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Question 1 From a marketing perspective, what are the potential…
Question 1
From a marketing perspective, what are the potential opportunities and challenges for Pedego Electric Bikes operating globally during the pandemic?
concepts and theories from Block 2, Sessions 13 – 16
Are cities the new countries?
Coughlan, S. (2016) ‘Are cities the new countries?’,
1 Do big cities have more in common with each other than with the rest of their own countries?
Are there meaningful comparisons between cities such as New York, London and Shanghai, rather than between nation states?
That is the suggestion of the Organisation for Economic Co-operation and Development (OECD).
Such mega-conurbations have bigger populations and economies than many individual countries – and the think tank argues that they face many similar challenges, whether it is in transport, housing, security, jobs, migration or education.
In a report on global trends shaping education, the OECD says cities could learn from each other’s experiences, in a way that would be impossible at the level of national politics.
‘Sharing policy lessons across countries is hard, because policy is so much framed in terms of ideology and political parties’, says Andreas Schleicher, the OECD’s education director.
‘When we talk about countries, it’s often about what separates us, language and culture. But when you talk about cities, we face very similar challenges.’
They are the upsides and downsides of immense concentrations of people living in a small space, often two sides of the same coin.
There are more jobs, but also more unemployed. There are extremes of wealth and poverty. There are highly developed transport systems and then overcrowding as they struggle to cope with the demand.
The bright lights, the economy and innovation attract people, which leads to extra pressures on housing and services and arguments over the levels of migration.
Modern mega-cities are highly connected places, but with corresponding levels of people who feel dangerously disconnected.
These are issues that the OECD says could be more usefully examined at a city level.
Reading 13: Are cities the new countries?
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Competing in a global context
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‘If you think of security, terrorism and radicalisation, it’s not going to be a challenge for the villages of England or France – it’s going to be large metropolitan areas that are going to have to deal with this.’
‘The world is much more of a global village when you talk about cities.’
In education, Mr Schleicher says comparisons between cities are particularly
relevant.
‘Why is it that city schools in London are so much better than city schools
in New York? We should be asking ourselves that question.’
The OECD’s figures show how the economic activity of metropolitan areas accounts for a disproportionate slice of national wealth. In France and Japan, 70% of GDP growth between 2000 and 2010 was attributed to their big cities.
And there are forecasts for even more urbanisation, tipping even more of the economic strength into these city states.
The metropolitan areas of Mexico City, Delhi, Shanghai and Tokyo already have populations above 20 million, bigger than most European countries.
The report also shows how ideas spread between mega-cities – and how much they have come to look like one another.
It tracks how brands such as Starbucks, H&M and Zara went from operating in relatively few countries in the early years of the century, to being almost everywhere a decade later.
The pressures on urban transport are also shared – and so often are the responses.
There was once only one urban metro system, the London Underground, which began in the 1860s, at a time when Britain’s entire population wasn’t much bigger than modern-day Shanghai. Now there are more than 100 operating in 27 of the OECD member countries, part of the fabric of highly urbanised areas.
Bike-sharing schemes, launched in Copenhagen in 1995, have spread in 20 years to more than 600 cities around the world – and the biggest are now in China. In Hangzhou alone there are around 80,000 bikes hired out.
The modern mega-city is also intensely international. Whether its food, languages being spoken, local media, the multicultural mix of the people, the rapid flux of money, ideas and fashion – these world cities are increasingly unlike anywhere else within their own countries.
They’ve developed their own cultural and economic micro-climates. Take a London bearded hipster and he might be more at home in Manhattan than a post-industrial part of his own country.
The OECD raises the question about whether such cities are ‘now the most relevant level of governance, small enough to react swiftly and responsively to issues and large enough to hold enough to hold economic and political power’.
It stirs echoes of the long history of city states, like Italian cities during the Renaissance, with wealth and creativity operating within civic fiefdoms, rather than national boundaries.
The 2016 global trends report provides some other fascinating snapshots of modern living.
Belgium and Japan are the most urbanised countries in the world, with the UK above average.
Smoking tobacco is in decline across all developed countries apart from Greece, where consumption is higher than in 1990, perhaps raising questions about the economic crash.
