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Wyoming Business Tips for Jan. 17-23

January 8, 2016

A weekly look at Wyoming business questions from the Wyoming Small Business Development Center (WSBDC), part of WyomingEntrepreneur.Biz, a collection of business assistance programs at the University of Wyoming.

By Mike Lambert, Wyoming Entrepreneur Market Research Center manager

“With the start of the new year, what are some trends that we should keep an eye on in Wyoming?” Mark, Lusk

One of the things that I do at the Market Research Center is to watch business trends.

A recent article from McKinsey & Company, one of the top global management consulting firms, identifies four forces that are fundamentally changing the world we live in. If you are my age, you’ve seen technology and political changes that are staggering (cell phones, the end of the Cold War, computers that put Star Trek to shame). But, according to McKinsey & Company, the changes that are coming will be even more monumental.

The first change is the shift of economic focus to emerging markets. This may be hard to grasp in Wyoming, where we tend to be a bit out of the mainstream, but the global economy is rapidly shifting away from the “developed” economies of North America and Europe. Instead, economic activity is shifting east and south to Asia, Latin America and the Middle East.

Even more striking, the activity in these areas is becoming highly urban. With global urban populations increasing by about 65 million people a year over the past 30 years, it is expected that about half of the growth in global domestic product (GDP) will come from 440 small and medium cities about which many of us have never heard. Ever heard of Tianjin, a city southeast of Beijing, China? Its GDP in 2010 was estimated to be $130 billion, about the same as Stockholm, Sweden. By 2025, it is estimated to explode to $625 billion, or about the same as all of Sweden.

The second disruptive force is accelerated impacts of change driven by technology. If you think things have changed rapidly in the past 20 years, hold on to your seats, according to McKinsey & Company.

“It took more than 50 years after the telephone was invented until half of American homes had one. It took radio 38 years to attract 50 million listeners. But Facebook attracted 6 million users in its first year, and that number multiplied 100 times over the next five years. China’s mobile text and voice messaging service WeChat has 300 million users, more than the entire adult population of the United States,” according to the company.

All of this technological change and adoption around the world is leading to huge amounts of innovation. This is resulting in such a rapid change that companies and product life cycles are shortening, and executives are having to make decisions at a hugely accelerated pace.

Another global trend is that of aging populations. Around the world, people are getting older. Fertility is falling, and the average person is looking much grayer everywhere. Japan and Russia have seen their populations decline. The expectation is that by 2060, Germany’s population will shrink by 20 percent.

Currently, about 60 percent of the world’s population lives in countries with fertility rates that are lower than the replacement rate. Declining and aging populations will place severe pressure on economies and governments that have to care for elderly people with the inputs from fewer and fewer workers.

The last disruptive force is that of the world’s increased global connections. It used to be that most global trade flowed through the major trading hubs in Europe and North America. No longer. Today’s trading patterns are much more complex, and Asia is becoming the largest trading region.

Not only is money moving around; people are, too. In 2009, more than a billion people crossed borders. This is five times as many as in 1980. The increasing interconnectedness of the global economy is creating huge opportunities, and equally huge volatility.

The overall impact of these disruptive forces is that the future is becoming less and less predictable. People and businesses will be less able to rely on “what worked before” and will have to become open to changing realities.

In a state like Wyoming, where we value the traditional and tried and true, the next few years may be extremely challenging.

A blog version of this article and an opportunity to post comments are available at http://wyen.biz/blog1/.

The WSBDC is a partnership of the U.S. Small Business Administration, the Wyoming Business Council and the University of Wyoming. To ask a question, call 1-800-348-5194, email wsbdc@uwyo.edu, or write 1000 E. University Ave., Dept. 3922, Laramie, WY, 82071-3922.


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