Presentation done by Elizabeth Waelbroeck Rocha

© BIPE 2010

December 2, 2010

Challenges from the environment and their effect on clusters

Élisabeth Waelbroeck-RochaPartner & Vice President, BIPE

2© BIPE 2010 - December 2, 2010

Challenges from the environment and their effect on clusters

This powerpoint document constitutes the visual support of the presentation made at the TCI Annual Conference in Delhi, in December 2010.

It cannot be quoted.

3© BIPE 2010 - December 2, 2010

Four main drivers will impact the futureof clusters

Demography

4© BIPE 2010 - December 2, 2010


Demography Economy

5© BIPE 2010 - December 2, 2010


Demography

Technology

Economy

6© BIPE 2010 - December 2, 2010


Demography

Environment Technology

Economy

7© BIPE 2010 - December 2, 2010

These four drivers are interdependent

Demography


Economy

8© BIPE 2010 - December 2, 2010

1. Demography, not only the economy, will change the way businesses operate

Demographic growth is highly variable across regions

Continued urbanisation

Reduced household size

Ageing

Demography


Economy

-100

0

100

200

300

400

500

600

Euro

pe

North

ern

Amer

ica

Afric

a

Asia

Latin

Amer

ica

Ocea

nia

1960-19701970-19801980-19901990-20002000-20102010-20202020-2030

Change in population size, in millions

9© BIPE 2010 - December 2, 2010

By 2050, North America and Europe will merely represent 12,5% of the world’s population (down from 17% in 2000)

01 0002 0003 0004 0005 0006 0007 0008 0009 000

10 000

1950

1955

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

2020

2025

2030

2035

2040

2045

2050

Latin AmericaAsiaAfricaOceaniaNorthern AmericaEurope

01 0002 0003 0004 0005 0006 0007 0008 0009 000

10 000

1950

1955

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

2020

2025

2030

2035

2040

2045

2050

Latin AmericaAsiaAfricaOceaniaNorthern AmericaEurope

10© BIPE 2010 - December 2, 2010

Urbanisation will continue: this causes specific problems that have to be dealt with

By 2020, 60 cities will have more than 5 million inhabitants, and13 will have more than 10 million

Source : ONU – World Urbanization Prospects

Cities with more than 10 million inhabitants

Cities with more than 5 million inhabitants

11© BIPE 2010 - December 2, 2010

Other consequences of these demographic developments include:

Ageing in Europe, and a reduction in the population of working age, unless migration flows break from past trends

Strong rise in demand for food products, concentrated in certain regions that do not all have a high agricultural growth potential – or whose potential will be curtailed by climate change

Strong rise in energy consumption4 For heating and cooking4 For lighting4 For transportation

Ever increasing demand for clean water

12© BIPE 2010 - December 2, 2010

2. On the economic front, the recent crisis will have long lasting effects on the world economy

Volatility is there to stay

Diversification strategies of companies

Emphasis on flexibility

Reduced role of government

Demography


Economy

Risks of bubbles

Risk aversion / difficult access to financing for SMEs

Continued strong competition

Business cycles will be deeper, creating market disruptions

13© BIPE 2010 - December 2, 2010

Why volatility ?

A result of:4The massive externalisation strategies

� Production / delivery volumes can be adjusted at short notice

4Zero stock policies4The strategies of dominant players on resources markets

� Dual markets will emerge, characterized by different prices depending on the client …

4Reduced government’ capacity to offset turnarounds in business cycles

14© BIPE 2010 - December 2, 2010

2. On the economic front, the recent crisis will have long lasting effects on the world economy

Volatility is there to stay

Diversification strategies of companies

Emphasis on flexibility

Reduced role of government

Demography


Economy

Risks of bubbles

Risk aversion / difficult access to financing for SMEs

Continued strong competition

Business cycles will be deeper, creating market disruptions

15© BIPE 2010 - December 2, 2010

Demographic developments will impact the economy

Demography


Economy

Development of complex markets

Growth in services sectors

è In addition to the above changes, there will be growing opposition between mature / growing markets

16© BIPE 2010 - December 2, 2010

3. On the technology front, several breakthrough innovations could change the way we work, produce and consume

New promising fields:

Biotechnologies

Nanotechnologies

Vehicle propulsion

Laser and optics

Etc …

Demography


Economy

17© BIPE 2010 - December 2, 2010

The speed of change is evolving. Product innovation cycles are shorter and deeper

We are in a process innovation phase, with low product innovation

Product cycles

2010 ?

