Corporate Management
  in T b l t Ti
  i Turbulent Times




        By Dr. Allen Yeh,
       Dec 29th, 2008/12/28


     ...
“In turbulent times, an enterprise has to be managed both to
                   ,         p                   g
withstand ...
The Year 2008 will go down in history as one of the most turbulent
period since WWII, if not since the 1930 “ Great Depres...
The Five Key Fundamental Forces
           y

I.    The emergence of the new world order/regional
      economic blocks

I...
I. The emergence of a new world order/regional
   economic blocks.
     The 21th century will over turn many of our basic
...
I. The emergence of a new world order/regional
   economic blocks.

           World Population from AD 1 to 2001




    ...
I. The emergence of a new world order/regional
   economic blocks.
           Population Growth from 1950 to 2050




    ...
I. The emergence of a new world order/regional
   economic blocks.
          Human Population in the Developed and
       ...
I. The emergence of a new world order/regional
   economic blocks.
    Economic Activity by Region in 2000 and 2050 (proje...
I. The emergence of a new world order/regional
   economic blocks.
         Annual Growth Rates from 1990 to 2005 vs.
    ...
II. The Environmental Impacts on Industrial
    Development / Cross Border Trade
    The current trajectory of human activ...
III. The Transition from Petroleum based economy to
                                               y
     “Renewable/Bio E...
III. The Transition from Petroleum based economy to
                                               y
     “Renewable/Bio E...
III. The Transition from Petroleum based economy to
     “Renewable/Bio Energy
      Renewable/Bio Energy”

   The Oil Sho...
III. The Transition from Petroleum based economy to
     “Renewable/Bio Energy
      Renewable/Bio Energy”
               ...
III. The Transition from Petroleum based economy to
     “Renewable/Bio Energy
      Renewable/Bio Energy”
             Cr...
III. The Transition from Petroleum based economy to
     “Renewable/Bio Energy
      Renewable/Bio Energy”
               ...
III. The T
III Th Transition f
             iti from Petroleum based economy t
                       P t l    b   d      ...
IV. The global warming/impact to industrial development/
    cross border trade
   The long term trend of “Global Near Sur...
IV. The global warming/impact to industrial development/
    cross border trade
   With the objective of mitigating climat...
IV. The global warming/impact to industrial development/
    cross border trade
      Global Average Near-Surface Temperat...
IV. The global warming/impact to industrial development/
    cross border trade
                 Atmospheric Carbon Dioxid...
IV. The global warming/impact to industrial development/
    cross border trade

          Human Dominance or Alteration o...
IV. The global warming/impact to industrial development/
    cross b d t d
          border trade
               By Indust...
IV. The global warming/impact to industrial development/
    cross b d t d
          border trade




  Source: State of t...
IV. The global warming/impact to industrial development/
    cross border trade

   Benefits of GHG Redaction to Corporati...
V. The re-structuring of world financial system
   The global financial impacts to the US sub-prime sector and the subsequ...
Recommended Reading List
 Jeffrey D. Sachs Common Wealth-Economic For a Crowed Planet, the Penguin Press
 (NY), 2008
 Etha...
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971229 Ethics [Compatibility Mode]

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971229 Ethics [Compatibility Mode]

