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Underlying Historical Forces Changing Business Environment

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by Baby Jhudiel Canillas on 28 June 2013

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Transcript of Underlying Historical Forces Changing Business Environment

Underlying Historical Forces Changing The Business Environment
9 HISTORICAL FORCES
The Industrial Revolution
Inequality
Population Growth
The basic population trend throughout human history is upward. It took only
1825
for the
world population to reach 1 billion
; then each billionth additional person was added faster and faster - first in 100 years, then in 35, then 15, then only 12. This
astonishing growth had two causes
, both related to the industrial revolution.
First: advances in water sanitation and medicine
reduce deaths from infectious disease, and
second: mechanized farming
expanded the food supply.

The
world population reached 6.1 billion persons
in
2000
and it continues to rise. But the rapidity of growth is slowing now primarily because of declining fertility. Despite a continued drop in fertility rates, population experts predict that the
world population will grow to a peak of 9.2 billion
in
2075
. Then it will
decline over a century to 8.3 billion
in
2175
before
slowly rising to 9 billion
in
2300
.
These population trends have many implications. First,
although overall growth is slowing, it will be highest in less industrialized regions, widening further the wealth gap between high and low income countries
. Second,
growth will continue to restrain the earth's ecosystems, especially as industrial activity spreads
. Third,
the west is in demographic decline compared with other people
.

In such ways will population trends alter the
business environment and create new societal
expectations for corporate behavior.
Technology
In the
1450s
the
printing press
was an immediate commercial success, but its impact went far beyond the publishing business. Over the next 100 years the affordable, printed word reshaped European culture by creating a free market for ideas that undermined the doctrinal monopoly of the Catholic Church. Printed pamphlets spreading Martin Luther's challenge to its scriptural dogma and brought on the Protestant Reformation. Galileo was placed under house arrest in Florence for holding heretical views about astronomy, but his theories prevailed because they were published in Protestant Holland. A Europe opened to the exchange of new ideas based on experience and observation was primed for the scientific revolution.
Historical Force
According to Henry Adams, "anything that does, or helps to do, work."

An environmental force of unknown origin and mysterious action that provides the energy for events. The discussion divides this force, somewhat artificially, into nine separate but related forces causing distinct chains of events.
Transforming changes that turn simple economies of farmers and artisans into complex industrial communities.
Such change requires specific conditions, including sufficiency of capital, labor, natural resources, and fuels; transportation; strong markets; and the ideas and institutions. These conditions first arose in
England during the late 18th century
, then spread to
Western Europe and the United States during the 19th century
.
Japan and Russia took off in the first part of the 20th century
, and
other Asian nations, including Taiwan, South Korea, and China, followed in the second half
. Industrialization continues to spread as less developed nations try to create the conditions for it.
GINI Index
- a statistical measure of inequality in which 0 is perfect equality (everyone has the same amount of wealth) and 100 is absolute inequality (a single person has all wealth).

The Human Development Index
- is a
statistical tool used by the United
Nations for measuring the progress
of humanity. The HDI is a scale
running from 0 to 1, with 1
representing the highest human development and 0 the lowest. It measures the development of nations as an average of scores in
three equally weighted categories
:
longevity
,
knowledge
and
income
.
The
invention of the steam engine
in the
late 1700s
and
its widespread use

beginning in the early 1800s
, along with increased use of the waterwheel and new iron-making methods, triggered the industrial revolution. The
first of five waves of technological revolution
are shown below. In each wave innovations spread, stimulating economic booms of increased investments, rising productivity, and output and growth. The shortening of successive waves reveals faster technological innovation.
Globalization
Globalization
occurs when networks of economic, political, social, military, scientific or environmental interdependence grow to span worldwide distances
. In the economic realm,
it refers to the development of an increasingly integrated commercial system based on free markets in which nations are open to foreign trade and investment
. The current rise of such a system began after World War II, when the victor nations lowered trade barriers and loosened capital controls. Over the next 50 years, international negotiations led more nations to open themselves to global flows of goods, services, and investment until today no national economy of any significance remains isolated from world markets.
According to Historians
J.R. McNeill
and
William H. McNeill
, in prehistoric times humans interacted in a loose worldwide web through which genes and inventions such as language and the bow and arrow were slowly exchanged by migrations between relatively isolated bands. Beginning about
12, 000 years ago
with the growth of agricultural societies, stable and expanding populations formed the first cities. Over time, these cities grew into nodes that tied regions together. Still, there was little interaction between civilizations of different continents. Then, about 500 years ago, China sponsored oceanic voyages to extend its power. Soon Portugal and Spain followed and over the next 250 years mariners connected even the most remote places to the great centers of civilization. By the late
1700s
the world was knit together with the exchange of trade goods, currencies and ideas. The consequences of this initial globalization is similar to those arising from the current globalization.
Economic activity rapidly increased
.
Trade expansion increased inequality among nations
.
Cultures changed
.
Infectious disease spread
.

Transnational corporations are the central forces of current economic globalization.
Nation-States
The nation-state is
the unit of human organization in which individuals and cultural groups can influence their circumstances and future
. In the past, nations increased their power by seizing territory from other nations. With more territory they acquired new natural resources, agriculture, and labor. Now, however, the wealth of high-income nations is based on the operation of global corporations that use flows of capital and knowledge to provide goods and services in many nations.
Dominant Ideologies
An ideology is
a set of reinforcing beliefs and values that constructs a worldview
. The Industrial Revolution in the West was facilitated by a set of interlocking ideologies, including
capitalism
, but also
constitutional democracy
characterized by protections for rights that allowed individualism to flourish; progress, or the idea that humanity was in upward motion toward material betterment;
Darwinism
, or Charles Darwin's finding that constant improvement characterized the biological world, which reinforced the idea of progress;
Social Darwinism
, or Herbert Spencer's idea that evolutionary competition in human society, as well as the natural world, weeded out the unfit and advanced humanity; and the
Protestant ethic
, or the belief that hard work, saving, thrift, and honesty led to salvation.

Vibrant pluralism
of belief existed for most of recorded history, but many doctrines have perished as a result of globalization. After two centuries of contention the economic ideology of capitalism has marginalized its rival
socialism
. The sifting of ideas accelerated in the 20th century as a result of rising literacy and innovations that spread information.
Great Leadership
Chance
Alexander imposed his rule over the ancient Mediterranean world, creating new trade routes on which Greek merchants flourished. Adolf Hitler of Germany and Joseph Stalin in the Soviet Union were strong leaders but they unleashed evil retarded industrial growth in their countries.

There are
two views about the power of leaders as a historical force
:
Leaders simply ride the wave of history
.
- John D. Rockefeller
Leaders themselves change history rather than being pushed by its side
.
- John Jacob Astor
- James B. Duke
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