The Changing Global Economy and Implications for Entrepreneurial Ventures

1. The Changing Global Economy and Implications for Entrepreneurial Ventures Trends – Effects of Globalization Growth Industries New Opportunities in Global Markets

2. Trends – Effects of Globalization Economic Trends • Global economy is growing at 5% - WSJ, Oct 26, 2004 • China is growing at 9.6% • India at 7.6%; Malaysia at 8% • Emerging Markets and Developing Markets – 6.6% annual growth and expected to increase – Economist Magazine Nov. 2004

3. Trends – Effects of Globalization Positives of Globalization • Most politicians believe in the concept of Free Trade • Reduces the prices of American-made products • American firms allowed to source the best product regardless of where it is manufactured – hence more American firms more competitive both at home and abroad - American customers receive the lowest possible prices

4. Trends – Effects of Globalization Negatives of Globalization • That Giant Sucking Sound – H. Ross Perot, 1990 election • Public Attitudes • Worsens poverty (US and abroad) • Extends or entrenches the use of child labor • Worsens the plight of women • Erodes democracy • Despoils the environment Economist , April 2004

5. Trends – Effects of Globalization Political Trends • Terrorism • Global Warming • Democracy and the Rule of Law • Indonesia and Malaysia recently had full democratic elections • China – bureaucrats lost a lawsuit in favor of business Economist , April 2004

6. Trends – Effects of Globalization Countries China and India – 1.2 billion people each • China • Wal-Mart estimates retail market to be CNY 4.58 trillion in 2003 • Annual Growth of 10% through 2010 WSJ, Nov 2, 2004 • Developing local brands for export Economist 2003

7. Trends – Effects of Globalization Countries China and India – 1.2 billion people each • India • New Prime Minister – Mahmohan Singh – former Finance Minister who was the chief privatization architect • Call Centers • IT Departments • Health Care • Developing local brands for export

8. Trends – Effects of Globalization Countries Asian ‘Tigers’ • Taiwan – 20 million people – 10 million companies • S. Korea – 40 million people • Singapore – 3 million people • Hong Kong – 7 million people Newly affluent

9. Growth Industries Services • Legal, Banking, and Finance • FDI - $1.4 trillion annually between 1990 – 2000 Economist , March 2004 • Marketing and Management High technology • Convergence of laptop, PDA and Cell Phones • Products increasingly designed in Asia and Europe Contract Manufacturing

10. Trends – Effects of Globalization Countries Asian ‘non-Tigers’ • Thailand - 60 Million people • Philippines – 60 million people • Indonesia – 214 million people • Malaysia - 25 million million people

11. Trends – Effects of Globalization Countries Europe • France • US is #1 investor • France is #2 investor in America – - -WSJ Oct 26 • EU • Russia • WTO • Oligarchs and crime • 7% growth in 2003 – Economist Oct, 2004 • Eastern Europe

12. Trends – Effects of Globalization World Wide Web • It no longer matters where you are or where your customer is • Your virtual neighborhood • Customer Relationship Marketing

13. Trends – Effects of Globalization Affluence • People increasingly desire the opportunity to enjoy their affluence • Leisure time • Luxury items • Services • Many people do not know how

14. Growth Industries Services • Legal, Banking, and Finance • FDI - $1.4 trillion annually between 1990 – 2000 Economist , March 2004 • Marketing and Management • Health Care

15. Growth Industries High technology • Convergence of laptop, PDA and Cell Phones • Products increasingly designed in Asia and Europe Contract Manufacturing Entertainment • MTV • Black entertainers in Japan, Taiwan, and Hong Kong

16. New Opportunities in Global Markets Opportunities are wide-open • New ideas • Old ideas with a different ‘twist’ • If your product has been successful here, it may be successful overseas Pay attention to your markets with an eye on risk and culture