Sim 4 Forecasting 2025 Vision


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Sim 4 Forecasting 2025 Vision

  1. 1. 2025 A VISION (… Or a Nightmare?…) This long-range scenario has been produced for ColmarCo, by MegaDevelopment Consultants by 'pushing' key trends and forecasts, introducing conceivable discontinuities coupled with some intuitive and creative synthesis. The future in actuality when it 'arrives' will, of course be rather different - the value of this exercise is to test ability to plan a strategic and tactical response to a fast-changing business environment. "The future will not only be stranger than you imagine - it will be stranger than you are capable of imagining." Arthur C Clarke Nonetheless, decisions are being made everyday to devote substantial capital and other resources to the development of processes, products and projects whose success will depend upon future conditions in the medium to long term which are uncertain, but must be considered and evaluated. Strategic planning - the design of a desired future and of ways in which to bring it about - cannot be achieved in a vacuum. A 'match' must be found between the possibilities presented by the business environment and the capabilities of the organisation. This is not in any way an exact science since it is people - groups of individuals with different sets of skills, experiences, perspectives and values who 'read' (analyse and intuitively assess) both the external and internal contexts, identify the options, select amongst them, design the appropriate planned response and implement and then review it. Even though the process may be fraught with difficulty and imperfection, statistically it is those organisations that at least attempt it, which tend to outperform the competition in the longer term. Paradoxically perhaps the activity of planning is simultaneously exceptionally difficult but exceedingly vital. It is hoped that this exercise will be interesting and will offer the all too rare opportunity to 'look over the parapet' and consider the future of the industry to which we are all committed in the light of a fast changing environment which in turn affects our activities as consumers and suppliers of tourism products and services.. For added reality, the perspective taken by the following scenario will be from the year 2025 looking back at the previous 20 to 25 years. 1
  2. 2. SCENARIO 2025 Technology, Sustainability and Political Unrest: The Driving Forces for Change Some of the key impacts were, and in 2025 continue to be: Technology Drivers 1. In developed economies cities began to de-populate as retention of high-cost office space became virtually pointless in the face of omnipresent, low-cost, home-based, high- bandwidth, Information and Communication Technology (ICT) links and the high economic and environmental cost of transport . Employers simultaneously reduced costs whilst offering employees the attractive prospect of greater control over their working lives. A 'win-win' situation accelerated ICT adoption. Whilst some employees took the ‘home working’ opportunity to more effectively manage their ‘work-life balance’, others worked longer hours to reward their employers for the (perceived) ‘perk’ of home working. In both cases employer and employee costs fell – critical when, on the one hand, trying to compete with low-cost labor economies and on the other, trying to make a family income go further in the face of increasing costs of staples. 2. In one step, without second-hand, alternative technology or interim/staged development, less developed and undeveloped economies adopted ICT directly as it was widely perceived as being the 'last ticket on the last train leaving the Third World' and became major competitors to the West. A low-wage economy coupled with homogeneous technology saw new players rapidly join the world economic stage: much of South America, the Far East and the Indian subcontinent. A clearer world economy had begun to emerge with a strong tendency toward the equalisation of world labour rates representing a stagnation and even lowering of rates in the West and the opposite tendency in what were the low-wage economies of the late 20th century. Attractive growth rates are synonymous with the newer Second World economies. The ‘West’, as we knew it at the turn of the millennium, was and is, suffering widespread economic stagnation which is proving hard to accommodate politically. The worlds axis of power is moving steadily east towards China and India as North America and Europe begin to wane. 3. The distribution and retailing/wholesaling systems changed almost overnight in most developed economies as 50% of all regular purchases (which became known as 'Boring Shopping' or BS) were made online from home in Western/Central Europe, the US and Japan. BS largely disappeared from these countries’ high streets in just two decades. TESCO/ Carrefour, by 2020 the world's 4th largest food retailer, closed over 50% of its superstores, massively expanding the scale and product ranges of the remaining MegaStores and seeking to provide a more conducive 'Retail Recreation' environment therein. The company invested in gigantic stock warehouses to be the hub of its 'Direct Distribution' network and in home delivery vehicle fleets (in partnership with a privatised La Poste in France and the Royal Mail in Britain) in response to the massive switch of consumer preference for having BS ordered online and delivered. The high street was swept by the Retail Recreation Revolution (or 3R as it became known) as a natural counterpoint to BS; whereby, with BS consigned to the online world, 3R became an exclusively leisured and educational activity in which fulfilling and relaxed mutual relationships between buyer and seller became the goal. 2
