Where in the World Will Your Customers Be?

Professor of Global Management Policies and founding director of The Center for Global Business Studies at the Smeal College of Business, Penn State, Dr. Farborz Ghadar, shares his thoughts on the growing global environment and the movement of customers in terms of supply chain and logistics.

Professor of Global Management Policies and Founding Director of The Center for Global Business Studies at the Smeal College of Business, Penn State, Dr. Farborz Ghadar, recently made a contribution to Inside Supply Management Magazine identifying the future of customers with dramatic demographic changes - from aging populations to shifting growth patterns. Today, demographic trends are transforming the world, changing economic patterns, generating new dependencies, and altering geopolitical balances. This influences businesses causing a shift in where products are produced and consumed. Key components in maintaining a successful business into the future, as Ghadar notes is: "determining who the consumer of tomorrow will be, where they will be located, and what they will be buying..."

Key components in maintaining a successful business into the future, as Ghadar notes, is: "determining who the consumer of tomorrow will be, where they will be located, and what they will be buying..."

Differences in Population Growth Rates

The world population is rising, numbers are estimated to be 8 billion people by 2025 and 9.8 billion by 2050, but the global population is expected to level off mid 21st Century.  With these numbers and predictions, it's normal to expect changes in the nature and growth of global markets. The majority of the growing populations is occurring in less-developed countries (97%) such as India, Sub-Saharan Africa, and the Middle East. Companies need to focus on "youth bulges" having a large economic impact once the younger generations hit the workforce. Large youth populations will lead to an increase in unemployment, resource scarcity, and an increase demand for housing, education, and basic services. Companies need to consider these trends as they prepare for the next wave of customers and employees. As companies begin to source globally, less-developed countries are beginning to become more developed and wages are rising, ultimately causing companies to look for lower-labor areas and thus, starting a circle of events. 

Immigration Effect

Immigration is a natural and intrinsic part of globalization, reflecting global demographic realities. Increasing global economy serves are playing similar roles in terms of immigration that the Industrial Revolution had a century ago. Global production, distribution and consumption of goods stimulates migration since people follow where work and money leads. This is critical for companies to realize as customers are migrating as a result of short-term social and economic factors, and they will have to manage a global sector of customers.

Aging Populations

With the increase in developed countries, populations are aging with falling fertility rates, and a decrease in multiple-child families. It's expected that by 2050, two billion people will be 60+, almost 25% of the overall population. As a result of lower fertility rates and longer lifespans due to increases in working conditions, health care, etc., emerging and developed economies will soon see a smaller percentage of their workers supporting those who are "too young or too old to work." Companies will need to re-organize systems to create sustainable welfare and pension systems to meet this aging population.

Today, it is critical that companies determine where in the world their customers are located to remain competitive in the changing global environment. Reality is that customers and employees are living longer lives, fertility is declining, social patters are shifting - ultimately creating a different business environment across the world. Ghadar provides significant insight to the changing global environment in the January/February 2016 Inside Supply Management Magazine.