PROCEEDINGS OVER 1978 -79
SEMINAR PAPERS: BUSINESS ENVIRONMENT 1980s
Ecological Pressures: The Prospects for Business
Socio-Political Organisation
Market Saturation: its inevitability
This monograph contains a brief summary of the proceedings of the Study Group during its last "session" from April 1978 to May 1979. The session was rounded off by a day's seminar and evening debate held on 4 October 1979 which was open to all members of the Society.
At this seminar papers were presented by Study Group members, highlighting the more important conclusions. In one area where there was a difference of opinion, the topic was staged as an evening debate.
The papers presented to the seminar are reproduced in this monograph, together will a brief resume of the discussion.
This monograph does not intend to provide a comprehensive review of the business environment of the future, being confined to those areas which the Group studied. However, taking together with the first monograph, it does provide views of an informed body of corporate planners and forecasters in the UK over quite a wide spectrum of business futures
In April 1978 the Study Group set up a programme to consider four areas
The conclusion from this was that world economic growth rates will slow down appreciably over the next 20 years.
The Study Group concluded that if materials had satisfactorily been made available during the higher growth rates in the past, there should be no problems over the availability of materials during the lower growth rates of the future. Where there are supply problems, their origin will not be in their availability but in politics. Some mechanisms occurring in both of these areas - availability and politics - were presented to the seminar by Dr R H G Whaley.
The concept was seen that the advanced societies were effectively running out of space - and not just physical space.
Thus the freedoms of one person would increasingly encroach on the freedoms of another. This was the basic problem behind ecological pressures
Lower economic growth seen in the future was not seen as reducing concern in this area. More complex technology and sophisticated cost benefit analysis enabled more ecological problems to be measured and monitored, and therefore more issues would be raised. Absence of knowledge of the effects of many processes or technology is likely to cause opposition even when it was unjustified.
Widening of professional protest skills will further increase the ecology movement. The effect on business is reviewed in the paper presented by John Elkington.
Economic growth and market growth were not necessarily the same thing. Undoubtedly certain markets grow and reach a plateau - but one group thought this was just the product cycle concept - and was just an ordinary marketing problem.
Another group thought the future period would produce a different pattern from the past - with many markets showing a saturation feature.
It was difficult to obtain a definition of saturation. Because of the difference of opinion a debate was staged on the evening of the seminar. The position of the two sides is set out in more detail in the papers.
Some of these considered were
Dr R H G Whaley
Director, Planning & Control Investments Limited
The Environmental Assessment Study Group carried out a Delphi-type exercise to consider what international growth rates may be over the next 20 years. This was undertaken by:
Eight people took part, although not everyone attempted all the areas of the world.
The results for the last twenty years were used to validate the procedure, by comparing the Growth Scores with known growth rates. However, the study group concluded that outside the OECD countries there were no reliable statistics (largely because accurate allowance for inflation is generally not made). While in the future even major OECD figures will be increasingly suspect (due to the underground economy).
The graph in Table 5 shows the results for the advanced countries. Changes in growth rates for other areas of the world are deduced from changes in the Growth Scores. (Table 6)
Desire for growth - largely cultural. Probably similar throughout the Western world, low in simple food gathering tribes.
Knowledge and Creativity - the depth to which knowledge and technologies known to man exist within a society and the capacity (both institutional and individual) to create new ones. Societies without the full range must buy the knowledge off others - and learn not to abscond without paying (eg: UDC who confiscate foreign subsidiaries) if they wish to go on growing.
Risk Resources - growth requires new things developed, which in turn is a trial and error process needing risk resources and people prepared to take risks; the numbers of rich people with risk resources and institutions prepared to back risk ventures - and their coupling with people with ideas.
Variety - the trial and error process will produce more new developments the more people who take part in it. Conversely if economic power is concentrated in a few hands (in the extreme in the single hand of the State) less new developments can be expected. (There is also a theory that large organisations will continue longer with misconceived things than will small ones.)
Stability - commerce will only flourish in stable, safe, condition. Violence weakens trade and may make it impossible. Violent swings in economic activity weakens the feedback coupling between demand and supply, reducing investment and growth - such swings accompany high money supply growth and inflation.
Freedom versus oppression, extortion, theft - For much of man's history he has lived under conditions of military feudalism, where a small group has enslaved the bulk of the people and secured a high standard of living by effectively stealing their output. Clearly economic growth can only occur under conditions of freedom, the right to bargain - history suggests mass markets cannot develop without Trade Unions. The more the governing group sequestrates economic output for its own use, the more will be the waste, the lower will be the growth.
Management - the ability to organise rationally, analyse issues, to make investments which produce more than they consume. Clearly this is a variable quantity amongst individuals and peoples. The absence of a Byzantine culture - where status and maintenance of the status-quo are more important than rationality. The ability to be commercial minded, to recognise whether or not one is competitive or has bargaining power, to insure that one gets paid (otherwise others will benefit from your efforts, but you will not).