  3. 3. Environmental Drivers 4. In the decade between 2008 and 2018 the evidence for dramatic climate change and global warming caused principally by man-made pollution became incontrovertible and accepted as being far more dramatic than was first thought. Governments and citizens alike began to have to think the unthinkable. Events that gave rise to this included:- • 10 consecutive years of highest summer temperatures and lowest rainfall on record across Europe with 100,000 dying of heatstroke / dehydration in the summer of 2015 and massive crop failures dramatically increasing the prices of almost all foodstuffs. • Massive acceleration in the melting of the polar icecaps (Greenland is by 2020 almost completely green every summer and Iceland is currently debating whether to consider a new name – ‘Brownland’?). • The release of icefield meltwater / freshwater into the world’s oceans, which has: • raised sea levels by more than a centimetre per year over the 17 years to 2025 - this rate seems to be accelerating uncontrollably. Low-lying coastlines are becoming rapidly remodelled. In the face of rising sea levels, spring tides and an August hurricane, the whole world watched as the London Olympics were washed away when the Thames barrier was overwhelmed and central London was catastrophically inundated. (Projections suggest that without significant improvement to the system, London will have to expect this at least once every year). Much of the Netherlands coastline is set to suffer a similar fate. Coastal resorts are being battered and finding it hard to maintain their infrastructure and most of all their beaches. • dramatically slowed the Gulf Stream to such an extent that by 2040 scientists predict that it may no longer reach as far as the North Atlantic and its warming effect upon Northern and Western Europe will be significantly reduced. Winters in North Western Europe are set to become far, far colder and the summers hotter. European Tourists are beginning to ‘look north’ rather than south for their summer holidays to seek cooler climes. • Had a dramatic effect upon fish stocks the levels of which are beginning to fall alarmingly. The traditional British ‘Fish and Chip Shop’ on every corner has almost entirely disappeared as fish is now priced as a luxury item few can afford (even on an island). • Grain yields in the Steppes of Russia and the Prairies of North America are also showing signs of falling consistently. Another failure of the European harvest and world food production is in real trouble. 5. In 2020, in the face of such evidence, the World managed to bring the USA, China and India into the ‘fold’ to agree to introduce and rigorously enforce new policies to cut carbon emissions dramatically under the global ‘Put the Planet First’ campaign. Sustainability / Carbon-Neutrality is now rapidly becoming the business mantra, yet even so, the calls for Sustainable Retreat from development are growing. Given that late 20th Century statistics revealed that approximately 60% of all personal vehicle traffic movements were related to travelling to/from work and engaging in BS, the emergence of ICT, coupled with the global environmental crisis, provided the final justification and impetus in the Developed World for a fundamental volte-face in transport policy favouring public transport system provision and investment whilst levying punitive taxes on personal vehicle ownership and use. 6. This has resulted in (inter alia): • Punitive taxation on private car ownership … (car ownership which in 2025 is beginning being seen as elitist and highly anti-social) • The banning of all ‘gas-guzzlers’ and second car ownership. • The growth of fuel efficient, low-emission, public transport 3
  4. 4. • Heavy taxation per seat-mile on all flights. All airlines forced to include carbon offsetting • Dramatic rises in ‘clean’ energy prices as the world’s energy needs begin to outstrip supply. • Massive global state and commercial investments in hydrogen fuel cell power and Nuclear Fusion energy production. 2023: France commissions the first Nuclear Fusion Reactor to come online in 2035. • Market demand is beginning to focus on ‘Put the Planet First’ and manufacturers and suppliers are having to listen and gear up accordingly no matter what their product or service. Luxury items that appear not to be putting the planet first are beginning to be stigmatised. 7. A classic battle is being fought out between the Marketing function, which has driven demand and fuelled economic growth & wealth since the Industrial Revolution by artificially creating and then satisfying ‘wants’, and the ‘Put the Planet First’ global-social [Glo-So] movement which points out most eloquently that the planet’s resources cannot sustain such ‘wants’ even in the short term for the rich minority, and that ‘meeting needs’ is more equitable and, even then, only barely in the planet’s sustainable resource ‘envelope’ given population forecasts. Eco-Political Drivers 8. Ironically despite the unifying message of ‘Put the Planet First’, unrest in the world is growing. The gap between the rich and poor is increasing and as a result the world seems more polarised than ever. The Three Worlds are never more clear: • The First World (The West), has had to get used to falling growth rates, increasing unemployment and lower rates of pay (courtesy of globalisation) at just the time when ‘Put the Planet First’ is requiring gigantic new expenditures equivalent to typical national Defence or Health/Welfare budgets. Overseas Development and Aid budgets have been slashed and trading blocks have become more protectionist and inward looking. The West fears the closure of the gap by Second World countries and the loss of its pre-eminence globally. The economy is also increasingly burdened by pension and welfare costs as society lives longer. • The Second World (Rapidly developing, formerly Third World countries, like India, China, the Tiger Economies of the Far East and some of the former Soviet Block states with energy resources etc) has rapidly industrialised using its own resources plus ultra- efficient new technologies. Work has flooded from the First World to these nations spurred on by low labour costs. Some of these nations are also positive beneficiaries of climate change. • The Third World is being left behind even further: the Second World has grown away from it and the First World is focusing its attention and its own resources closer to home. The opportunity to develop is even more remote as it’s aid receipts have fallen as a result of the crisis in the West, the Second World is too lean a player to compete with and it is actively prevented from using old, cheaper, fuel- inefficient systems by the global environmental crisis. 9. In the light of the above, the mission of the UN has become clearer to all: to keep the peace so that the world can concentrate on managing the environmental battle it has on its hands. War is simply too energy-hungry and pollution-producing to be permitted. However, the UN’s ability to achieve this is undermined by its falling revenues as the First World suffers. Unrest comes in FIVE forms: • The First World fighting the loss of its preeminence 4
  5. 5. • The Second World resenting the First World’s protectionism • The Third World desperately trying to find a way forward without much help and looking for more ‘aggressive’ means to draw attention to its plight. Gandhi-like marches of millions towards national borders seeking the very basic necessities of survival are now commonplace. ‘Walk to Water’ / ‘Fight for Food’ slogans banners are icons to shame the global conscience of the developed economies. • The misuse of the power held by global energy suppliers and energy control / disruption as the obvious target for terrorists • The extreme and uneven impacts of climate change 10. State support for Higher Education and access thereto was increased throughout the world, in the East to support the acclimatisation to the technical skill requirements of ICT and in the West primarily to ease societal tensions and create a sense of unity of purpose, or more crudely, to make those largely unemployed feel in some way productive members of society. 5
  6. 6. General Implications for Leisure and Tourism 11. In the First World, as incomes begin to plateau and fall back, taxation increases to deal with environmental issues, unemployment grows rapidly and energy costs rise: disposable incomes fall. Tourism remains a luxury item and is therefore a prime candidate for cutback by those hardest hit. However, in a more austere and pressurised world, consumers continue to hold on tight to the possibility of ‘escape’ from the daily grind to actually see and experience the planet they are trying to save. That said, travel and transport costs, in particular, are a worry for the consumer: the further the distance  the greater the cost. Leisure has become a permanent way of life for a significant portion of the world's population. Other than Environment, the key political issue has become the redistribution of the economic product of labour between those who work and those who, through no fault of their own, cannot do so. This issue is particularly vexed in the First World where fewer are in work and are earning less but are asked also to shoulder the massively increased burden of the longer-living, non-working portion of society. Jobs in most cases are now shared and in many nations legislation has been enacted to institute a 30 hours per week ceiling on individual paid work. Holiday taking of an absolute minimum of 8 weeks a year is enforced with an almost religious zeal. Such measures are being introduced to reduce the tension in societies and promote a feeling of equality of access to work. Social Tourism has been reinvented in a big way. 12. ‘In-Home Leisure’ increased dramatically as populations began to explore almost infinite information availability. The combination of almost omnipresent home-based ICT in the First and Second Worlds with the rapid advances in speech recognition (which dramatically replaced the keyboard as the standard input device by 2015) represented a quantum leap in ICT adoption. VHS, cassettes, CDs, DVDs and most brochures became redundant memorabilia of a pre-ICT age. Books and newspapers, once considered immune from the challenge of ICT, now find themselves currently under threat of capitulation to the new technologies (largely because of their energy and resource costs in production and distribution). This has resulted in an overall decline in day visits and short breaks in particular, and even the Visiting Friends and Relatives market has begun to be hit by the online ‘MEnU’ (me & you) facility which allows multiple and simultaneous face to face meetings to take place via the screen (in 60% of the developed world’s homes and businesses by 2020). For the same reason, business tourism saw a dramatic overall reduction in volume worldwide: it reduces direct financial costs significantly without impairing organisational effectiveness and enables saved time to be productively reinvested. Incentive-based business tourism is however growing dramatically as it has a ‘cachet’ (one can get through work something one could never afford personally). 