Suicide rates have either fallen or remained stable across most of the developed world, but the USA and South Korea are exceptions, where the rates have risen compared with 2000. The UK has one of the lowest suicide rates.
Levels of household debt have risen in almost every industrialised country, with the two exceptions being Germany and Japan. Denmark has the highest level of household debt, with the UK in the upper half of the range.
So would the problems on national governments be better addressed at a more local level?
Mr Schleicher says it’s the great global cities where many of the big contemporary questions are sharpest.
In such diverse cities, what are the values and identities that need to be promoted or rejected? How do we respond to widening extremes of income equality? How do we prepare young people for such a shifting jobs market?
What does it mean to be an individual in a huge city shaped by the unpredictable trade winds of a global economy?
Living in a mega-city doesn’t necessarily make us feel like mega citizens.
As the OECD guru asks, how do we make people ‘feel safe and at home in a city that changes rapidly around them?’
Reading 13: Are cities the new countries?
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Reading 14: Zonal Retail Data Systems
Invest Edinburgh (2016), ‘Zonal Retail Data System’ [Online]. Available at http://www.investinedinburgh.com/why-invest/case- studies/zonal/ (Accessed 6 June 2017).
My family owned a hotel in a place called Carlops, explains Stuart McLean, chief executive of Zonal Retail Data Systems.
‘There were a couple of bars and staff used to drink and give drink to their friends. We didn’t like that very much so we tried to control it. But there wasn’t a system out there, so we invented one.’
‘Over the last four to five years, growth has been really quite spectacular’, Mr McLean says. ‘I think the product set that we’ve got has hit the mark. We certainly focus as a business on making sure we retain our customers by providing them with great service. For example, Wetherspoons have been with us for 28 years, so our customer retention is very good.’
1 Focussing on customer retention
The beauty of Zonal’s system is in itemising every product and linking the till to every part of the business, including the kitchen, finance department and head office.
‘So if you’re ringing up a food order for the kitchen, you don’t have to walk through with a ticket – the system does it for you’, Mr McLean explains.
‘You can see that you sold 47 bottles of Becks at certain times, or you know that when someone comes in and orders a burger, they usually have a pint of Fosters with it. It’s all about control, efficiency and data.’
‘It makes our customers very efficient. It gives them control and gives them granular information about their business and their customers. There are loyalty systems linked into it, so you can understand the customer journey from when they sit down at a table in a restaurant to when they leave and give feedback.’
Global Tech Talent
About half of Zonal’s 423 staff work at the company’s head office in Tanfield, Edinburgh, in roles including research and development, finance and technical support. Another 20 work at Zonal’s logistics centre and factory at Livingston. There are also about 120 field staff including engineers and account managers.
Reading 14: Zonal Retail Data Systems
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I can’t think of another city that’s got the talent that Edinburgh’s got and the way of life that Edinburgh’s got … Those two things make Edinburgh a great place to invest. There are also a lot of other great IT companies in Edinburgh like Skyscanner, and that attracts people too.
Stuart McLean, chief executive, Zonal Retail Data Systems
Zonal is benefitting from a strong hospitality sector as the improving economy means more people are eating out more.
‘We are growing and gaining market share so we we’re in a fantastic place at the moment’, Mr McLean says.
The company’s vision is to continue expanding into different market segments and geographies – particularly America. Zonal opened a US head office in Orlando, Florida, 16 years ago.
‘The US is a focus for us as we expand over there’, Mr McLean adds. ‘It’s about investment – investing in more people and investing in the products to make them compelling for the US market.’
2 Ordering innovation
When Stuart McLean first took over as chief executive in 1997, the company turned over £6.8 million. In the financial year just passed, turnover was £59.6m.
Innovation is also a big driver for the business as consumers increasingly look to engage with brands through their mobile devices.
‘We now have an app where, if you’re sitting at a table in Wetherspoons and you want to order four more pints of lager, you can do it from your phone and they’ll just turn up. We live in a mobile world now and increasingly that’s the way customers want to interact with their brands.’
So what does Mr McLean personally value most about Edinburgh?
