QUESTION $1\mathrm{.}3$

An ongoing shift in global economic activity from developed to developing economies, accompanied by growth in the

number of consumers in emerging markets, are the global developments that executives around the world view as the

most important for business and the most positive for their own companies' profits over the next five years. Executives

also identify two other critical positive aspects of globalization: technologies that enable a free flow of information

worldwide and, increasingly, global labor markets. These four trends of the ten we asked about, also are the ones that the

biggest share of respondents$$around half$$say their companies have taken active steps to address. In this sixth annual

survey asking executives about the forces shaping the world economy, there is little change in how respondents view the

importance of global trends compared with previous years$$either for business in general or for their own companies'

profits. Clearly, the financial crisis and economic downturn have not shaken these key trends. Continued faith in the

positive effects of globalization combined with a move away from short$-$term planning likely reflects rebounding optimism

about global economic prospects and is consistent with the findings of other McKinsey surveys on the economy.

The result of this survey explores for the first time five interconnected themes that highlight the opportunities and

challenges faced by global economic integration itself and by companies seeking to profit from it: growth in emerging

markets$$ labor productivity and talent management$$ the global flow of goods, information, and capital$$ natural$-$resource

management$$ and the increasing role of governments.

The findings show that the global economy faces significant challenges as it continues to integrate. For example, most

respondents$63$ percent$$expect increased overall volatility to become a permanent feature of the global economy, and

another $23$ percent see sharply higher levels of volatility that will undermine the economy's robustness. In addition, high

levels of public debt are a headache in Europe and North America, where most executives fear the debt will have a

negative impact on GDP growth. There are specific corporate challenges too. Half of the respondents are only somewhat

optimistic they will be able to find the right talent to meet their companies' strategic goals. Likewise, only half of the

executives reported that their companies have taken steps to address the shift in global economic activity from

developed to developing economies$$the force that is reshaping the global economy more than any other.

Low birth rates and graying workforces in most developed economies will make it hard for them to achieve steady growth

unless they continue to make sizable gains in labor productivity. A majority of all respondents, $62$ percent, do expect

moderate gains in the next five to ten years in developed economies, and another $13$ percent expect the gains to be

significant. Nonetheless, developed and developing economies alike must become more innovative at sourcing talented

employees, whether by tapping global labor markets or making better use of older workers. Just less than $40$ percent of

executives are "very" or "extremely confident," and around half are "somewhat confident," that their companies will have

the right kinds of talent to meet their strategic goals over the next five years. Notably, respondents at companies based in

developing markets largely share the same views as those from developed markets on this point. The greatest projected

talent shortfalls are in three functions$$management$,$ R&D$,$ and strategy$$with significant variations between executives

in different regions as provided for in Exhibit $2.$ Interestingly, executives in China are much more concerned about a

shortage of management talent than they are about R&D specialists. For India, it is the reverse.

Exhibit $2$

When indicating where their companies will find the talent they need, executives most often cite talent from emerging

markets to work there $(44$ percent$),$ new talent entering developed labor markets $(41$ percent$),$ and talent from developed

markets deployed to emerging markets $(35$ percent$).$ North American companies, their executives say, are counting more

than all others on sourcing talent in developed economies, including retrained talent $(30$ percent$)$ and talent from

increased labor pools due to delayed retirement $(25$ percent$).$ This is consistent with the lower number of actions North

American companies are taking to capture emerging$-$market growth.

QUESTION $1\mathrm{.}3$

As an operations management executive in one of the Chinese organisations, you have faced

significant challenges with the implementation of your human resources management strategy. With

reference to this, demonstrate the primary factors that can hinder the implementation of this strategy. Make

use of relevant examples.