Emerging Trends in Business in relation to business strategy and models

M. Abraham Mathew

Liberty is the highest political end of man[But] no country can be free without religion. It creates and strengthens the notion of duty. If men are not kept straight by duty, they must be by fear. The more they are kept by fear, the less they are free. The greater the strength of duty, the greater the liberty. Lord Acton

Imbalances
The principal flaw in the post Bretton Woods system, is its inability to prevent large - scale trade imbalancesThose imbalances have destabilized the global economy by creating a worldwide credit bubble. Richard Duncan, The Dollar Crisis

Imbalances
Strong dollar leads to trade deficits financed by trade creditsleading to budget deficits till they become unsustainableleading to a crisis. Paper money could lead to inflationary pressures on commodities for things like food.

Imbalances
Trade imbalances can be corrected by currency appreciation. Or can lead to Protectionism. To encourage local consumption, in the absence of demand abroad, pay more to your workers.

Adversarial Trade
In adversarial trade the sellers goods displace the goods produced by he manufacturers of the buying country without any compensating purchases from that country. Yet the seller in adversarial trade may lose in the end even more than the buyer and be totally unable to prevent it. The seller has no defense against retaliatory action on the part of the buyer. Peter Drucker, The Perils of Adversarial Trade

Adversarial Trade
Protectionism is however not good for any country A policy to beggar thy neighbor is self defeating (Reciprocity)

Triffins dilemma
It appears that, once again, it will fall to the US to run the worlds deficits in what could be dubbed Bretton Woods IIIit may be unable or unwilling to do so On the other hand, the US may eventually be enticed by the cheap cost of international capital to absorb some of the excess savingsleading to global expansion Indeed, the arrangement could last a long time if the US uses the capital to fund sensible investments rather than consumption - Sanjeev Sanyal, Waiting for Bretton Woods III

The Big Picture

Steady growth, in spite of crises, leading to aspirations Inclusiveness, dont want to leave them behind Vote, want to be counted Rejection of terrorism PM at HT Leadership Summit Dec 6, 2013

Business Contribution
How can businesses help deficit reduction, growth and inflation management? - fair wages - reciprocal trade - dont over leverage, over sell - dont dress up annual reports (Asian Crisis: growth rate, pricing signals,misuse and NPAs, dollar peg, 'heads I win, tails you lose lenders)

Business Contribution
Inflation: support free trade and competition Go long term Redefine wages Pay dues Cash flow management (manage surplus) Invest in people Paranoia, prudence Organization (flat, IT, leadership, measures and rewards) Honor commitments

Business Contribution
Drucker, Strategy the new certainties: Demographics Disposable income Defining performance Incongruities, economics and politics Global competitiveness

Business Contribution
Drucker: Dos: FE cover, alliances Don'ts: economic viability, dont go against theory of business

On morals
Give liberally Golden Rule