A Revolutionary Shift in Global Business Practices: Emotional Labour

What is “emotional labour”?

Let’s look at the examples given by Mind Tools:

"Well, now there's a mark on my water glass. Get me a new one!"

"You expect me to pay full price for this meal? I was served runny eggs and had to go out of my way to ask for water, which was then brought in a dirty glass. I can't believe it. There will certainly be no tip for you, young lady!"

Does your job require you to manage your emotions, or the way you express those emotions, to meet organizational expectations? This is called 'emotional labor.' People in a service-oriented role - hotel workers, airline flight attendants, tour operators, coaches, counselors - often face the demands of emotional labor.

Emotional labor is officially defined as “the act of expressing organizationally desired emotions

during service transactions” (Morris & Feldman 2). It is the effort, planning, and control needed

to express organizationally desired emotions during interpersonal transactions, intended to promote an organizationally desired state of emotion within a customer (Sass).

Arlie Hochschild created the term 'emotional labor' in 1983 to describe the things that service workers do that goes beyond physical or mental duties. Showing a genuine concern for customers' needs, smiling, and making positive eye contact are all critical to a customer's perception of service quality. These types of activities, when they're essential to worker performance, are emotional labor. (1)

According to Hochschild (1983), organizations are increasingly willing to direct and control how employees present themselves to others. In other words, the images employees create for customers and the quality of interactions between employees and customers have come increasingly under the control of management. As a consequence, a key component of the work performed by many workers has become the presentation of emotions that are specified and desired by their organizations. (Morris & Feldman 2)

When you face angry clients, or people who are generally unpleasant, emotional labor can be particularly challenging. A large part of that challenge comes from the need to hide your real emotions, and continue to 'smile and nod your head,' even when receiving negative or critical feedback.

Companies often place a great deal of strategic importance on service orientation, not only to external customers but to colleagues and internal clients as well. While emotional labor is applicable to many areas of business, the consequences are probably greatest in traditional service roles. However, in an increasingly service-oriented marketplace, it's important to understand how emotional labor affects workers, and what organizations can do to support and manage any issues.

The following video displays a case in which an employee feels one way but is forced to present emotions contrary to her true emotions in order to fulfill her duties as an employee.

We will be discussing four perspectives to demonstrate the revolutionary shift of global business practices in emotional labor. They are the following: the organizational perspective, cultural perspective, economical perspective and knowledge management perspective. Each perspective has been supported with real-life examples from multinationals to relate to international management contexts. Furthermore, two case studies have been presented to showcase exemplary and unusual emotional labor instances in the marketplace: The Walt Disney Company and Japan’s Rent-a-Friend Business.

Organizational Perspective

1.  Causes of the shift

1.1  Change of customer demand

More people are getting richer, they demand more on the things they spent on. Instead of better quality of products, they want better quality of products and services.

As indicated on below figures, the world GDP, and different countries GDPs keep increasing.

The growing GDP among countries shows that on average personal wealth of global citizen increased. When people are richer, they are able to enjoy higher quality of goods and services.

1.2  Change of customer group

Due to the technological and globalization, people can go to other countries easily by simply taking some hours of flight. Every year, thousands of millions of people go to other countries for businesses, visiting, and so on.

Taking Hong Kong as an example:

“The Hong Kong Tourism Board (HKTB) announced on the 21st of December that visitor arrivals to Hong Kong reached 37,770,230 in the first 11 months of 2011. The figure not only represents a 16.3%-increase compared to the equivalent period in 2010, but has also surpassed the yearly total of 2010. In November alone, arrivals rose by 16.4% year-on-year to 3,552,733, making it the November with the highest number of visitor arrivals in record.”

The visitor arrivals from different market regions in November and the first 11 months of 2011: 

This implicates that the customer groups shifts from local customers to local and global customers. Different customers from all over the world have their own cultures. In order to turn the change as an opportunity for organization, organization needs to vary its business strategies.

1.3  Increase competition

Due to globalization, many multi-national companies enter local markets. This leads to greater competition in almost all kinds of businesses locally. We can take the airline companies as an example.

