Reasons for accelerating activities in business – part 1

Why do targets have to be reached faster and faster in businesses? Below you can find several reasons which indicate that being effective and efficient on the market is no longer enough and that being ever faster is additionally required. 15/2018(21)

Polska wersja artykułu: Przesłanki akceleracji działań w biznesie - część 1

I would like to present just a handful of reasons which point out to the need of accelerating activities (accleraTING not acceleRATE).  They are:

  • population growth
  • increased frequency and impact strength of target groups
  • increased number of competitors
  • GDP growth, including GDP per capita growth
  • increased number of needs
  • shortening of product life cycles on the market
  • growth in the average life expectancy
  • subjectivism of the time of existence
  • improved efficiency of communication processes
  • development of science and technology
  • availability of resources

I will describe the first five of them, leaving the remaining ones for my next post.

Reason 1. Population growth

An increased number of people generate needs, hence businesses need to accelerate activities for their satisfaction. A bigger number of potential customers needs to be served.  Obviously, since there are more and more people on Earth, one could expect that more and more people work, therefore the balance between the growth in needs and the growth in workforce needed to satisfy them should be even.  This is where additional reasons begin to impact.

 

 

Population on Earth since 50 000 B.C. to 2011 A.D. Prepared on the basis of:  State of world… 2011, p. 2-3; Haub no publication date.

Reason 2. Increased frequency and impact strength of target groups

There are various geneses to needs. Some are biologically based, other stem from co-habitation in the society.  The factors which generate the needs of a subject of activity include other people. It is often talked on the market about the impact of reference groups “which have direct or indirect influence on behaviors and attitudes of an individual” (Kotler 1994, p. 163-165). The following groups can have impact on the human being:

  1. member groups, i.e. groups the entity is part of or interacts with
  • primary groups, e.g. family, friends, colleagues, neighbors,
  • secondary groups, e.g. religious, professional, association groups;
  1. aspirational groups, i.e. groups the individual would like to belong to, e.g. their favorite sports team;
  2. dissociation groups, i.e. groups the individual would not like to belong to, e.g. a sports team competitive to their favorited one (on the basis of: Kotler 1994, p. 163).

At the moment, in particular thanks to a dynamic development of communication tools as well as changed lifestyles and cultural changes, the number of relations and reference groups which affect each of us is growing.  The number of relations increases, inter alia, due to better diversity of communication tools and an easy access to them. Using social media, we often have a big number of friends and can stay in virtual touch with them. Knowing what every one of them does, how their spend their time and what they buy affects the scale of needs and activity on the market.

A bigger number of sources of information leads to changes in belonging to dissociation and aspirational groups.  My child is not a fan of only one sports club and the Polish national football team, as I used to be in the past. He has several favorite European clubs (not long ago he played football wearing an FC Barcelona jersey) and national teams, e.g. the Spanish one, apart from the Polish side.

Reason 3. Increased number of competitors

The number of businesses has been increasing over recent years. Although the number changes each year, the overall tendency is growing. Below, I collected data on the number of businesses in Poland in the years 2004-2015:

  • 2004 – 1 714 983,
  • 2005 – 1 676 775,
  • 2006 – 1 714 915,
  • 2007 – 1 777 076,
  • 2008 – 1 862 462,
  • 2009 – 1 673 527,
  • 2010 – 1 726 663,
  • 2011 – 1 784 603,
  • 2012 – 1 794 943,
  • 2013 – 1 771 460,
  • 2014 – 1 843 000,
  • 2015 – 1 914 000

According to them, in 2015 there were 11.6 percent more businesses than in 2004 (Activity… 2010, p. 46; Activity… 2013, p. 48, Activity… 2014a, p. 49, Activity… 2014b, p. 23, Activity… 2015, p. 22, Activity… 2016, p.  24).

In 2015, 99 percent of all businesses were small enterprises, mainly micro ones (96 percent) (Activity… 2016, p. 24).

The number of initiations of business activity is also growing in many countries, especially in China (Młynarczyk 2011), Brazil (28 percent ), Chile (37 percent), Columbia (55 percent), or Mexico (49 percent). The growth in the number of businesses enhances competitiveness.  You have to be more efficient, agile and faster to succeed on the market.

Reason 4. GDP growth, including GDP per capita growth

GDP can be calculated with different methods: by summing up products, summing up income or summing up expenses (Milewski 1998a, p. 339). The first method which is quite often used is based on adding the value of generated goods (products and services) and lowering their total by the value of goods used to generate them (cf.  (Milewski 1998a, p. 339 and Obrębski 1994, p. 174)).

Changes in the GDP and GDP per capita in the global economy can be seen on the figure below.

