As companies develop and refine their corporate strategies for growth, profitability and success, an environment of uncertainty requires their attention.
BCG, one of the world’s leading management consulting firms, evaluates four macro-level scenarios based on “important geopolitical, technological, and socioeconomic uncertainties” that deserve the attention of those engaged in the development of corporate strategies.
BCG also explores how each of these four developments would impact a hypothetical research-oriented European-based pharmaceutical manufacturer.
#1 Globalist commercial paradigm ends
First, BCG explores the possibility that the globalist commercial paradigm that has defined global commerce for the past several decades ultimately unravels, giving rise instead to populism and nationalism.
BCG presents this as an unfavorable development that would lead to reduced global output and employee layoffs.
Among the risks: The United States ultimately departs the World Trade Organization (WTO), leading to the WTOs dissolution, and the European Union—building on the Brexit movement in the United Kingdom—becomes increasingly weakened, or dissolves fully, as European nations see less value in a collective European governing body.
Result for the hypothetical European pharmaceutical company:
- The company is cutoff from many markets, forced to abandon plans for non-Europe-based manufacturing, and ultimately is forced to move to a franchise model.
- The company is cutoff from many markets, forced to abandon plans for non-Europe-based manufacturing, and ultimately is forced to move to a franchise model.
#2 Rivalry between China and the U.S. escalates
Second, the growing tensions and rivalry between China and the U.S. escalate considerably, leading to a new Cold War between the two nations.
This too would erode the traditional global business model as countries and companies are forced to ultimately align with one nation or the other.
Result for the hypothetical European pharmaceutical company:
- The company finds itself cutoff from China’s aging population market, is again forced to abandon its manufacturing consolidation,
- and finds itself needing to spin off its China-based operations in a new global market divided between two rival nations.
#3 Growing concerns about climate change
Third, the growing concerns about carbon emissions and climate change lead the world’s top industrial powers to fundamentally restructure under new environmental regulations, leading to reduced workloads for employees and growing challenges for employee earnings.
Emboldened by their success on environmental policy, these activists move on from environmental activism to other aggressive policy campaigns, including “pay equity, corporate responsibility, democratic reform, and single payer healthcare in the U.S.”
Result for the hypothetical European pharmaceutical company:
- The pharmaceutical company benefits from increased access to healthcare and a system that rewards health outcomes,
- and the company looks to its manufacturing consolidation to offset increased costs from anticipated environmental-focused carbon taxes.
#4 Regulatory changes driven by governments
Fourth, governments move to break up large companies, open borders, and remove intellectual property protections.
With these massive changes, job security erodes and less skilled employees are left struggling. Cities begin competing for the affluent, giving rise to self-driving electric vehicles to “tackle traffic, noise, and pollution.”
Result for the hypothetical European pharmaceutical company:
- The company’s intellectual property protections collapse, leaving the company with difficult choices, including embracing hard to duplicate personalized health services;
- Manufacturing is outsourced to embrace the improved quality and cost options available in a more borderless employment market.