There are many airline companies providing service from Hong Kong to Singapore. They are Singapore Airline, United Airline, Cathay Pacific, Jet Star, Hong Kong Airline, Philippine Airline, Malaysia Airline, and so on. Customer has numerous choices to choose which airline company to take. On the other hand, there will be great competition among airline companies.

2.  How “emotional labour” increase competitiveness of organization?

2.1  People are intangible asset (8)

Tangible asset such as strategies can be copied by competitors easily or after certain period of time. However, people are intangible asset to the organization and are what competitors cannot copy. Having well-trained and high quality talents are the competitive advantage of the organization.

Michael and Milorad suggested that organization shifting in strategic attention from efficient management of tangible resources to effective management of intangible asset. Under today’s rigorous business world, in order to maintain organization’s competitive advantage, organization is shifting its strategy from efficient tangible resources management to effective intangible assets management. In this point, the growing popularity of emotional labour that is trained to provide excellent services to customers plays an important role.

2.2  Service charges

As mentioned above, consumers are now demanding better quality of both goods and services. Sometimes, they are willing to pay a higher cost for the same goods because of better services provided.

Let’s compare different ticket fee of two airline companies – Singapore Airlines and Jet Star

Both airlines flight from Hong Kong to Singapore on 26th March 2012 and return on 6th April 2012. However, the ticket fee of Singapore Airlines ranges from HK3855 to HK4605 where Jetstar Airline ranges from HK1538 to HK2048. Singapore Airlines is double the ticket price of that in Jetstar. The underlining reason is that these two airline companies provide different quality of services to customers.

From this example, it demonstrates that organizations enjoy higher service charges when they are able to provide better service quality to customers. Emotional labour is the key factor in providing superior services. Also, it is another way to differentiate your organization towards competitors.

3.  More to be done

3.1  Organizational learning

Kris and Angappa stated that organizational learning has been considered to be an effective developmental initiative in organizations that have a mission to develop, to sustain and to advance. (9)

A learning organization actively creates, captures, transfers, and mobilizes knowledge to enable it to adapt to a changing environment. Thus, the key aspect of organizational learning is the interaction that takes place among individuals. (10)

Under today’s fast changing business environment, organization should be able to adapt the changes, be flexible and innovative. Emotional labour is a good example. In order to meet the changing demand on service quality, emotional labours are trained to manage their emotion and provide satisfactory service to customers. The world is still changing every minute, therefore, it is important that organization should keep learning and changing. A Chinese saying is that “Sailing against the current, if you do not move forward, you will fall behind”.

3.2  Training

Emotional labours indeed affect their performance. Organization needs to train employees to manage their emotions. Some very common concept on training emotional labour are: customer is always right and always greet customers with a smile.

In addition, more important thing is to support their employees and help them to deal with their emotions. It is sensible to help employees dealing with the consequences of emotional labour. This may improve staff morale and reduce staff turnover.

We can take a look of some common strategies suggested by Mind Tools that organizations use to help their staff deal with the demands of emotional labour:

•           Offer staff assistance programs - Organizations invest in the care and development of their workers by providing access to stress management and emotional health services. This strategy recognizes that emotional labor can be hard work.

•           Teach problem-solving techniques - To move workers beyond using scripts or relying on other display rules, some companies help their staff solve problems more effectively. This helps people build confidence, and reduce their negative reactions to angry or unpredictable situations. The better that worker is able to deal with problems, the more likely they are to resolve interpersonal issues before they lead to negative emotions.

•           Improve emotional intelligence - The ability to recognize other people's emotions is an effective way to reduce the burden of emotional labor. Building empathy and using other emotional intelligence tools help reduce the likelihood that emotional conflict will lead to emotional exhaustion.

•           Share knowledge - One of the most effective ways to help people deal with the realities of emotional labor is to share success stories. Allow staff to learn how others successfully deal with the impact of emotional conflict. (1)

The Cultural Perspective

In the cultural perspective, it is important to take note of differences of reactions in culture to norms of emotional labor. Societal norms vary across cultures. The world is becoming a “[…] diverse workplace where many cultures collide.”

