3- global trends

8/10/2019 3- Global Trends

http://slidepdf.com/reader/full/3-global-trends 1/42

Long-Term Global Trends – TM 298 - SDTalisayon

Some Global Trends

Technology Management 298

2nd Semester, 2011-2012

Dr. Serafin D. TalisayonProfessor, Technology Management Center

University of the Philippines




• Energy

• Mineral resources

• Land

• Labor

• Information

• Food

Physical Inputs to the Global

Economy:




Energy: tight supply

Oil depleted by 2030s, natural gas by mid-21st century

Oil getting expensive: petrochemical use onlyFossil fuels exacerbate global warming

Nuclear energy: dirty and risky to human life

Most solar-based sources still costly




Mineral resources: bleak for some

SLI of several extends only to 2100s

Food: bleak Arable land area being exhausted

Phosphate rock reserves limited

Energy subsidy needed for intensive farming

ZPG only by last quarter of 21st

centuryMore food from sea farming




Labor and information: no scarcity

Information/telecommunication/media revolutions

Population explosion

Importance of human/intellectual capital




• Energy

• Mineral resources

• Land

• Labor

• Information

• Food

Physical Inputs to the GlobalEconomy:




0

10

20

30

40

50

60

70

Low Mid High

Agri

Industry

Services

The global economy has

become a service

economy…

Source: World Development Report 2000/2001

http://www.worldbank.org/poverty/wdrpoverty/report/tab12.pdf

…which is more knowledge

intensive.




Since 1985:

Value of international trade: grew 2x faster than world outputof goods & services

International trade in services: grew faster thantrade in goods

and… Markets for derivative financial instruments (futures,options, securities): grew faster than market forstocks & bonds

“Information about money has become more valuablethan money itself”

-- Walter Wriston (ex-chairman, Citicorp)




Increasing Knowledge Content

of Goods

~ 80% of the cost of a Levi Strauss

jeans is knowledge.

>50% of the cost of petroleumis knowledge




Increasing Knowledge Content

of Goods

~25% of the cost of the typical

aluminum beer can is knowledge

Freely downloaded Mozilla Firefox is

100% bits (pure knowledge) and 0%

atoms




Buying Vitamin or Knowledge?

Generic Vitamin C P1 per 500-mg tablet

Poten-Cee

(Pascual Laboratories)

P2.70 per 500-mg tablet

Cecon

(Abbott Laboratories)

P4.50 per 500-mg tablet




“Weightless economy” 1

– Danny T. Quah, London School of Economics

Production is“dematerializing” 2

– Thomas Stewart, Fortune Magazine

1. http://www.unesco.org/courier/1998_12/uk/dossier/txt11.htm2. Thomas Stewart: Intellectual Capital. Currency, 1997.




In 1995, market-to-book ratio of 500 firms in

Standard & Poor index was 3.83

In 1997, market-to-book ratio of companies in theDow Jones index was 5.3

For information and knowledge-based companies,

market-to-book ratios often exceed 10; for example,

Google in November 2006 has a market value of $156 billion and tangible assets of only $10 billion (or

market-to-book ratio of 15.3)*

Market Value > Book Value

* http://www.valuecruncher.com/wordpress/wp-content/uploads/2006/11/valuecruncher-valuation-report-google-221106.pdf




Intangible assets >> tangible assets

NYU-Brookings Institute Intangibles Research Project

Findings (among non-financial publicly-traded firms):

In 1978, tangibles: intangibles ratio = 80:20In 1988, tangibles: intangibles ratio = 45:55

In 1998, tangibles: intangibles ratio = 30:70

Source: Patrick H. Sullivan ―Value-Driven Intellectual Capital‖, 2000




Historical trend of value of intangibles




Intangible assets > tangible assets

In 2000 in the Philippines, some market-to-book ratios were:

ABS-CBN 3.9

Globe Telecom 3.8

BPI 3.0

PLDT 2.5

Ayala Corp 2.4Jollibee Foods 1.8

San Miguel Corp 1.6




Knowledge assets ~ Intangible assets

Internet

Company

Market-to-Book

Ratio

Knowledge

Capital-to-Book

Ratio

America Online 194.4 76.0

USWeb 8.7 25.3

Yahoo 88.1 7.3

Lycos 28.2 21.2

RealNetworks 91.1 19.3Broadvision 41.4 18.8

CFO.com’s 2nd Annual Knowledge Capital Scoreboardhttp://charts.cfo.com/cfomag/charts/knowledgecap00-2.html




Price-to-Book Valueof Some Philippine Companies (March-April 2007)

Philweb Corp 23.0 Robinsons Land Corp 3.3

Pacific Online Systems 9.1 EEI Corp 3.2

PLDT 6.0 Megaworld Corp 2.1

Benpres Holdings Corp 5.1 China Banking Corp 2.0

Jollibee Foods Corp 5.1 Union Bank of the Phil 1.9

Ayala Land Inc 4.9 BPI 1.8

Philex Mining Corp 3.8 San Miguel Corp 1.7

Globe Telecom 3.5 RCBC 1.6




Knowledge assets > Tangible assets

―Increasingly, intangible knowledge assets are

dwarfing the value of tangible book assets at many

companies.‖

— S. L. Mintz, CFO MagazineFebruary 1, 2000

http://www.cfo.com/article/1,5309,1086,00.html





―For Internet companies, there is

hardly any relationship at all between

book value and market value.