‘I can’t think of another city quite like it’, he says. ‘I think there are great people here and it’s big enough to have everything, but small enough not to overwhelm you. If you think of the culture here like the festivals, the bars and the restaurants – everything about Edinburgh makes it a fantastic city. Personally I think it’s a great place to be.’
Reading 15: Sustainable cities – creating urban environments of the future
Reading 15: Sustainable cities – creating urban environments of the future
Childs, M. (2013) ‘Sustainable cities: creating urban environments of the future’, The Guardian, 29 July.
With the population in urban areas set to swell, how can business contribute to developing more sustainable cities?
Cities are the future – a statement that is difficult to argue with if predictions that 7 out of 10 people will be living in urban areas by 2050 comes true. What changes are needed in the organisation and management of resource use to make cities better places to live and what role does business have in this?
1 Autonomy
Every city is different, with its own history, culture and skill bases; take Shanghai, Manila and London, for example. To respond to those differences, cities need significant levels of autonomy to allow them to build on their uniqueness, play to their strengths and respond to the challenges ahead (extreme weather, growing and ageing populations and resource crunches, to name a few).
In the UK this power has been gradually stripped away from city authorities through the decades as the state has become more centralised. Having a mayor in London has arguably strengthened the city’s voice and allowed an urban vision to develop, but even London has limited autonomy and other cities have even less.
Michael Heseltine, the former UK Conservative deputy prime minister, sees more autonomous cities as leading to economic growth. But as the EU has highlighted, there are currently vast differences in the control that European cities have over revenue raising and spending.
Granting cities more autonomy isn’t controversial; however, the question of who holds the levers of power and how this is used is. Should city authorities be able to introduce rent controls and land taxes? Should they be able to make procurement decisions, not hampered by national, EU or global rules? Should they be able to introduce minimum wages for their area?
For big business, a more complex regulatory environment may reduce efficiency but it could also allow smaller local companies to flourish. Some firms have developed good relationships with their local cities and recognise the need to adapt to their local environment. Will that become the norm?
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2 Participation
The question of who holds power at the city level is crucial. Heseltine suggests businesses need to be in the driving seat, setting the rules. But if we want to improve the wellbeing of our cities, autonomy cannot just exist for the benefit of the powerful few.
One good solution is participatory decision-making and participatory budgeting – involving affected communities in making the decisions themselves, and giving a voice to the poorest and most marginalised in society, not just the well-educated and articulate middle classes.
In Porto Alegre, Brazil, involving residents in determining local budgets has resulted in increased primary healthcare in poor areas, more schools and nursery schools and provision of water and waste-water systems to most households.
For participation to work, we need an education system that not only produces students with good qualifications in maths, English and science, but that more importantly develops the power of critical thought. As the educational philosopher Paolo Freire said, education should become ‘the practice of freedom, the means by which men and women deal critically and creatively with reality and discover how to participate in the transformation of their world’ rather than a tool for conformity.
3 Sharing
Is our vision of the future really one where every household has cupboards full of stuff that is rarely used, where people hide in gated communities, and move around in private metal boxes? This is a future of estrangement, resource waste and dysfunction.
Innovative businesses are already tapping into this idea, with some examples showcased on www.shareable.net. We need business models that help build communities, allow local people to manage assets from energy to parks to bikes and that utilise the digital revolution to bring people together, not to segment them.
And more traditional businesses can get in on the act as well. Water is a basic necessity. Beer isn’t (arguably) so the brewer SAB Miller has rightfully recognised the need to work with communities to ensure that there is enough water for basic needs, as well as enough for beer production. This sharing approach is critical to future development, and obviously for SAB Miller critical to its future licence to operate. This approach needs to be the norm for businesses, not just a best case example at sustainable development conferences.
Reading 15: Sustainable cities – creating urban environments of the future
4 Transformation
These three ideas alone could be transformational for the future of our cities. They certainly envision a very different role for business. But does any business really think a tweaked version of the status quo is tenable?
As cities get bigger, it is inevitable that they demand more power. The digitally enabled public will demand their voice is heard – witness Turkey and Brazil. Sustainable businesses will embrace this change – some are already doing so. How do you see our cities in 2050? Can business contribute to developing more sustainable cities? Let us know by leaving your comments below.