Culture is behind our behavior on the job. Often without our realization, culture influences how close we stand, how loud we speak, how we deal with conflict-even how we participate in a meeting. (P.142, HR Magazine)

Norms within one country may work in its location but may backfire in another. For example, when McDonald's opened a fast-food outlet in Moscow, staff members were trained to refer to Western norms of good service, which included smiling at customers. However, this particular norm did not exist in the former Soviet Union, which prompted some customers to conclude that staff members were mocking them.

It is also essential to pay attention when the service provider and the customer stem from different cultural backgrounds. An approach taking this focus into consideration is the dynamic constructivist approach (Hong & Chiu, 2001), which treats culture as an internalized “network of knowledge and practices that is produced, distributed, and reproduced among […] interconnected people” (Chiu & Hong, 2005). This view regards cultures as dynamic open systems that transcend geographical boundaries and evolve over time (Hong & Chiu, 2001). This theoretical perspective provides a broad lens for what constitutes an intercultural service encounter. Examples include a German tourist staying at an American hotel in the U.S. (different national culture), or a Hispanic waitress serving an Asian customer in a restaurant (different ethnic culture).

With greater globalization, service companies will be required to conduct their business with culturally diverse customers. Ethnic minorities are growing steadily and increasingly possess more purchasing power (Furrer & Sollberger, 2007). International travel and immigration have seen an explosive growth (Ng, Lee, & Soutar, 2007). It is therefore important to determine what constitutes good service in general? Does it mean the same thing for everyone? Or should consumers with different cultural backgrounds receive different types of treatment to better satisfy their expectations?

In the Service Industry

Prior research has shown that customers from different cultural backgrounds have different expectations and attitudes toward service encounters, which affect service interactions and evaluations. Service encounters are defined as “dyadic interactions between a customer and a service provider” and a form of human interaction characterized by its intangible nature.

It has been shown that when service providers and customers possess same cultural backgrounds, service encounters often result automatically, requiring only a minimum of cognitive activity. Customer interactions are social exchanges, repetitive and routine in nature, which are therefore likely to be scripted. Problems can occur because the service provider’s performance is not aligned with the expectations of customers, or if customers do not behave as expected by the service company.

A study comparing service encounter evaluations (Winsted 1997) of American and Japanese restaurant guests found significant differences in the relative importance customers placed on eight service dimensions: authenticity of behavior, caring, customer control, courtesy, friendliness, formality, personalization, and promptness. Half of these dimensions, namely authenticity, caring, courtesy, and friendliness, can be related to emotional labor.

Another study conducted by Barker and Härtel (2004) demonstrated that based on the verbal and nonverbal cues of service employees, culturally diverse customers from a different ethnic background felt dissatisfaction from receiving inequitable service. Foreign customers admitted that they perceived service providers were treating them with unfriendly or sarcastic tones of voice, more suspicion and lack of trust (i.e., thinking the customer might steal), general avoidance (e.g., not acknowledging the customer’s presence, serving someone else first), and less effort.

Most recently, Sharma, Tam, and Kim (2009) proposed a conceptual framework for intercultural service encounters that focuses on perceived cultural distance and cultural competence. They conducted an exploratory qualitative study where customers and employees from different cultures were interviewed in a variety of service settings. Their findings concluded that perceived cultural distance and cultural competence had effects on inter-role congruence, which is the degree of agreement between both parties on each other’s role in a social interaction; interaction comfort, adequate service level, perceived service quality, and satisfaction.

These findings showcase the importance of studying cultural service interactions. What traits should service providers instill in their employees to properly handle an intercultural service interaction? How do such interactions impact the physiological and psychological health of service employees?

In general, there will be a similar level of performance in certain industries where norms of emotional labor can be transferred across cultures. For example: remaining calm during airplane flight for flight attendants or solemn, sympathetic attitudes at funeral homes. These behaviors are expected throughout all cultures. However, more neutral-emotional settings such as the fast food industry or hospitality create an area with more leniency in behaviors and different expectations depending on cultural backgrounds.  Therefore, especially with increasing globalization, it is important for service providers to become aware of cultural discrepancies to ensure consistent customer satisfaction.

However, there is also the dilemma of maintaining company standards and reputation. Cultural standards may demand that companies change or remove intrinsic policies or conduct that do not align with locally expected behavior, even if these elements have been part of the company’s system for a long time. For instance, McDonald’s central values include delivering a ‘happy experience’. However, as previously mentioned, this ‘happy’ atmosphere with smiling employees does not resonate with Moscow customers, where this type of service comes across as mocking and insincere.

