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If the world is changing, so will my company

  • 08 May 2015
  • Articles

The world is undergoing constant transformations that have changed not only the way we communicate and relate with one another, but also the way we do business. In fact, globalization and new technologies have altered the modus operandi of geographically established markets, to markets that tend to be increasingly transversal, international and culturally diverse. Social networks are a clear example of a mutation in the economy. Facebook has over 1.23 billion users, a market as large as the most populated nations of the world, such as India (1.24 billion) and China (1.3 billion), with the big difference that Facebook’s rate of growth is greater than the rate of birth of both countries.

Large flows of information have stripped States and big companies of some of their power, empowering citizens and consumers who are increasingly willing to issue public and massive judgments. This explosive progress, both in terms of quantity and quality of new technologies, has caused life cycles to be shorter with accelerated obsolescence, exceeding the expectations of the creators themselves. Who remembers jobs like the night watchman, milkman, knife-grinder, mattress repairman, linotype operator, among others? Technology and process optimization have made certain trades disappear, while inventing others at the same time.

Younger generations are more adaptable to new technologies. This ability is inherent to human beings for their survival, and it is the attitude that should motivate companies when faced with change, or else they will be destined to disappear. This situation has happened to many banks, newspapers and companies that have lost the fight to global competitions and new technological trends, which fact especially affects SMEs and new enterprises

According to García Ordóñez (2005), 80% of the companies in Spain bankrupt within the first five years. In Mexico, according to Cetro-Crece, 75% of the new Mexican companies have to close down their operations after two years in the market. In underdeveloped countries CEPAL estimates that between 50 and 75% cease to exist within their first three years. On the other hand, the Argentinean Association for the Development of Small and Medium Enterprises stated that 7% of entrepreneurial ventures make it to their second year while only 3% make it to the fifth year. In the United States 53% of the companies incorporated in the year 2005 disappeared after a 5-year period.

In Chile said statistical trend does not vary. According to Rodrigo Castro, who studied the behavior of 67,310 companies incorporated in 1996, 25% of the companies disappeared during the first year, 17% during their second year, 13% during the third year and 11% during the fourth year. Many of these writers agree that the reason for such failure is both due to poor management and poor planning; two activities that are most relevant in this new and variable scenario in which uncertainty and risk is abundant, aside from competitors from other countries who possess better technology.

Beyond the complexities that correct planning and management of a company entail, it is also of paramount importance to have prompt access to periodic information that allows reducing risks. For this same reason, before releasing a new product, entrepreneurs should assess the market and its technological trends because in order to have a good strategy it is fundamentally important that companies have adequate information both internally as well as regarding their surroundings.

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If the world is changing, so will my company