Industry outlook

Chapter 3

Our world now by Sir Martin Sorrell

In his May 1983 Harvard Business Review article ‘The Globalization of Markets’, Ted Levitt highlighted that multinational companies were abandoning the strategy of adapting their products to idiosyncratic consumer preferences in individual countries in favour of “globally standardised products that are advanced, functional, reliable – and low priced.” Globalisation was born and became the reigning economic paradigm for decades to come.

Forty years later we are moving away from globalisation. Among the reasons are a series of disparate geo-political developments, and a level of uncertainty that is unprecedented in recent times. The West’s stand-off with China, the war in Ukraine and the growing threat from Iran: these are all shifts that have divided the world and unleashed a nightmare for those building and operating supply chains to serve global markets. The specific hurdles include escalating energy costs; the insecurity of sourcing components or manufacturing from countries at risk of conflict; and targeted international sanctions. Once you could plant your flag and trade wherever there was a favourable demographic; now the world is becoming fragmented and we all have to be much more selective about where we invest. Onshoring, re-shoring, ‘friendshoring’ – all these will have a part to play in business success over the next few years. The challenge will be to find secure places where you can build supply chains and service your key markets.

The 2020s will be very different from what we are used to. And that means you will have to run your business or live your life in a totally different way.”