  1. 1. Corporate Management in T b l t Ti i Turbulent Times By Dr. Allen Yeh, Dec 29th, 2008/12/28 1
  2. 2. “In turbulent times, an enterprise has to be managed both to , p g withstand sudden blow and to avail itself of sudden unexpected opportunities. opportunities This means that in turbulent times, the fundamentals have to be managed, and managed well” --Peter F. Drucker, Managing in Turbulent Times 1980 Peter Times”-1980 2
  3. 3. The Year 2008 will go down in history as one of the most turbulent period since WWII, if not since the 1930 “ Great Depression” -Just look at some examples: In July 2008, oil was trading at an all time high of 147USDs/barrel-and is around 40USDs at the moment-projected to go down to mid 30’s in early 09 Daily chartered rate for large bulk cargo ship a few months ago, was close to 240,000USDs/D, and is now only about 1% of this-a reduction of 99% in less than 6 months In stock markets, the decline is also un-unprecedented -if you buy 1,000USDs of Delta Airline a year ago, you would have 49.0USDs left today; -If you had p purchased 1,000USDs worth of AIG one year ago, you would have 33.0USDs today , y g ,y y The prices of world’s major commodities, such as steel, aluminum, etc are also declined by more than 50% in a short 6 months span How can an organization cope with changes of such magnitudes? H H i i ih h f h i d ? How does “Corporate Manager” manages during time of extreme “Volatilities” and “Turbulent” Turbulent 3
  4. 4. The Five Key Fundamental Forces y I. The emergence of the new world order/regional economic blocks II. II The Environmental Impacts on Industrial Development /Cross Boarder Trade-How to Manage “Sustainability”? III. The Transition from Petroleum based economy to “Renewable/Bio Energy”?? IV. IV The global warming/impact to industrial development/ cross border trade V. The re-structuring of world financial system 4
  5. 5. I. The emergence of a new world order/regional economic blocks. The 21th century will over turn many of our basic assumptions about economic life The end of European domance of global politics and economics The decline of America as a economic super power Emergence of the new economic powers: China China, India, Russia and Brazil etc. 5
  6. 6. I. The emergence of a new world order/regional economic blocks. World Population from AD 1 to 2001 6
  7. 7. I. The emergence of a new world order/regional economic blocks. Population Growth from 1950 to 2050 7
  8. 8. I. The emergence of a new world order/regional economic blocks. Human Population in the Developed and Developing Countries from 1950 to 2005 8
  9. 9. I. The emergence of a new world order/regional economic blocks. Economic Activity by Region in 2000 and 2050 (projected) 9
  10. 10. I. The emergence of a new world order/regional economic blocks. Annual Growth Rates from 1990 to 2005 vs. Income Level in 1990 10
  11. 11. II. The Environmental Impacts on Industrial Development / Cross Border Trade The current trajectory of human activity is not subatainable Population growth and consumption of resources such as farmland farmland, water, commodities will put severe strains on the world’s eco-system. Rapid rate of consumption in energy resources, particularly oil—the emerging of large population centers such as China, India, Brazil etc will put further strain on world’s energy sources- Environmental Mandates, such as restriction on use of hazardous Mandates chemicals in manufacturing processes and the EU’s WEEE recycling mandates etc are all measures to regulate cross border trade. The emergence of “CO2 abatements” are an important economic and industrial policies Globally, Globally the trends of production and retail trades increasingly focusing on issues such as : -Global Warming; g -Sustainability -CO2 labeling 11
  12. 12. III. The Transition from Petroleum based economy to y “Renewable/Bio Energy” “Oil is the world’s biggest and most pervasive business, the greatest of the great industries that arose in the decades of 19th century. As we look toward the 21th century, it is clear that mastery will certainly come as much as from a y y computer chip as from a barrel of oil…Until some alternative source of energy is found, oil will have far reaching effects found on the global economy; major price movements can fuel economic growth or contrarily drive inflation and kick off growth, recession.” “Daniel Yergin” – President, Cambridge Energy Research Associates 12
  13. 13. III. The Transition from Petroleum based economy to y “Renewable/Bio Energy” The drilling of oil from black rock for the making of “Kerosene” in a small town called “Titusville” western pennsylvania in 1850’s served as the origin of modern petroleum industry, with Standard Oil Co then dominated not only the US but the world’s petroleum production and trade for many decades decades. Up until 1970’s US was the largest oil producer in the world with d il outputs exceeding 10 MM b ld i h daily di barrels/D. l /D 13
  14. 14. III. The Transition from Petroleum based economy to “Renewable/Bio Energy Renewable/Bio Energy” The Oil Shocks: “ In 1861 oil was selling for 10USDs/barell, and quickly dropped to 0.5USDs due to lack of demand. 1. The 6 days war of 1967 -the 3rd Arab-Israeli War-oil flow was cut by more than 60%,-Arab oil producers using “Oil” as weapon , p g p 2. The second Arab-Israeli War of 1973-the Oil Embargo, oil prices went from 5-6USDs/barrel to over 20 USDs as a result of the supply disruption. di ti 3. The 3rd Oil Shock: Oil price peaked around Nov 1985 to 31.75USDs/ 31 75USDs/ barrel to 10.0USDs/barrel. 10 0USDs/barrel 4. The 4th Oil Shock: 2008-in July oil hit the historical height of 147USDs/ barrel and quickly dropped to around mid 30’s by Dec 08. 14
  15. 15. III. The Transition from Petroleum based economy to “Renewable/Bio Energy Renewable/Bio Energy” Crude Oil Discoveries 15