Mike Childs is project leader for Friends of the Earth’s Big Ideas Change the World project.
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Reading 16: Globalization and the nutrition transition – a case Study
Hawkes, C. (2007), Case Study #10-1 of the Program ‘Food policy for developing countries: the role of government in the global food system’, Cornell University, Ithaca, New York.
Edited by Per Pinstrup-Andersen (..m@cornell.edu) and Fuzhi Cheng Cornell University, in collaboration with Soren E. Frandsen (FOI, University of Copenhagen), Arie Kuyvenhoven (Wageningen University) and Joachim von Braun (International Food Policy Research Institute).
1 Executive summary
In the current ‘nutrition transition’, the consumption of high-calorie, nutrient-poor foods high in fats and sweeteners is increasing throughout the developing world. The nutrition transition, implicated in the rapid rise of obesity and diet-related chronic diseases worldwide, is rooted in the processes of globalization. Globalization affects the nature of the food supply chain, thereby altering the quantity, type, cost and desirability of foods available for consumption. Understanding the links between globalization and the nutrition transition can thus help policy makers develop policies, including food policies, for addressing the global burden of chronic disease.
This case study explores how one of the central mechanisms of globalization, the integration of the global marketplace, is affecting specific food consumption trends in the context of the nutrition transition. Focusing on middle-income countries, it highlights the importance of three major processes of market integration: the production and trade of agricultural goods, foreign direct investment in food processing and retailing, and global food advertising and promotion.
It finds that policies and processes designed to advance the globalization of the world economy in the areas of agriculture, trade, investment, and marketing are shaping dietary trends. Thus the policies designed to integrate the global food market matter for what people eat. Dietary outcomes also depend on the socioeconomic and cultural context in which the policies are operating, as well as changes in consumer behavior.
Health policy makers should pay greater attention to globalization processes and policies in order to address some of the structural causes of obesity and diet-related chronic diseases worldwide, especially among groups with low socioeconomic status. The benefit of leveraging policies designed to integrate global food markets to encourage healthy diets is that relatively small changes at a macro-scale can have relatively large population-wide impacts.
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The effects of policies and institutions are mediated by existing resources, services, and technologies
Existing resources, services, and technologies have a major influence on the outcomes of global and national economic policies (and, indeed, influence their design). As shown here, policies designed to promote domestic production and global consumption of Brazilian soybean oil were possible only in the context of an abundant and cheap supply of land. Policies on FDI in processed-foods manufacturing in Mexico paid off in part because of the existence of traditional forms of retailing. In Thailand globalized marketing strategies were nationally effective, in large part because of historical patterns of TV ownership.
Globalization influences dietary differentiation as well as convergence
Globalization is often viewed as ‘Coca-Colonization’ or ‘McDonaldization’ – a homogeneous process with homogeneous outcomes. But this case study has shown that the dynamic, competitive forces unleashed as a result of global market integration produce both convergent and divergent dietary outcomes. The case studies show how market integration increases the incentive for TFCs to sell cheap or standardized food around the world, while simultaneously increasing the incentive to create market niches. The creation of similarity and difference is thus part and parcel of the same process – the logical functioning of the global marketplace. In dietary terms, this means that more people eat more soybean oil and processed foods, for example, but different types of people eat different types of these foods bought from different types of stores and possibly influenced by different types of marketing techniques. This convergence-divergence model unites the apparently contradictory observations that, on the one hand, global market integration homogenizes diets and, on the other, brings greater food variety.
Globalization could be encouraging different dietary habits for rich and poor
It has been argued elsewhere that the increased differentiation brought by globalization promotes better diet quality by increasing people’s access to dietary diversity (Regmi et al., 2004). The same could be said of urbanization. Following this argument, the problem of obesity becomes one of diet quantity (people eating too much of a wide variety of nutritious foods), not quality (people eating a diet dominated by nutrient-poor, energy- dense foods).
