. Crisis is a trigger for great inventions and strategies. Whoever overcomes crisis, overcomes himself.”
Albert Einstein, The Saturday Evening Post, 26 October 1929

Anyone who went through a crisis sometime in his/her life, regardless of its nature, can emphasise Einstein’s words above. Even Plato, in “The Republic,” made this now familiar statement: “Necessity is the mother of invention.” So, let’s take a look at what necessities resulting from this financial crisis might concretize into global opportunities:

  • Humanity is moving towards greater humility, recognising their inter-dependence within the global community;
  • Small to medium size businesses have an opportunity in their ability to reinvent processes in all kinds of economic conditions;
  • For some particular businesses, asset acquisition becomes affordable and tending towards value-for-money over time;
  • The use of advanced technologies may reduce costs and the innovators of these technologies will benefit from the present global crisis in the years ahead;
  • The American, European and Russian crises may be an opportunity to Japan, China and India to improve their global significance. China and India may also remain preferred destinations for capital at the expense of other emerging nations;
  • The ongoing financial crisis may show that the US and US dollar are going to remain significant but they are not going to be the only preferred destination and currency. There is a great opportunity for the Japanese Yen, among others.

Of course, this is just a glimpse on a global perspective of opportunities; the list is endless if we tend to be exhaustive. In future articles, we’ll also take a look at some opportunities closer to particular businesses.

PwC’s 2009 Global CEO Survey

CEOs around the world are retrenching, indeed many claim to be entering “survival mode.” PwC’s 12th Annual Global CEO survey shows how the financial crisis shattered short-term confidence.

The percentage of CEOs who were ‘very confident’ about their one-year revenue growth prospects dropped to 21%, the lowest level in six years. Uncertainty about the future is still running high and confidence no doubt continued to deteriorate after PwC completed the survey in early December.

You may compare yourself to the CEOs in this issue or download the most relevant nuggets of Survey data by industry, country or business issue from:


As you came to the “Business Management” weblog, I would like to wish you a warm welcome and a worthful spend of your time.

This web space is a result of my business management experience and I intend to comprise opinions on various business issues as well as some abstracts of my published work.

May you enjoy the lecture and please let me know of your thoughts, if you feel like sharing them to me and / or this weblog’s readers.

Thank you,
Liviu Mihaileanu