The door has just closed on 2010, but members of Emory University's faculty are already weighing in on the hot topics of 2011 and their potential effects on business.

The biggest issue in 2011 will be rising prices for raw materials, counsels Goizueta chaired marketing professor Jagdish Sheth.

“Due to greater demand for commodities, especially in growing markets like India and China, materials prices will likely jump in 2011, placing tremendous pressure on corporate margins,” he says. “This may not be a short-term trend, as consolidation is driving the emergence of OPEC-like cartels in the raw materials segment.”

Like oil, many raw materials resources belong to countries, not private sector companies, he adds.

“So you may see countries that wish to preserve their stock of raw materials or, like China, keep some off the market so they can be used for internal development,” Sheth observes. “I believe the biggest shock from this will occur in processing-type industries that do not add a lot of value through their processes.”

So steel and aluminum industries are likely to be buffeted by the worldwide price hikes Sheth anticipates, but consumer electronics and technology companies are unlikely to suffer as much.

Within the U.S., Sheth expects to see a rebound in mergers and acquisitions, as companies that sat on the sidelines during the economic slowdown—and built up their cash reserves—now see buying opportunities as a result of decreased price-equity ratios and other valuations.

“Also, there’s a push for companies to show better results, and since share buybacks are not being looked upon favorably by the IRS, companies are looking to M&As for a quick boost to their bottom line,” he says. “I think we’ll also see more cross-border, or international M&As, with U.S. companies being targets as well as acquirers.”

With the bank crisis fading and liquidity improving, Sheth also foresees a significant rise in initial public offerings, as business owners get more confident about the overall economy.

On the political front, Sheth’s not worried about the Congressional split between Democrats and Republicans.

“There’s likely to be increased cooperation between the House Republican majority and the Democratic Senate,” he says. “Just like Newt Gingrich worked well with [former President] Bill Clinton, I think that House Speaker John Boehner will work with the Senate and President Obama to cut taxes and spur growth.”

Can we all just get along?

According to Ray Hill, an assistant professor in the practice of finance at Goizueta, American and other political observers are wondering how Congress and the Obama administration will deal with the record-setting federal budget deficits.

“This is the ‘big’ issue of the year,” Hill says. “No matter what comes out of Washington.”

On the one hand, "if our politicians don't address the deficits in any meaningful way, we will continue on an unsustainable path as the national debt relative to GDP reaches levels unprecedented in peace time," adds Hill.

At a minimum, he notes, the tidal wave of debt is likely to begin pushing up interest rates for all borrowers, particularly once the economy begins to make a substantive recovery and companies begin to compete for available funds.

Even more seriously, “we could be on a Greek-style collision course with disaster if the government fails to control the growth in debt,” Hill says. “What level of debt is too much?  We will only know this after we are in a crisis. If investors lose confidence in the U.S. dollar it won’t be a gradual fall—instead we’ll be in a sharp plunge.”

The crisis, he adds, could be exacerbated because unlike Greece and Ireland, which could turn to the European Union for a bailout, “the U.S. dollar is the world’s primary reserve currency, so there’s no one to bail us out if everyone runs for the exits at the same time.”

On the other hand, if Congress and the president do find the will to reduce the budget gap, the ripple effect in the U.S. would be “huge,” Hill says.

“Cutting the budget to any significant degree would mean a major realignment in U.S. fiscal policy,” he explains. “We’d have to see spending cuts in Medicare, Social Security and other ‘sacred cow’ entitlements that would result in a lot of pain for the constituencies affected. This almost guarantees a continuation of the bitter politics we have seen lately.

The year of technology

While America's political arena may remain murky, computer advancement and technology will hold the spotlight in 2011, contends Benn Konsynski, a chaired professor of information systems and operations management.

 

“Mobile computing is changing the way that businesses relate to consumers,” Konsynski says. “Organizations like Groupon and Scoutmob can deliver a company’s advertisements, promotions and other deals directly to individual users based on their smartphone and other settings. Businesses that don’t embrace this new proximity commerce model could miss out on significant opportunities to establish relationships with new customers and strengthen relationships with existing ones.”

Analytics are also evolving and are likely to make great strides in 2011, according to Konsynski.

“Instead of the traditional static model that looked back for data, technology is now enabling continuous analysis of real-time point of sales and other data that can better support business decisions,” he notes. “Sensors, radio frequency identification, and other technology means that real-time activity becomes more relevant for long-term and short-term decision making. For businesses, the challenge is to identify the opportunities and to align the organization with the accessible data. The capability may be there, but the company may not yet have the recognition and alignment that’s necessary to make it work.”

The rapid evolution of computer tablets, still seen by some as a purely consumer item, will also bring significant changes to businesses in 2011 and beyond, Konsynski says.

“The widespread acceptance of the tablet format introduces a new demographic into the mobile computing equation,” he reports. “Now you don’t just have smartphone or computer users; you’ve got a format that combines elements of both in a way that smartphones alone could not."

Tablet computers shouldn’t be viewed as just a replacement for netbooks or desktops, he adds. “Instead, they may replace multiple items, since smartphones may not have the computing power a user needs—particularly in a commercial setting—and laptops or even netbooks may be too bulky for a person who’s constantly on the move, like someone in logistics services, or people in the medical field who may move from patient to patient and require a great deal of computational power while they’re on the move. It’ll be up to businesses to reach out to these audiences and make their pitches through social networking and other mobile applications.”

One of the big trends seen by Anandhi Bharadwaj, a Goizueta associate professor of information systems and operations management, is in the way companies will move to improve their information technology infrastructure for innovation, instead of simply searching for ways to cut costs.

“With the economy coming back, I think companies will increase their IT spend in 2011,” she says. “Among other initiatives, I believe that more firms will embrace technologies that allow for greater agility and more emergent processes. One example is cloud computing, which can offer more flexibility in operations than traditional corporate networks.

Bharadwaj also expects more application and services development, on the corporate side as well as the consumer side, as more companies embrace mobile platforms and social networking. Along with this, she anticipates a greater focus on context, even as content continues to expand.

“I see context as the refining of content,” Bharadwaj explains. “With so many applications and so much content, we’ll need to be able to more efficiently manage the information that’s being delivered to us. Scrolling through layers on your smartphone or other device will become too cumbersome. Instead, companies will have to continue to develop ways to cut through the clutter and grab our attention.”