Yet the convergence-divergence duality raises the policy concern that globalization could be encouraging the uneven development of new dietary habits between rich and poor. As high-income groups in developing countries accrue the benefits of a more dynamic marketplace, lower-income groups may experience convergence toward poor-quality obesogenic diets, as has been observed in Western countries. People of low socioeconomic
Reading 16: Globalization and the nutrition transition – a case Study
status (SES), although not the poorest of the poor, are more likely to be influenced over the long term by the converging trends of the global marketplace: the economic and cultural convergence toward cheap vegetable oils, trans fats, and imitations of heavily promoted products whose desirability has been stimulated by their earlier popularity among wealthier groups. Meanwhile, the more affluent and educated move on to the more expensive, ‘healthy market’ niches such as the trans-fat-free vegetable oils and ‘diet’ foods.
The influence of globalization policies on dietary patterns is context-specific
The divergent nature of the dietary outcomes of globalization is also a result of regional, national, and local contexts. National socioeconomic bifurcation and the cultural context are particularly important (Labonte, 2004). In high- income countries, the prevalence of poor-quality diets, obesity, and diet- related chronic diseases tends to be higher among groups with lower SES. Unfortunately, this trend is now also beginning to emerge in middle-income countries. A recent review of the evidence concluded that as gross national product (GNP) increases in developing countries, the burden of obesity tends to shift toward groups with lower SES. After countries have crossed over a GNP threshold of about US$2,500 per capita, women with low SES tend to have proportionally higher rates of obesity (Monteiro et al., 2004). In other words, obesity starts out as a problem among groups with higher SES, but as national economies grow, the risk moves toward groups with lower SES. This duality feeds off of existing socioeconomic inequalities. For example, in Brazil, there is a strong inverse relationship between obesity and education in women, indicating an important association between education and nutritional knowledge (Mbuya et al., 2005). Poor diets and obesity are emerging in this socioeconomic context.
Culture is another important context. In the Brazilian case, a culture of ‘thinness’ exists in more highly educated groups, no doubt reinforcing the role of education in this particular country context; the opposite is true in other cultures. The cultural context also affects the degree of acceptability of new products and services introduced through the globalization process, a factor that is particularly relevant for promotional activities. In an apparently contradictory process, the ‘glocal’ marketing strategies adopted by TFCs and domestic firms often deliberately appeal to existing cultural viewpoints or traditions in order to change cultural norms and rules about what to eat, how, where, and how much (Hawkes, 2002). This is the true power of marketing and indicates the importance of ‘cultural transition’ in dietary change (Lang and Rayner, 2005).
Altogether, the processes of differentiation combined with convergence, the differences between rich and poor, and the role of the socioeconomic and cultural contexts make up a ‘convergence-divergence model’ of dietary change rather than a simple transition
The World Health Organization (WHO) is responsible for guiding globally coordinated action in all health matters. To provide global guidance in the area of the nutrition transition, obesity, and diet-related chronic diseases, the WHO developed a Global Strategy on Diet, Physical Activity, and Health in 2004 (WHO, 2004). It is not a legally binding document, but it sets out the policy options available to countries to promote healthier diets in the context of the nutrition transition. This document follows a long history of WHO resolutions on chronic diseases (Yach et al., 2004).
National governments
Governments are responsible for developing national health policies. Although many governments around the world are aware of the problem of chronic disease, the majority do not have comprehensive policies and budgets to develop integrated approaches to their prevention, surveillance, and control (Yach et al., 2004). Given the rapidity of the nutrition transition, governments should develop policies aiming to prevent obesity and diet- related chronic diseases and promote healthy diets, especially among lower- income groups. Such policies should include looking beyond the health sector and entering into policy arenas dealt with by other sectors and disciplines.
Transnational food companies
TFCs tend to dislike government regulation and favor self-regulatory approaches and the provision of incentives to change. A combination of government regulation and self-regulation is appropriate to apply pressure for change without creating a prohibitive business climate. Many of the world’s largest TFCs are now making commitments to create a healthier food environment; action is needed to ensure that these steps have measurable outcomes and are applied in both developing and developed countries.
Consumer- and health-oriented nongovernmental organizations
Nongovernmental organizations (NGOs) have the advantage of a wide geographic spread and the ability to build capacity. Yet NGOs have made no overall, concerted effort to advocate solutions to the nutrition transition. NGOs should play a more important role in lobbying for specific policy actions, conducting research into consumer concerns about obesity and unhealthy diets, and tracking commitments made by TFCs and governments.