  16. 16. III. The Transition from Petroleum based economy to “Renewable/Bio Energy Renewable/Bio Energy” Crude Projections of World Oil Production 16
  17. 17. III. The Transition from Petroleum based economy to “Renewable/Bio Energy Renewable/Bio Energy” Crude Oil Pricing Trend 17
  18. 18. III. The T III Th Transition f iti from Petroleum based economy t P t l b d to “Renewable/Bio Energy” Fundamental questions: 1. Are we running out of oil? How long before the oil stocks is depleted? -what are the alternatives? 2. What would be the long term price level of crude oil- and its impact to the global economy? 3. Is this transition from the petroleum based economy to an global economic order based on Renewable /Bio energy”? 18
  19. 19. IV. The global warming/impact to industrial development/ cross border trade The long term trend of “Global Near Surface Temperatures” increases- from 1850-2005 f 18 0 200 The rapid rise of “Atmospheric Carbon Dioxide” Human activities have greatly increased emissions of some greenhouse gases (called “Anthropogenic Greenhouse Gases”). Global warming causes p g polar ice to thaw, sea levels to rise, and , , increases the severity of extreme climate events (droughts, floods, tropical storms). The main anthropogenic GHGs are: -carbon dioxide (CO2) -methane (CH4) -nitrous oxide (NO2) -hydrofluorocarbons (HFC) -perfluorocarbons (PFC) 19 -sulfur hexafluoride (SF6)
  20. 20. IV. The global warming/impact to industrial development/ cross border trade With the objective of mitigating climate change most of change, the world’s countries signed the United Nations Framework Convention on Climate Change (UNFCCC) in 1992, and the Kyoto Protocol in 1997. Two t T types of market: f k t 1. A regulated market has greenhouse gas (GHG) emission limits set by a regulatory body. Emitters have emission reduction targets and can buy carbon credits to meet such targets. 2. A voluntary emission reduction market exists outside of any regulatory mandate (e.g. the Kyoto Protocol), but there are common understandings regarding project types, documentation to be presented, etc. 20
  21. 21. IV. The global warming/impact to industrial development/ cross border trade Global Average Near-Surface Temperatures from 1850 to 2005 g p 21
  22. 22. IV. The global warming/impact to industrial development/ cross border trade Atmospheric Carbon Dioxide 22
  23. 23. IV. The global warming/impact to industrial development/ cross border trade Human Dominance or Alteration of Several Major Components of the Earth System 23
  24. 24. IV. The global warming/impact to industrial development/ cross b d t d border trade By Industry: Energy 26% Landfill Efficiency, Fuel Switching & 1033 as of May 2008 Registered Composting, Coal Mine & CH4 Chemical Cement CDM Projects Avoidance 4% 15% Oh Other 1% Renewable Energy 54% Renewable Energy 54% Perfluoro- By GHG: carbon 0% HFC Nitrous Oxide 2% 3% 26% Methane Carbon Dioxide 69% Source: UNEP Risoe CDM Pipeline, March 2008 24
  25. 25. IV. The global warming/impact to industrial development/ cross b d t d border trade Source: State of the Voluntary Carbon Market, 2008, p. 7 25
  26. 26. IV. The global warming/impact to industrial development/ cross border trade Benefits of GHG Redaction to Corporation Contribution to climate change mitigation, society & sustainable mitigation development Generate extra income for projects that reduce GHG emissions and lead to achieve sustainable development goals May improve process May reduce costs May demonstrate leadership May fulfill corporate objectives 26
  27. 27. V. The re-structuring of world financial system The global financial impacts to the US sub-prime sector and the subsequent demises of some of the world’s first tier investment firms and banks, such as Bear Stern, Lehman B th B St L h Brothers, AIG, Fortis and many others have resulted in AIG F ti d th h lt d i hundreds of billions of loses across all sectors The sever impact of “liquidies” of financial institutions not only cause the strain of liquidies the entire financial world, but also severely impacting sectors that are highly dependent on “Financing” such as housing, auto, leasing, large purchases, leverage buyouts, hedging, M/A transitions, etc. For instance, in the US it is believed that between 20-30% of the decline in auto sales can be attributed to the shortage of “Financing Facilities”. g g During the past 12 months, investor confident of financial service industries have reached all time low, which are severely impacting the future of many of the financial products promoted by world’s financial institutions. Longer term, it is inevitable that a “Restructing” and “New Mode of Operations” and “Hi h R d “Higher Regulatory St d d ” will b i tit t d t ensure a much l t Standards” ill be instituted to h transparent and accountable financial system throughout the world. 27
  28. 28. Recommended Reading List Jeffrey D. Sachs Common Wealth-Economic For a Crowed Planet, the Penguin Press (NY), 2008 Ethan S H i Bem B Eth S. Harris, B Bernanke's F d the Federal Reserve After Greenspan, Harvard k ' Fed, th F d l R Aft G H d Business Press, 2008 Daniel Yergin The Epic Quest for Oil Money & Power the Free Press (NY) 1992 Yergin, Oil, Power, (NY), Al Gore, Earth In The Balance: Ecology and the Human Spirit, Houghton Mifflin Co, 1992 Lester C. Thurow, Dangerous Current: The State of Economics, The Ramdom House, NY, 1983 Peter F. Drucker, Managing in Turbulent Times, Harper Business Press, 1980 MT: E Neumayer, Weak versus Strong Sustainability: Exploring the Limits of Two Opposing Paradigms 2nd edn; J Kahn The Economic Approach to Environmental Paradigms, Kahn, Resource Economics, Dryden Press, 2005 A Hoffman, Competitive Environmental Strategy: A Guide to the Changing Business , p gy g g Landscape, Island Press, 2000 28

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