Demography


Economy

Process cycles

18© BIPE 2010 - December 2, 2010

Demographic changes and the economy also impact the future of technology – and vice versa

Demography


Economy

Innovation =new players

new processes

19© BIPE 2010 - December 2, 2010

4. Environmental changes are underway

New scarce resources:Raw materials, energyFoodSpaceTimeSilence / quietnessDarkness in urban areas(clean) WaterPrivacyComfort

Demography


Economy

People will accept to pay higher prices to have access to the scarce resources

This will change the relative price of goods / services

20© BIPE 2010 - December 2, 2010

Demographic changes are speeding up changes in the environment

Demography


Economy

Anthropic pressures on environment

21© BIPE 2010 - December 2, 2010

Between 2010 and 2030, world primary energy demand will grow by more than 40%

Source: IEA Energy Outlook 2010


22© BIPE 2010 - December 2, 2010

Given the oil peak, coal fired electricity generation will have to grow – with major consequences on the environment – not on prices


23© BIPE 2010 - December 2, 2010

Greenhouse gas emissions accelerate climate change and will have a major impact on agriculture

Source: European Commission, PESETA model results

Changes in average mean precipitation and temperature between 2011-2040, from the 1961-1990 period

24© BIPE 2010 - December 2, 2010

Again, economic factors and changes in the environment are linked

Demography


Economy


26© BIPE 2010 - December 2, 2010

Impact on clusters

� Urbanisation

� Development of scarcity

� Emergence of complex markets

� Reduced role of government

� Increased competition, low price

� Localized pressures on resources� Cost increases� Internalization of external costs� Change in values

� New value chains, defined by market rather than by product

� Increased delegation, development of PPP

� New business models, new price setting mechanisms4Change in the firms’ scope of

activity, development of multiproduct companies

27© BIPE 2010 - December 2, 2010

Impact on clusters

� Urbanisation

� Development of scarcity

� Emergence of complex markets

� Reduced role of government

� Increased competition, low price

� Localized pressures on resources

� Cost increases� Internalization of external

costs� Change in values

� New business models, new pricing schemes

� New value chains, defined by market rather than by product

� Increased delegation, development of PPP

� New business models, new price setting mechanisms4Change in the firms’

scope of activity, development of multiproduct companies

� Location of clusters

� Ressouce efficiency of clusters

� Scarcity niches develop before scarcity spreads throughout the economy

� New borders of clusters

� New stakeholders in cluster

� Relocation closer to end client

28© BIPE 2010 - December 2, 2010

Impact on clusters

�Production starts after orders have been confirmed / paid

�Increasingly customized products

�Co-conception, value chains built from the end-market upwards, starting from the recycling stage

�Increasingly difficult financing of SMEs

�Zero stocks

�Need to reduce delivery time

�Involvement of the final consumer in the value chain

�Innovation in financial engineering

�New stakeholders in cluster, new cluster frontiers

29© BIPE 2010 - December 2, 2010

Impact on clusters

� Zero stocks

� Need to reduce delivery time

� Involvement of the final consumer in the value chain

� Innovation in financial engineering

� Internalization of external costs

� Change in values� New business

models, new pricing schemes

� Process optimisation

� Relocation

� Cluster = living lab� Innovation zones

� New stakeholders in cluster

� New frontiers for clusters

� Production starts after orders have been confirmed / paid

� Increasingly customized products

� Co-conception, value chains built from the end-market upwards, starting from the recycling stage

� Increasingly difficult financing of SMEs

30© BIPE 2010 - December 2, 2010

Consequences for cluster initiatives and cluster managers

Need to internalize environmental issues:4 Take into account local conditions (assets and weaknesses)4 Pay attention to the location of activities / relocate ?4 Adapt the cluster and companies’ organisation4 Choice of process4 Choice of market

(Continuously) Review the cluster’s frontiers4 Broaden the scope ?4 Prepare the « transformation » stage in the cluster life cycle4 Focus on services ?

31© BIPE 2010 - December 2, 2010

Consequences for cluster initiatives

Review the clusters’ stakeholders4 Open to new players of tomorrow (insurance, etc.)4 Review the roles and responsibilities of stakeholders in clusters

� Means of governments / regions will shrink� è find new leaders for the initiatives

Interact with individual consumers4 Reach outside the cluster to the final consumer – wherever

he/she is – in order to adapt to permanently evolving customer needs

4 Use local residents to create living labs

www.bipe.com

Presentation done by Elizabeth Waelbroeck Rocha

Business

Transcript of Presentation done by Elizabeth Waelbroeck Rocha