Will the profits keep growing in spite of the unstable economy?

For the past three decades, corporations have enjoyed record profit growth, new market opportunities, and declining costs. But this unprecedented run may be coming to an end. New rivals are putting industry leaders on notice as the business environment turns more uncertain and hypercompetitive

That’s seen profits rise from US$2 trillion dollars and 7.6% of global GDP in 1980 to US$7.2 trillion in profits and 9.8% of GDP by 2013. And it’s been driven largely by three key factors:

New Consumers – between 1990 and 2010 the world added 1.2 billion consumers
New investment
Global supply chains

Forecasts shows that while profits will still grow to US$8.6 trillion by 2025.

On one side is an enormous wave of companies based in emerging markets. The most prominent have been operating as industrial giants for decades, but over the past 10 to 15 years, they have reached massive scale in their home markets. Now they are expanding globally.

On the other side, high-tech firms are introducing new business models and striking into new sectors. And the tech (and tech-enabled) firms giants themselves are not the only threat. Powerful digital platforms such as Alibaba and Amazon serve as launching pads for thousands of small and medium-sized enterprises, giving them the reach and resources to challenge larger companies.

The new competitors are taking market share, driving prices down for customers.

Some of the external factors that helped to drive profit growth in the past three decades, such as global labor arbitrage and falling interest rates, are reaching their limits.

The companies that adapt quickly to the new realities can capture enormous opportunities.

Jr.Trader-G.Bozhidarov