Bargaining Power - all members of the community are free to bargain. The extent to which the community is self-sufficient or produces things which outsiders wish to buy. A community running an extended trade deficit cannot grow significantly - it eventually loses credit worthiness
(May need Medium Text setting)
International Growth Rates
and
International Resource Implications
Dr R H G Whaley
John Elkington
Christopher RaggDEBATE: SATURATION OF MARKETS
The Case Against Saturation
Derek E Done
W Owen Nutt
DISCUSSION IN SEMINAR & DEBATE
INTRODUCTION
PROCEEDINGS OVER 1978 -79
International Resource Implications
The Group considered that pressure on natural resources would largely be a function of international economic growth rates. To this end it gave consideration to what were the fundamental factors which affected economic growth. It carried out a Delphi-type exercise to determine how these may apply in the future.
Ecological Pressures
Saturation of Markets
The Study Group did not reach a conclusion in this area, but was divided into two camps.
Social Organisation
This turned out to be a complex area. Much of it concerned the involvement of people with each other - and the basic paradox of our culture requiring self-reliance, yet there is an increasing interdependence with economic development.
SEMINAR PAPERS: BUSINESS ENVIRONMENT 1980s
Table 1
Table 2
1. EXAMPLE | LAST | 20 | YEARS | - | - | ¦ ¦ | NEXT | 20 | YEARS | - | - |
Estimates entered where ? C = Calculation entered. | Importance in Producing Economic Growth | Score for this part of the World | - | - | ¦ ¦ | Importance in Producing Economic Growth | Score for this part of the World | - | - | ||
Desire or aspiration for Growth | ? | x | ? | = | C | ¦ ¦ | ? | x | ? | = | C |
Knowledge & Creativity | ? | x | ? | = | C | ¦ ¦ | ? | x | ? | = | C | Risk Resources | ? | x | ? | = | C | ¦ ¦ | ? | x | ? | = | C | Variety | ? | x | ? | = | C | ¦ ¦ | ? | x | ? | = | C | Stability | ? | x | ? | = | C | ¦ ¦ | ? | x | ? | = | C | Freedoms v. Oppression | ? | x | ? | = | C | ¦ ¦ | ? | x | ? | = | C | Management | ? | x | ? | = | C | ¦ ¦ | ? | x | ? | = | C | Bargaining Power | ? | x | ? | = | C | ¦ ¦ | ? | x | ? | = | C | Other factors (specify) Social & Political Cohesiveness | ? | x | ? | = | C | ¦ ¦ | ? | x | ? | = | C | ADD UP THE FIRST AND LAST COLUMNS: | C | - | - | + | C | ¦ ¦ | C | - | - | + | C | THEN DIVIDE FIRST FIGURE INTO THE SECOND GIVING GROWTH SCORE: | - | - | - | + | C | ¦ ¦ | - | - | - | + | C |
Rate your competence to judge: ?
A Participant | LAST | 20 | YEARS | - | - | ¦ ¦ | NEXT | 20 | YEARS | - | - |
1. NORTH AMERICA | Importance in Producing Economic Growth | Score for this part of the World | - | - | ¦ ¦ | Importance in Producing Economic Growth | Score for this part of the World | - | - | ||
Desire or aspiration for Growth | 10 | x | 9 | = | 90 | ¦ ¦ | 10 | x | 7 | = | 70 |
Knowledge & Creativity | 10 | x | 10 | = | 100 | ¦ ¦ | 10 | x | 10 | = | 100 | Risk Resources | 7 | x | 9 | = | 63 | ¦ ¦ | 7 | x | 7 | = | 49 | Variety | 5 | x | 10 | = | 50 | ¦ ¦ | 5 | x | 9 | = | 45 | Stability | 6 | x | 8 | = | 48 | ¦ ¦ | 6 | x | 7 | = | 42 | Freedoms v. Oppression | 6 | x | 8 | = | 48 | ¦ ¦ | 6 | x | 7 | = | 42 | Management | 6 | x | 6 | = | 36 | ¦ ¦ | 6 | x | 7 | = | 42 | Bargaining Power | 4 | x | 8 | = | 32 | ¦ ¦ | 4 | x | 7 | = | 28 | Other factors (specify) Social & Political Cohesiveness | 8 | x | 8 | = | 64 | ¦ ¦ | 8 | x | 7 | = | 56 | ADD UP THE FIRST AND LAST COLUMNS: | 62 | - | - | + | 531 | ¦ ¦ | 62 | - | - | + | 474 | THEN DIVIDE FIRST FIGURE INTO THE SECOND GIVING GROWTH SCORE: | - | - | - | + | 8.6 | ¦ ¦ | - | - | - | + | 7.6 |
