Companies need to: identify, monitor, analyze and respond to the main trends in their macro environment (demographic trends, economic trends, technological trends, natural environment trends, political-legal trends, socio-cultural trends).

The process of analyzing trends in the macro environment begins with the identification of fads, trends, and megatrends that could be opportunities or threats for the company.

Some of the definitions of trends:

Fashions are unpredictable, ephemeral, without major significance

Trends are changes in the environment that have a certain momentum and durability.

Megatrends are major changes that take time to form but, once established, have significant influence for years, Apple Inc., for example.

Most companies use outside experts to help identify and assess the most significant trends and megatrends. The experts typically perform annual updates to their trend analysis for the company and help the company assess the impact on the company’s business.

Leading trend analysts who monitor and report on trends include:

o Yankelovich (program called “Monitor”, meets with client companies and prepares specific reports for each client),

o Faith Popcorn (program called “Popcorn Report”),

o Ken Dychtwald (“Age Wave” program, meets with client companies to review the latest updates on the “Baby Boomer” generation),

o Malcolm Gladwell (“The Tipping Point” book, identifies trends relevant to a client company that have reached Tipping Point or will soon reach Tipping Point). We don’t discuss this book or concept in class, but it’s an excellent read for anyone in the class who wants to really understand trend analysis (also, his latest book “Blink” explains how trends develop and gain momentum).

o Sam Hill (“60 Trends, 60 Minutes” book: Analysis program called “Trendblasting” takes 60 trends and identifies a process to determine which ones are most important to the client company)

These analysts hire companies to help them develop awareness of important trends affecting their business and identify strategies to respond to the most important trends.

The basic methodology followed by trend analysts is to ask (and answer):

1. What is changing?

2. Why does it happen? Is it just a fad or is it something more fundamental?

3. How and when could it be developed?

4. What kind of opportunities (and threats) will arise if the trend continues?

Trend analysts help a company to:

o Identify trends and megatrends relevant to the business and how quickly trends are growing and changing.

o Understand the potential impact of the trend(s) on the business.

o Focus on possible strategies to profit from the trend(s).

Management will be continually identifying, monitoring, analyzing and responding to trends and megatrends:

This is an approach that a company could take to do an environmental analysis and internalize in the company the importance of relevant external developments. The result could be the beginning of responses to environmental trends that impact or could impact the company as opportunities or threats.