Accounting may perhaps be the

world’s second oldest profession, but

its survival may well be at stake, if this

trend continues.‖

— Claes Fornell, Donald CookProfessor of Business,

University of Michigan





―Traditional financial controls are of limited use in

managing, understanding and assessing a knowledge-

based company.‖

— 1997 Annual Report WM Data

(biggest Swedish software and consulting firm)





―…coming out of the change in our economy

from one that is industrial-based to one that is

knowledge-based, where intellectual

property, soft assets, and other intangiblesincreasingly make up the bulk of the asset

base for wealth production in our society…

we must learn to better measure and account

for these assets, and reflect that in thefinancial reports of corporations.‖

— Commissioner Steven Wallman

US Securities and Exchange Commission




Implications

Knowledge assets in people, processes and patrons had

become more important than physical assets (buildings and

equipment)

Traditional accounting is unable to see ~80% of corporate

assets

Knowledge management is necessary for recognizing,

tracking and managing intangible assets




Intangible Assets >> Tangible

Assets―The accountingsystem doesn’tcapture anything,really.‖

—Judy Lewent

Chief Financial Officer,Merck




Media and Telecommunications

Shifts --

from print to electronic medium

from local to regional/global reach

from unimedia to multimedia

from few closed, centralized sources to many open,

distributed information sources from one-way to two-way

from separate to mixed services/industries




According to John Naisbitt in “Global Paradox ” the

combination of several global trends:

removal/reduction of trade barriers all over the world

telecommunications revolution

deregulation & globalization financial markets cosmopolitan & differentiation of consumer demands,

tastes & lifestyles

pressure to innovate & increase speed-to-market

lower cost of entry for businesses

Will result in…




…Will result in:

less advantage of huge MNCs over SMEs

opportunities for SMEs due to their flexibility, fasterresponse to consumer demands, and ability to match thegrowth, multiplicity & differentiation of small niches

growth of strategic alliances among SMEs

complex communication and production networksspreading rapidly across the globe

Thus, the bigger and more complex the globalmarket, the smaller and stronger are its componententerprises: the “global paradox”




Technologies Uses Modalities

computer entertainment digital

software education wireless

telephone communication interactive

television networking global

fiber optics virtual reality cellular

laser multimedia

―Over the next years & decades… (above)…will be put together in thousands ofcombinations by thousands of alliances &

entrepreneurs. The interplay will createproducts & services we can’t even imaginetoday‖

-- John Naisbitt: Global Paradox , 1994




CHARACTER OF

MARKET

ORGANIZATIONAL AND MANAGEMENT

REQUIREMENTS

Large stable markets

for standardized

products;protected local

economies

“Fordist” model: high-investment, mass-productionindustrial systems; assembly line needing

specialization, standardization and dedicatedequipments.

“Taylor” model: management aims towardorganizations and processes for maximum

production efficiency; normally adversarial industrialrelations.

Role of innovation: to increase production efficiencyand control, to compete for larger market share.

Fast-changing,

diverse, fast-growing

niches for

customizable, short

lifecycle products;competitive global

economy

“Post-Fordist” model: low-investment but innovative,small and agile firms; customizable products need

“flexible specialization” and leaner production

systems.

Knowledge management: management aims to gainloyalties of knowledge workers, foster organizational

learning and nurture core competencies.

Role of innovation: to continuously anticipate, create

and capture new market niches.




Philippine economy: a service

economy

SERVICES

INDUSTRY

AGRICULTURE

NINOY’S ASSASSINATION

1991-92 POWER CRISIS





economy

1991-92 POWER CRISIS

EAST ASIAN FINANCIAL CRISIS





economy Percent of GDP from services has exceeded that from

industry or agriculture since 1984.

Percent employment in services exceeds that from industry

or agriculture.

Over the last 3 decades, export mix had shifted away from

the primary sector (abaca, copra, sugar, copper, etc.)

towards the tertiary sector (OCWs).




Our Competitive Edge:

Knowledge-Intensive Services

DOMINANT SERVICE SECTOR

NET SERVICE EXPORTER

NET ENERGY IMPORTER

LACKS RAW MATERIALS FOR STEEL &PETROCHEMICAL INDUSTRIES

Relative to Asia:

VERY OPEN SOCIETY

ENGLISH-SPEAKING

HIGH LITERACY RATE

ACTIVE PRIVATE TERTIARYEDUCATION SECTOR

VALUE ON EDUCATION & TRAVEL

SMALL GENDER GAPS

COMPETITIVE EDGE

IN SERVICES

COMPETITIVE EDGE INKNOWLEDGE-

INTENSIVE SERVICES




The Global Economy is Changing

―Whereas at one time the decisive factor ofproduction was the land, and later capital, todaythe decisive factor is increasingly man himself,that is, his knowledge .‖

– Pope John Paul II

―The most important wars of the 21st centurywill be fought no longer on the physicalbattlefield, but in corporate boardrooms,laboratories, stock exchanges, classrooms, andshop floors.‖

– former president Fidel V. Ramos




“I nformation and knowledge are the thermonuclear

competitive weapons of our time. Knowledge is more

valuable and more powerful than natural resources, big

factories, or fat bankrolls.”

-- Thomas A. Stewart,

author of Intellectual Capital: the New Wealth of

Organizations (Doubleday, 1977)



NOTE: Some images in this presentation may be copyrighted material

downloaded from the Internet. Therefore, this presentation is only for the

academic purposes of this course and should not be redistributed to anyoneoutside of this class.

3- global trends

Documents