Strategy and Governance

Global Megatrends

The world is changing in significant and surprising ways. Anticipating such changes in the marketplace has never been more critical or more difficult.

Ford has long used “megatrend analysis” as a tool to identify and assess such changes. We focus on global trends – the implications of which vary across the world, impacting our people, our operations and the communities in which we work.

Megatrends Affecting Our Sustainability Work

Every global megatrend has far-reaching social, technological, economic, environmental and political implications. For the purposes of this sustainability report, we focus on the implications for our sustainability efforts. This section offers a glimpse of some of the trends tracked by the company. Below we call attention to those trends that have played a prominent role in shaping our sustainability reporting and strategy development, including our 2014 materiality analysis1.

It’s important to note, too, that megatrends are not mutually exclusive to any one area of our business. As such, these sustainability megatrends have some overlap with the mobility megatrends identified in the Mobility section of the report, which focus on drivers of mobility challenges.

Growing population

The global population is growing. To what degree remains up for debate. Some claim we will grow to 9 billion people by 2050, while others claim it will be 11 billion.

What is clear is that much of the growth will take place in areas that are not well equipped to handle it, such as in developing nations, resource-constrained, climate-vulnerable locations, and urban settings with infrastructure constraints. At the same time, we are seeing stagnant or declining fertility rates in developed locations. Overall, these kinds of population changes influence many of the global shifts taking place in the world today (including those described below), and they will shape the social, technological, economic, environmental and political forces of the future.

The world of opposites

Young vs. Old

The population in almost every region in the world is aging, which promises to affect society, economies and corporations. In the most advanced economies, people are having fewer children, further compounding the aging of the base population.

This may hinder the ability to manage change, as some members of the older population struggle to adapt to change, or even resist it. On the opposite end of the spectrum, the emerging economies of India, Mexico and Africa have very young populations. The task of bringing these two worlds together may rest with the Millennial generation, which in itself is shaping new approaches to how we work and influencing what products we buy, with particular attention to products that are ethically and sustainably made.

Emerging vs. Shrinking Middle Class

In parts of the world, the middle class is achieving unprecedented growth, while in other parts of the world the middle class is disappearing. Overall the global middle class is predicted to grow 172 percent between 2010 and 2030, resulting in a rise in global wealth, primarily in emerging markets.

This will lead to increased demand for new types of products, services and business structures, but in an environment where resources will be scarcer and more price-volatile. At the same time, some developed nations are tackling a widening gap in income equality, as the middle class begins to shrink and wealth becomes more concentrated among fewer people, creating a whole set of different challenges.

Local vs. Global

Globalization has many benefits but also some disadvantages. As the world tries to grapple with the downsides, the needs of the global community will compete with local priorities.

The potential for collaboration among countries will be influenced by factors such as uneven global distribution of material resources, from oil to land to fresh water, and a desire for home-grown prosperity, making planning for the future even more complex, particularly in trying to address global issues such as poverty and climate change.

Urbanization

At no time in mankind’s history have city populations been so dense. This density brings great opportunities to live sustainably, but also puts greater pressure on infrastructure and natural resources.

In megacities and mega regions, “smart” development is expected to be imperative to deal with the resulting opportunities and challenges. Urban areas must make critical decisions regarding whether to continue using the infrastructure they have, or to develop a new framework for managing challenges such as congestion.

Examples of Ford’s work relating to this trend:

Resource and carbon constraints

As both the developed and developing world continue to grow, innovation and ingenuity will be needed to overcome constraints in the availability of energy and raw materials.

Also, emissions of carbon will need to be curbed as the implications of climate change become clearer. In fact, one of the great challenges of the 21st century will be finding and harnessing enough low-carbon energy to power the new and the old industrial economies, allowing both to grow and prosper.

Disruptive innovation and big data

We live in an extraordinary era of disruptive innovation. In 2020, computers are anticipated to be about 200 times faster than today and to have memories 1,000 times as large. Cisco forecasts a 10-fold increase in global mobile data traffic between 2014 and 2019 while information and communication technology systems become more and more intelligent.

There are now more active SIM cards than people on Earth; devices and the data they transmit have made the world more connected than any other time in history. As consumers, we take delight in the benefits ushered in by new technologies and the growth in data and information. It will be important, however, for us to stay ahead of and manage this explosive growth to minimize unintended consequences. For example, customization may require consumers to disclose information previously considered personal or private. This makes it important for data to be managed responsibly and transparently.

Emerging Trends/Microtrends

Megatrends, in their nature, are slow moving. It takes time for megatrends to impact society and for the results to become known. And emerging trends – or microtrends – are those that have the potential to grow into megatrends.

As a complement to our analysis of megatrends, Ford develops an annual summary of emerging consumer microtrends to help evolve our thinking about the world ahead. The 2015 Ford Trend Report reveals data and insights about the global consumer habits and behaviors expected to shape culture in 2015 and beyond. The insights gathered in this report guide Ford designers and engineers in developing future Ford products and help Ford marketers anticipate customer shopping and ownership habits.

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  1. A materiality analysis is an analysis that scans, identifies and reviews sustainability issues that are of the highest concern to our stakeholders and that could significantly affect our company’s ability to execute its business strategy.