 

Fig. 2.9. Global GDP in the years 1-2011 A.D. (in million USD)
Own study on the basis of: Maddison 2007, p. 379; Gross domestic… 2013

Fig. 2.10. Global GDP per capita in 1-2011 A.D.
Own study on the basis of: Maddison 2007, p. 382; Index Mundi 2014

An analysis of the changes in the value of GDP per capita in the global view is especially interesting.  After all, it could be the case that the GDP value would grow along with the growth in the population but only because of the growth in the number of people and thus workers. However, especially over the past several hundred years, the value of GDP per capita has been growing quite significantly (despite wars, epidemics and other adverse extraordinary incidents).

  1. As Kelly points out: “In the long-term, the global economy developed, on average, at the pace of a fraction of a percentage per year. Over the past several hundred years, the average was 1 percent annually and over the past 100 years, during which we built the vast majority of things we have on Earth now, it reached 2 per year. […] The invisible wave pushes the entire economic ecosystem forward, […] going faster with each year” (Kelly 2001, p. 134).

Reason 5. Increased number of needs

Despite the growth in the GDP, including GDP per capita, the number of generated needs might become higher than the number of satisfied needs and a negative balance leads to unsatisfied consumers.  People who are investors in businesses also have their expectations – their needs are connected with share value and profit. Both number as well as diversity of needs are growing, leading to deepening differentiation of products. In order to ensure their diversity, it is necessary to accelerate the creation of innovative solutions, at the same time decreasing the costs of their implementation and maintenance on the market.

At the same time, according to data, approximately 18.7 percent of young people remain unemployed in the European Union. In Poland, the number of young unemployed is quite substantial (17.7 percent in 2016) but in some countries it is very high: in Greece it is 49.8 percent, 44.4 percent in Spain, 37.8 percent in Italy (Youth… no publication date).

Youth unemployment remaining high and difficulties in finding full-time jobs might lead to increased professional activity on the part of young people who, wanting to satisfy their needs, will be deciding to start their own businesses (most often micro ones) ever more often. Increasing the likelihood of their enterprises’ success on the market will be possible thanks to innovative products.  If young people do not increase their economic activity and solutions for the functioning of the labour market are not implemented, frustration will be growing in that group due to impossibility to satisfy an ever bigger number of needs or there will occur social phenomena which will increase the likelihood of their satisfaction in the opinion of those concerned (migration, aggravation of generational conflicts, perhaps radicalization of views and racists activities, etc.).  On the other hand, it must not be ruled out that minimization of internal needs will develop, leading to consolidation of the minimalist social movement.

Sources:

Activity of non-financial enterprises in 2008 r. (2010), Statistics Poland, Warszawa.

Activity of non-financial enterprises in 2011 r. (2013), Statistics Poland, Warszawa.

Activity of non-financial enterprises in 2012 r. (2014a), Statistics Poland, Warszawa.

Activity of non-financial enterprises in 2013 r. (2014b), Statistics Poland, Warszawa.

Activity of non-financial enterprises in 2014 r. (2015), Statistics Poland, Warszawa.

Activity of non-financial enterprises in 2015 r. (2016), Statistics Poland, Warszawa.

Gross domestic product 2011 (bez daty wyd.), World DataBankhttp://databank.worldbank.
org/databank/download/ GDP.pdf
  (dostęp: 2013.05.30)

Haub C. (bez daty wyd.) How Many People Have Ever Lived on Earth?http://www.prb.org/
Articles/2002/How ManyPeopleHaveEverLivedonEarth.aspx
 (dostęp: 2014.07.04)

Index Mundi , http://www.indexmundi.com (available: 2017.09.15)

Kelly K. (2001), Nowe reguły nowej gospodarki, WIG-Press, Warszawa.

Kotler P. (1994), Marketing. Analiza, planowanie, wdrażanie i kontrola, Gebethner & Ska, Warszawa.

Maddison A. (2007), Contours of the World Economy, 1–2030 AD. Essays in Macro-Economic History, Oxford University Press, Oxford.

Milewski R. (1998), Metody obliczania produktu krajowego brutto, w: Podstawy ekonomii, red. R. Milewski, Wyd. Naukowe PWN, Warszawa, s. 335-343.

Młynarczyk M. (2011), Chiny: Bliżej kapitalizmu?, 27.12.2011, http://www.psz.pl/index.php?
option=content&task=view&id=40421
 (availabe: 2014.07.04).

Obrębski T. (1994), Dochód narodowy i wzrost gospodarczy, w: Elementy makro i mikroekonomii dla inżynierów, red. nauk. S. Marciniak, Wyd. Naukowe PWN, Warszawa, s. 172-196.

State of world population 2011. People and possibilities in a world of 7 billion (2011), United Nations Population Fund.

Youth unemployment figures, Eurostat, http://ec.europa.eu/eurostat/statistics-explained/index.php
/File:Youth_unemployment_figures,_2007-2016_(%25)_T1.png
 (available: 2017.09.15).

 

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