GLOBAL ECONOMIC ENVIRONMENT

Themes & Implications for IndiaDr. Hema A. Krishnan

Professor of Strategy & Global BusinessXavier UniversityCincinnati, U.S.A.

GRG School of Management StudiesCoimbatore, July 2016

THE COMPONENTS OF A COMPANY’S MACRO-ENVIRONMENT

Source: Thompson, Strickland, Peteraf, Gamble

GLOBAL ECONOMIC THEMES FOR 2016 AND BEYOND; THE OPPORTUNITIES

GLOBAL ECONOMIC THEMES FOR 2016 AND BEYOND: CHALLENGES Increased Inequalities in the world Political instability Availability of capital not uniform Use and misuse of big data Increased Ethnocentrism/ nationalism; EU,

U.S.A, Asia, Middle-East Crash of oil and other commodities prices Rise in terrorist activities Health, Education and Environmental

Issues

WORLD DEMOGRAPHICS IMPACT ON ECONOMIC TRENDS

If the world were 100 people . . .

IF THE WORLD WERE 100 PEOPLE . . .

GENDER

49 Female / 51 Male

Slide Source: Dr. Mee-Shew Cheung’s presentation

WHAT ARE THE ECONOMIC AND SOCIETAL IMPLICATIONS? SOCIETAL: ↓; ECONOMIC ↓

GENDER

49 Female..falling / 51 Male…..rising

REGIONS 60 Asians 14 Africans 12 Europeans 8 Latin Americans 6 US/Canadians

IF THE WORLD WERE 100 PEOPLE . . .

Slide Source: Dr. Mee-Shew Cheung’s presentation

REGIONS 60 Asians 14 Africans 12 Europeans 8 Latin Americans 6 US/Canadians

ECONOMIC IMPLICATIONS. . .WHERE IS THE CENTER OF GRAVITY? INDIA, CHINA

Language

17 Chinese 8 Hindi 8 English 7 Spanish 4 Arabic 4 Russian 52 Others

IF THE WORLD WERE 100 PEOPLE . . .

Slide Source: Dr. Mee-Shew Cheung’s presentation

Economic implications of Language for online companies

17 Chinese 8 Hindi 8 English 7 Spanish 4 Arabic 4 Russian 52 Others

IF THE WORLD WERE 100 PEOPLE . . .

31 Christian 21 Muslim 14 Hindu 6 Buddhist 12 Other Religions 16 Not Aligned

IF THE WORLD WERE 100 PEOPLE . . .

Slide Source: Dr. Mee-Shew Cheung’s presentation

Economic Implications of Religion

Restaurant Industry Consumer Products Health & Education Textiles and Apparel Media Leisure & Entertainment

IF THE WORLD WERE 100 PEOPLE . . .

→ECONOMIC SHIFT TO BRICS

BRAZIL AND RUSSIA ISSUESThe Economist refers to these nations as “submerging economies.” Russia, more than Brazil!

Slow GrowthFalling currenciesHigh Inflation Huge DebtFalling global demand for – minerals, oil pricesSanctions against Russia for annexing Crimea

Demographic Advantage translates to economic advantage

+China’s economic reforms since the late

1970s and India’s since the early 1990s,

+Dramatic rise in entrepreneurial activitieshave shaken the global economic order

INDIA AND CHINA HAVE A STRATEGIC ADVANTAGE

Competitive Environment India and China:

• As consumers• As suppliers• As competitors• As collaborators

Between themselves and for the rest of the world

GLOBAL ECONOMIC THEMES FOR INDIA BEYOND 2016-THE CHALLENGES ( ↓ )

Increased Inequalities in the world; ↓ Increased political instability in world; ↓ Increased Ethnocentrism/ nationalism; ↓ Rise in terrorist activities; ↓ Health, Education and Environmental

Issues; ↓

GLOBAL ECONOMIC THEMES FOR INDIA BEYOND 2016-THE OPPORTUNITIES (↑)

Huge population at the Base of the Pyramid (BOP); ↑

Rise of the Millennial generation; ↑ Rise of online companies and services; ↑ Use and misuse of big data; ↔ BREXIT and EU: its impact on India; ↑ Crash of oil, other commodities prices; ↑

GLOBAL ECONOMIC THEMES FOR INDIA BEYOND 2016-THE OPPORTUNITIES (↑)

Africa; emerging force; ↑ Product innovation, differentiation-

combine eastern & western practices; ↑ Pace of technological change; ↑ Telecommunications revolution

CLASS EXERCISE

Team 1: Describe how India can nurture and channelize its BOP (Base of Pyramid) to influence the global economy.

Team 2: Describe how India can take advantage of falling oil and commodity prices to improve its economy.

Team 3: Describe what India should do to improve its presence in the African continent and what it can offer that China cannot, to improve Africa’s economy.

Team 4: Describe how India’s online economy can influence the global economy.

WHY INDIA’S MBAS WILL INFLUENCE GLOBAL ECONOMY

Skill-set advantages: Education, Multi linguistic, Entrepreneurship, Work ethic, Jugaad

+Political & Legal Environment: Democratic institutions, Rule of Law..role model to developing world

+Demography advantages: Rising Middle-class, Rising Millennials, BOP….Knowledge transfer to other nations, notably, in Africa and Middle-East

+Socio-cultural changes: adaptive culture

HOW SHOULD MBAS CAPITALIZE ON OPPORTUNITIES

Build sound foundation skills Act with honesty and integrity Build Strategic Leadership skills Cultivate big-picture thinking skills Build sound written and oral communication

skills Build long-term, mutually beneficial

relationships with other nations Focus on life long learning Build stress management coping mechanisms

Images embedded in this presentation were obtained from Google.

MBA second-year students from GRG School of Management studies actively participated during this session.

Administrators and faculty of GRG School of Management studies, Coimbatore, India, made this session possible.

ACKNOWLEDGEMENTS