Eleonora Escalante, MBA - MEng Strategic Corporate Advisory Services Creating Corporate Integral Value (CIV)

Eleonora Escalante, MBA - MEng Strategic Corporate Advisory Services Creating Corporate Integral Value (CIV) Leg 7. Trends in Competitive Advantage. Industry 4.0: Only if it reduces the Citizens poverty 02 April 2018

OUTLINE Leg 7. Trends in competitive advantage 01 A whole change for the world: Industry 4.0 02 Education as a competitive advantage for Industry 4.0 03 World Changing Technologies for competitive advantage? 04 If it doesn t improve citizens quality of life, it is not competitive advantage. 05 If it doesn t reduce citizens poverty, it is not competitive advantage 06 Summary and Conclusions 02April2018 2

Poverty explained in a bee s journey ❶ What is Poverty? ❸ How the poor live? ❺ Why of poverty? ❻ How to end Poverty? ❷ Who are the poor? ❹ Where are the poor? 02April2018 4

What is Poverty? ❶ What is Poverty? Poverty is another ambiguous term. For years poverty was defined from the point of view of economics. That is why the majority of us believe that Poverty is the scarcity or the lack of a certain (variant) amount of material possessions or money. As a result, a range of definitions exists, influenced by different disciplinary approaches, world views and ideologies (Handley et al., 2009). In the United States, the official poverty thresholds are set by the Office of Management and Budget (OMB). Persons with income less than that deemed sufficient to purchase basic needs food, shelter, clothing, and other essentials are designated as poor. The OECD has defined a term multidimensional poverty as a way to see poverty causes in several dimensions or levels. Multidimensional poverty encompasses different dimensions of deprivation related to human capabilities such as: consumption and food security, health, lack of education, lack of expression rights, inadequate living standards, lack of human rights, lack of decent income, disempowerment, lack of dignity, gender inequality, poor quality of work and threat from violence. There are several definitions of Poverty. See next slide please. 02April2018 5

What is Poverty? ❶ What is Poverty? The OECD s has done a multidimensional poverty framework which tries to explain the concept of poverty in the dimensions shown here: 02April2018 6

What is Poverty? Types of Poverty. ❶ What is Poverty? Situational poverty is generally caused by a sudden crisis or loss and is often temporary. Events causing it include environmental disasters, the death of the income provider, accidents, divorce, or severe health problems. Generational poverty occurs in families where at least two generations have been born into poverty. Families living in this type of poverty are not equipped with the tools to move out of their situations. Absolute poverty involves a scarcity of such necessities as shelter, running water, and food. Families who live in absolute poverty tend to focus on day-to-day survival. Relative poverty refers to the economic status of a family whose income is insufficient to meet its society's average standard of living. Source: Teaching with Poverty in Mind by Eric Jensen Urban poverty occurs in metropolitan areas with populations of at least 50,000 people. The urban poor deal with a complex aggregate of chronic and acute stressors (including crowding, violence, and noise) and are dependent on often-inadequate large-city services. Rural poverty occurs in nonmetropolitan areas with populations below 50,000. In rural areas, there are more single-guardian households, and families often have less access to services, support for disabilities, and quality education opportunities. No jobs. 02April2018 7

❷ Leg 7. From Auckland to Itajaí Who is poor? Who are the poor? Again if we don t have a consensus in defining poverty, we will have different interpretations and indicators. Those who have full time jobs are the less poor people in the world. And there are differences of children poverty by race too. 02April2018 8

Who is poor? ❷ Who are the poor? For the sake of illustrating at least some hints about who are the poor in the planet, let me share the World Bank global map about poverty (2017) But this is just poverty defined as living on less than $1.90 a day 02April2018 9

How the poor live? Some Highlights... ❸ How the poor live? The extremely poor households have a median of 8 people living in them. Usually more than two adults (elders or other adult relatives) The infant mortality is still high. Weakness and lack of balanced diet triggers other sicknesses. To survive, they are putting every penny earned toward food. Food expenses may account between 56% to 78% of the budget. The cheapest way to eat (in terms of calories per dollar) is grains (rice, beans, maize, etch) Access to water varies from a minimum of 0% in Udaipur to 36% in Guatemala. Electricity varies from 1.3% in Tanzania to 99% in Mexico. Moreover, infrastructure doesn t always appear together. A family may have electricity but not tap water. The poor generally don t own many productive assets, but Each member of the family consume less than 1400 calories a day on average, half over adults skip meals. some do have some land. For example: Only1.4% of the poor in South Africa, and 4% of the poor in Mexico, Even among the extremely poor, above 70% of households in South Africa and Peru owned a radio at least. 02April2018 10

❹ Where are the poor? The WB has a classification of the world by income per capita. But Poverty it is not about Income only. Many countries with higher income have the worst poverty areas too-inequality. Where are the poor? Answer: Everywhere. 02April2018 11

❺ Why of poverty? Why of poverty? The poverty causes are innumerable. It depends on how you see the world and how you define poverty. Many social experts in poverty and economists still don t agree in between two extreme opposite justifications: An individual cause of poverty: The existence and persistence of poverty is because of Individual deficiencies such as lack of intelligence or not working hard enough.? An structural cause of poverty: The failure of economic systems organized in ways that encourage the accumulation of wealth at one end and creates conditions of scarcity that make poverty inevitable at the other. There are other several theories which explain the causes of poverty: Check them please! 1. Poverty Caused by Cultural Belief Systems that Support Sub- Cultures of Poverty 2. Poverty Caused by Economic, Political, and Social Distortions or Discrimination 3. Poverty Caused by Geographical Disparities 4. Poverty Caused by Cumulative and Cyclical Interdependencies 02 April 2018 12

How to end poverty? ❻ How to end Poverty? Again, as in strategy we have more than 10 different schools with different frameworks or solutions, The poverty solutions are diverse. Personally I believe this is a beautiful topic which I need to study deeply. It will be subject of my next Volvo Ocean Race 2019-2020. That is why Industry 4.0 needs to wait. Follow me then. For the next race VOR 2019-2020 I will have a new boat, a new computer and I would have to learn in real life what is this all about sailing. Better future version of Eleonora Escalante Strategy Version 2.0 02 April 2018 13

Thank You! 02 April 2018 14