Rate your competence to judge: 8
A Participant | LAST | 20 | YEARS | - | - | ¦ ¦ | NEXT | 20 | YEARS | - | - |
2. UK | Importance in Producing Economic Growth | Score for this part of the World | - | - | ¦ ¦ | Importance in Producing Economic Growth | Score for this part of the World | - | - | ||
Desire or aspiration for Growth | 10 | x | 8 | = | 80 | ¦ ¦ | 10 | x | 6 | = | 60 |
Knowledge & Creativity | 10 | x | 8 | = | 80 | ¦ ¦ | 10 | x | 7 | = | 70 | Risk Resources | 7 | x | 6 | = | 42 | ¦ ¦ | 7 | x | 4 | = | 28 | Variety | 5 | x | 8 | = | 40 | ¦ ¦ | 5 | x | 6 | = | 30 | Stability | 6 | x | 7 | = | 42 | ¦ ¦ | 6 | x | 5 | = | 30 | Freedoms v. Oppression | 6 | x | 9 | = | 54 | ¦ ¦ | 6 | x | 6 | = | 36 | Management | 6 | x | 8 | = | 48 | ¦ ¦ | 6 | x | 6 | = | 36 | Bargaining Power | 4 | x | 8 | = | 32 | ¦ ¦ | 4 | x | 8 | = | 32 | Other factors (specify) | 8 | x | 8 | = | 64 | ¦ ¦ | 8 | x | 7 | = | 56 | ADD UP THE FIRST AND LAST COLUMNS: | 62 | - | - | + | 482 | ¦ ¦ | 62 | - | - | + | 378 | THEN DIVIDE FIRST FIGURE INTO THE SECOND GIVING GROWTH SCORE: | - | - | - | + | 7.8 | ¦ ¦ | - | - | - | + | 6.1 |
Rate your competence to judge: 10
A Participant | LAST | 20 | YEARS | - | - | ¦ ¦ | NEXT | 20 | YEARS | - | - |
3. W. EUROPE | Importance in Producing Economic Growth | Score for this part of the World | - | - | ¦ ¦ | Importance in Producing Economic Growth | Score for this part of the World | - | - | ||
Desire or aspiration for Growth | 10 | x | 10 | = | 100 | ¦ ¦ | 10 | x | 7 | = | 70 |
Knowledge & Creativity | 10 | x | 9 | = | 90 | ¦ ¦ | 10 | x | 9 | = | 90 | Risk Resources | 7 | x | 7 | = | 49 | ¦ ¦ | 7 | x | 6 | = | 42 | Variety | 5 | x | 7 | = | 35 | ¦ ¦ | 5 | x | 7 | = | 35 | Stability | 6 | x | 9 | = | 54 | ¦ ¦ | 6 | x | 7 | = | 42 | Freedoms v. Oppression | 6 | x | 10 | = | 60 | ¦ ¦ | 6 | x | 8 | = | 48 | Management | 6 | x | 9 | = | 54 | ¦ ¦ | 6 | x | 8 | = | 48 | Bargaining Power | 4 | x | 9 | = | 36 | ¦ ¦ | 4 | x | 9 | = | 36 | Other factors (specify) | 8 | x | 8 | = | 64 | ¦ ¦ | 8 | x | 6 | = | 48 | ADD UP THE FIRST AND LAST COLUMNS: | 62 | - | - | + | 542 | ¦ ¦ | 62 | - | - | + | 459 | THEN DIVIDE FIRST FIGURE INTO THE SECOND GIVING GROWTH SCORE: | - | - | - | + | 8.7 | ¦ ¦ | - | - | - | + | 7.4 |
Rate your competence to judge: 9
A Participant | LAST | 20 | YEARS | - | - | ¦ ¦ | NEXT | 20 | YEARS | - | - |
4. JAPAN | Importance in Producing Economic Growth | Score for this part of the World | - | - | ¦ ¦ | Importance in Producing Economic Growth | Score for this part of the World | - | - | ||
Desire or aspiration for Growth | 10 | x | 10 | = | 100 | ¦ ¦ | 10 | x | 7 | = | 70 |
Knowledge & Creativity | 10 | x | 7 | = | 70 | ¦ ¦ | 10 | x | 9 | = | 90 | Risk Resources | 7 | x | 7 | = | 49 | ¦ ¦ | 7 | x | 7 | = | 49 | Variety | 5 | x | 7 | = | 35 | ¦ ¦ | 5 | x | 7 | = | 35 | Stability | 6 | x | 9 | = | 54 | ¦ ¦ | 6 | x | 7 | = | 42 | Freedoms v. Oppression | 6 | x | 9 | = | 54 | ¦ ¦ | 6 | x | 7 | = | 42 | Management | 6 | x | 10 | = | 60 | ¦ ¦ | 6 | x | 9 | = | 54 | Bargaining Power | 4 | x | 6 | = | 24 | ¦ ¦ | 4 | x | 8 | = | 32 | Other factors (specify) | 8 | x | 10 | = | 80 | ¦ ¦ | 8 | x | 7 | = | 56 | ADD UP THE FIRST AND LAST COLUMNS: | 62 | - | - | + | 526 | ¦ ¦ | 62 | - | - | + | 470 | THEN DIVIDE FIRST FIGURE INTO THE SECOND GIVING GROWTH SCORE: | - | - | - | + | 8.5 | ¦ ¦ | - | - | - | + | 7.6 |