Reading 16: Globalization and the nutrition transition – a case Study
5 Policy options
The role of globalization in the nutrition transition has clear implications for stakeholders’ actions to address poor diets, obesity, and diet-related chronic diseases. Policies to support such action should be based on three principles. First, policies should be developed with full awareness of the influence of globalization processes and policies on long-term dietary change, and the context in which they operate. Such an awareness requires looking beyond the health sector as narrowly defined and entering into debates and policy arenas dealt with by other sectors and disciplines. Second, policies should address, in some way, the behavior of TFCs, preferably by creating incentives to improve the functioning of markets for healthy foods and disincentives for foods that contribute to unhealthy diets. Third, policies should focus on the promotion of healthy diets over the long term among groups with low SES. This case study focuses on groups with access to diets sufficient in energy, but diet quality is also important for those at risk from undernutrition. Policies that focus on diet quality are therefore important for addressing problems across the whole nutritional spectrum.
Thus far, there are few comprehensive sets of policies addressing obesity and diet-related chronic diseases in the developing world. This situation may begin to change following the passage of the World Health Organization’s Global Strategy on Diet, Physical Activity, and Health in 2004 (WHO, 2004). But even in high-income countries, policies still tend to focus on consumer behavior; there is reluctance to tackle the more structural drivers of change. This reluctance partly reflects misunderstandings about chronic diseases, the lack of evidence in the hands of policy makers, and the low capacity for policy development (Yach et al., 2004). But it also reflects the fact that implementing such policies necessitates confronting the powerful forces and institutions of the global marketplace, which governments actually often want to strengthen as a means of creating wealth. This is doubly a challenge because wealth can benefit health: higher GNPs are associated with higher life expectancies. Policies are thus needed to promote healthier economic development.
Two commonly proposed strategies are nutrition labeling and regulation of food marketing practices (Hawkes, 2004a). Labeling is probably the most widely used population-level policy and has potential: dietary adaptation shows that consumers do have real power in the modern food system and can be responsive to information. In turn, this consumer empowerment can be a powerful incentive for TFCs to change their products. Yet the benefits of policies based on the provision of information may accrue mainly to groups already more educated about nutrition, with implications for unequal dietary development.
Restricting food advertising and promotion could also alter signals to consumers and encourage product changes (Hawkes, 2004b). It would have the effect of creating a more supportive environment for health promotion efforts. Equally, marketing could be used more effectively to promote healthier foods, a strategy that has delivered some success through supermarkets and other points-of-purchase (Seymour et al., 2004). The concern here is that marketing regulations must confront not only TFCs,
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Case study
Impact of Covid-19 on e-bike market and supply chains
“The rising interest of e-bikes has been well-documented for a number of years now, with more and more people discovering the benefits of cycling but with a less strenuous option. And this has increased further since the outbreak of COVID-19 – with a new Shimano report of over 2,100 people in the UK revealing that 11% are more likely to use or buy an e-bike now than they were before the pandemic.” (Morley, 2021)1
Although e-bike market growth exploded during the pandemic, manufacturers of e-bikes, as in many other sectors, have experienced several global supply chain disruptions (Ivanov, 2020; OECD, 2020). Sources of these disruptions range from shortage of supply, factory closures, transportation failures, increasing cost of shipping to demand fluctuations (Ivanov, 2020). Some examples of these, particularly in the e-bike market, are presented in the article by Bushey (2021). As mentioned in the article, e-bike manufacturers need to reorganise the way they manage their supply chains due to the COVID-19 global pandemic. Difficulties on balancing supply and demand, handling inventory, maintaining relationship with the current suppliers, and/or switching to new ones had a huge impact on their supply chains. Yet it is envisaged to have great consequences in the future.
The e-bike that encapsulates the global supply chain crisis
Manufacturer switches suppliers but cannot do anything about log-jammed ports
When a new owner rides a Pedego electric bike for the first time, it has already travelled thousands of miles through a global supply chain snarled by the pandemic. The California company’s most affordable model, the Element, dubbed “the pandemic baby”
