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Underlying Historical Forces Changing Business Environment
Transcript of Underlying Historical Forces Changing Business Environment
9 HISTORICAL FORCES
The Industrial Revolution
The basic population trend throughout human history is upward. It took only
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.
world population reached 6.1 billion persons
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
. Then it will
decline over a century to 8.3 billion
slowly rising to 9 billion
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
growth will continue to restrain the earth's ecosystems, especially as industrial activity spreads
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.
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.
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
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.
- 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
invention of the steam engine
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.
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
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
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
Infectious disease spread
Transnational corporations are the central forces of current economic globalization.
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.
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
, but also
characterized by protections for rights that allowed individualism to flourish; progress, or the idea that humanity was in upward motion toward material betterment;
, or Charles Darwin's finding that constant improvement characterized the biological world, which reinforced the idea of progress;
, 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
, or the belief that hard work, saving, thrift, and honesty led to salvation.
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
. The sifting of ideas accelerated in the 20th century as a result of rising literacy and innovations that spread information.
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.
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