Rate your competence to judge: 6
Table 3
Matrix combining Participants' Scores
NORTH AMERICA | Participant's Competence | ¦ | Participant's Growth Score Last 20 years | ¦ | ¦ | ¦ ¦ | Participant's Competence | ¦ | Participant's Growth Score Next 20 years | - | - |
Participant 1 | 10 | x | 8.2 | = | 82.0 | ¦ ¦ | 10 | x | 6.6 | = | 66.0 |
Participant 2 | 8 | x | 8.6 | = | 68.8 | ¦ ¦ | 8 | x | 7.6 | = | 60.8 |
Participant 3 | 9 | x | 8.3 | = | 74.4 | ¦ ¦ | 9 | x | 6.6 | = | 59.4 |
Participant 4 | 4 | x | 8.7 | = | 34.8 | ¦ ¦ | 4 | x | 8.2 | = | 32.8 |
Participant 5 | 5 | x | 8.6 | = | 43.0 | ¦ ¦ | 5 | x | 7.7 | = | 38.5 |
Participant 6 | 10 | x | 9.3 | = | 93.0 | ¦ ¦ | 10 | x | 5.1 | = | 51.0 |
Participant 7 | 3 | x | 9.4 | = | 28.2 | ¦ ¦ | 3 | x | 8.5 | = | 25.5 |
Participant 8 | 8 | x | 8.7 | = | 69.6 | ¦ ¦ | 8 | x | 8.1 | = | 64.8 |
Add up 1st, 3rd, & 5th columns | 57 | - | - | + | 494.1 | ¦ ¦ | - | - | - | + | 428.8 |
Then divide 1st into 3rd & 6th Giving growth scores: | - | - | - | + | 8.67 | ¦ ¦ | - | - | - | + | 7.52 |
1. N. America | 2. UK | 3. W. Europe | 4. Japan | 5. Australia | 6. S. Africa | 7. Soviet Satellites | 8. USSR |
9. Mediterranean | 10. N. Africa | 11. Mid-East | 12. China | 13. India | 14. S America | 15. Indo-China | 16. Africa |
A possible form of relationship between our Growth scores and GDP Growth
AVERAGE GROWTH P.A.
OF GDP
%
Figures in brackets are the Growth Scores resulting from the Delphi | LAST 20 YEARS (1978) | Increase or decrease -> in growth | NEXT 20 YEARS |
______________________ | __________________ | ________________ | ________________ |
LOW GROWTH | Africa (4) | small increase | Africa (4.3) |
less 2% pa | N. Africa (4.5) | small increase | N. Africa (4.9) |
Growth Score | China (4.8) | increase | China (5.6) |
less 6.5 | India (5.2) | increase | India (5.8) |
" | Soviet Satellites (5.5) | same | Soviet Satellites (5.6) |
" | S. America (5.8) | increase | S. America (6.6) |
" | Indo-China (5.9) | small decrease | Indo-China (5.7) |
" | Middle East (5.9) | small decrease | Middle East (5.8) |
" | USSR (5.92) | same | USSR (5.96) |
" | Mediterranean Countries (6.06) | same | Mediterranean Countries (6.1) |
MEDIUM GROWTH | UK (7) | decrease | UK (6.7) |
2% - 5% pa | S. Africa (7.4) | large decrease | S. Africa (6.3) |
Growth Score 6..5 - 8.75 | Australia (7.8) | decrease | Australia (7.3) |
" | W Europe (8.1) | large decrease | W. Europe (7.3) |
" | N. America (8.5) | large decrease | N. America (7.5) |
HIGH GROWTH | Japan (8.7) | large decrease | Japan (7.9) |
All the developed world is forecast to show sizeable reduction in economic growth rates - but they will probably still be growing faster than the rest of the world. While some areas show small to moderate increases in growth, these are not sufficient to catch up with the West. Some areas also show decreased growth rates.
The Communist block is seen as proceeding at about the same growth rates. South America may increase theirs along with China and India.
In terms of the enclosed Table 6 defining Low, Medium, and High growth rates, there are not many changing in the rankings. Japan drops out of the High Growth into the Medium Growth category, but still remains the fastest growing area of the world.
South Africa drops out of the Medium Growth category, while South America is the only area to join this category.