To SCDigest, that means the likelihood of mergers and acquisitions, or private equity taking a public company private, should drop substantially versus levels seen in recent years. Companies and private equity companies will be a lot less willing or able to borrow the cash to fund such deals – or the price for the credit will be steep enough that a lot fewer of those deals will offer the right risk reward ratio. Whether that is good or bad for supply chain practitioners depends on your perspective – it likely will reduce the demand in some ways for top supply chain talent, which private equity deals were fueling in recent years, and that had the effect of pushing supply chain executive salaries higher.
But the changes in financial engineering may also put even more pressure on supply chains to take out costs.
“Companies that boost returns to equity the old fashioned way—through real productivity gains—will be rewarded,” Davis believes.
 It’s also clear that we will see an expanded role for government across most areas of business activity.
Davis, for example, says that “there is a risk of a new era of financial protectionism” that could make it “harder for companies to move capital to the most productive places and that dampen economic growth, particularly in the developing world.”
Davis adds that, “Companies need to prepare for such an eventuality—even as they work to avert it.”
He adds that it was clear, even before the recession, that “that US consumption could not continue to be the engine for global growth,” observing that most developments that enabled that over the past few decades (women entering the workforce, baby boomers entering peak spending years, rise in level of college grads) have largely played themselves out.
So, “Companies seeking high rates of income and consumption growth will increasingly look to Asia,” where he says the drivers of growth, including productivity gains, technology adoption, and cultural and institutional changes, are not likely to be stopped for long by the recession.
“The world’s economic center of gravity will continue to shift eastward,” Davis says.
There seems to be almost universal agreement that when we finally enter into the post-crisis period, the business and economic context will not have returned to its pre-crisis state – bringing risk and opportunity.
“Executives preparing their organizations to succeed in the new normal must focus on what has changed and what remains basically the same for their customers, companies, and industries,” Davis concludes. “The result will be an environment that, while different from the past, is no less rich in possibilities for those who are prepared.”
Look for our thoughts more specific to the “new supply chain normal” very soon.
What do you think of Davis’ comments on the “new normal.” Do you agree that the world business climate will be very much restructured – or is this idea overblown? Are these macro changes likely to be good or not so good for the supply chain? Let us know your thoughts at the Feedback button below.
SCDigest is Twittering!
Follow us now at https://twitter.com/scdigest |
Supply Chain Trends and Issues: Our Weekly Feature Article on Important Trends and Developments in Supply Chain Strategy, Research, Best Practices, Technology and Other Supply Chain and Logistics Issues 
The changes in financial engineering may also put even more pressure on supply chains to take out costs.