13. The New Accession countries of the EU have progressively become more attractive as tourism destinations and generating markets. The same is true of Second World countries – China has long since passed France as the World’s No1 Tourism Destination (2017). Whereas traditional ‘long-haul’ destinations had become prohibitively expensive for all but the top 25% of earners by 2015, short-haul alternatives with lower seat-mile tax remained popular despite rising costs. 6
  7. 7. 14. Faced with an aging and expiring market, higher overheads, the cut-throat pricing of the multiples and online low-cost operators, independent High Street travel agents were all but wiped out by 2015. Those that remain have become Travel Consultants’ serving small, highly-specialised, nîche markets and charging significantly for their services. Overall, Travel and Tourism are not what they once were: there are still significant opportunities and fortunes to be made, but the threats to traditional business are considerable. All Tourism businesses need to rigorously and continuously analyse and evaluate their products and services in the light of these trends and projections – even to the point of daring to think the unthinkable: should we stay in this market, or indeed in this business? c. MegaDevelopment Consultants. Scenario for ColmarCo Memo: From: ColmarCO Chief Executive’s Office To: Heads of Division Re: Scenario Planning Response to ‘Scenario 2025’ Urgently Required. Above you will see the scenario commissioned from MDC for the next 15 years. This may seem extreme to you, but may I remind you that over the last 20 years matters/events like: • The end of the Cold War / fall of the Berlin Wall and accession of Eastern Bloc states to the EU • The dramatic disappearance of the ice-cap / global warming • The rapid economic growth of China • The internet as a global communication and business platform • 9/11 all seemed pretty impossible/improbable to those looking forward just a few years before such events happened. We are now living with the reality of these things. I take the view that the MDC Scenario has at its core some trends which will inevitably impact dramatically upon us and some intuitive discontinuities (one-off events) which, although they may not happen, will be of the type of things which will almost certainly happen. Accordingly I consider this Scenario to be a good device against which to test our ability to plan proactive ColmarCo responses to events. Even if such things do not happen, others will, and the activity of rehearsing options for strategic change will stand us in good stead. 7
  8. 8. It would be all too easy for me to instruct each Divisional Head to prepare his own divisional Strategic Response to Vision 2025, but I fear that this would have the following disadvantages: • Divisional Heads are inevitably ‘inside their own (divisional) boxes’ and may simply not see the emerging opportunities and threats or the best means of responding to them. • The natural tendency to unquestioningly defend the ‘status quo’ / divisional ‘empire’ at all costs when this may be entirely inappropriate. • It would neglect any sense of an integrated, ColmarCo ‘vision’ emerging. We will proceed as follows: TWO teams drawn from the senior management of all our divisions will work in parallel (but separately) in order to produce TWO holistic ColmarCo strategies entitled: ColmarCo: Towards 2025. I feel that the different interpretations and resulting ideas & visions emerging from the respective teams may help produce a better definitive strategy as a result. In your teams you are to proceed as follows:- 1. Consider the relative strengths and weaknesses of the ColmarCo brands (pre 2025 scenario) on the basis of the performance data provided. 2. Brainstorm the Threats to the company emerging from / implied by the scenario and how and to what extent they are likely to affect ColmarCo financial performance (if no strategic changes are made to the company’s operations). Project forward for 5, 10 and 15 years. Consider ways of neutralising the threats. 3. Brainstorm the Potential Opportunities for ColmarCo arising from the scenario and consider their relative values (ie which do you feel offer the biggest possibilities for the company and why) 4. In the light of the above evaluations of opportunities and threats, consider the possible strategic options available to the Company and evaluate them in terms of issues such as: degree of risk, level of capital requirement, likely returns (profitability). 5. Prepare a ColmarCo 2025 Vision for presentation to the Company clearly explaining and justifying WHERE the company is going and HOW it is going to get there. A critical part of this will be a timeline explaining what the company wll be doing in the immediate / short / medium and long term. 6. Present your 2025 Vision to the other group (inc a 2 x page Executive Summary) 7. Consider together the respective merits of your strategies. Make a Master Strategy from the best of both. 8