Many projects have been started in countries to manage globalization to better accommodate Western culture. Instilling ‘smiling’ by introducing smiling school for Japanese workers to become more culturally acclimated to Western behaviors (See video below).

Chinese flight attendants in training practice by clamping a single wooden chopstick in the mouth to have a better, sweeter smile.

In the context of intercultural service encounters, important parameters are the cultural differences that exist between the parties involved in the encounter, individual differences due to personality and life history, and intercultural knowledge and experiences (Stauss & Mang, 1999).

Stauss and Mang (1999) stated that “If the employees have inter-cultural experience, and if they are aware of the verbal and non-verbal codes used in different cultural areas, they are able to vary their body language, e.g. eye contact, in order to adapt to the type and scope of the explicit information”.

A culturally competent manager will create opportunities for individuals to take some risks and explore projects that don’t require coordinating with others and a manager who is aware of different cultural norms is less likely to incorrectly interpret behaviors. (P.142, HR Magazine). Therefore, it is important for managers to be aware of these cultural discrepancies to better support their own staff and to leverage relationships with their customers, especially with growing globalization.

Economical Perspective

Prior to the Second World War, the Japanese was a developing economy. It wasn’t until the post war that Japan skyrocketed to become the second largest economy in the world, only recently surpassed by China in 2010. Japan can attribute its economic success to Japanese Keiretsu, which is also known as the close relationship shared between manufacturers, suppliers and distributors - and the guarantee of lifelong employment.
These displayed emotions have economic value, which can be transformed into wages, salaries, or tips.

A major reason for this increased attention is due to a change in the economy; as the ecnonmy in mosty of the developed countries has shifted from manufacturing to the service industry, the nature of the job role requirements has changed. Whereas workers in factories deal with machines, service providers interact with people.
Emotionally charged employee-customers interactions are essential to product delivery in service job roles.

In the service industry in general, as well as the hospitality industry in particular, being friendly or nice to people is a value added part of the product that employees provide (Schneider & Bowen, 1985). Most managers in the field assume that the friendliness and good nature of employees are strongly related to customer satisfaction  and increase customer commitment, loyalty, and therefore, affect bottom lines.

There aren't many jobs left that require zero emotional labour. Just about every occupation requires you to express emotions you don't feel.

The latest financial crisis started in the wake of the banking panic that erupted in September 2008 and the implosion of financial institutions involving Fannie Mae/Freddie Mac, Lehman Brothers, AIG and others associated with the panic. (Rasmus 2009) The latest financial crisis is often referred to as the worst economic crisis since the great depression in the 1930s. During the years from 2008 thousands of people lost their jobs around the world and companies suffered from the decreased market demand. Although, the crisis also changed attitudes and business practices among the companies towards the labor force but also the workers attitude towards work.

The financial crisis became emergent and affected the whole world because of the economic and political globalization that makes countries, economies and companies interdependent of each other. As Chase-Dunn, Kawano and Nikitin claim, in the article: Globalization - a worlds system perspective; economic globalization means globe-spanning economic relationships. This shows not at least the interrelationships and the networks between different economical actors. The extent of this globalization though trade and investments has also increased during the recent decades. Such a huge crisis that emerged during the 2008 is therefore affecting more actors than ever before in the world, is also spread faster, and makes a lot more harm. (Chase-Dunn et al)

The companies had to find ways to reduce its costs during the deep recession. The 26^th of January 2009 was referred to as the “Black Monday”; big companies, such as Caterpillar, Corus, Home Depot, ING, Pfizer and Sprint Nextel, announced that they were going to cut thousands of jobs. This because of the rapidly deteriorating global economy. The companies had to ensure their survival through saving jobs. Even though the companies would not cut their labor force, they had to take other actions to save themselves, actions that could be even worse that work cut, such as salary cuts, reduced hours and forced vacations. (Economist.com 29^th of January 2009)

Though, many leaders of the companies admit that the crisis is giving them the opportunity to actually restructure the firm, make cost reduction and increase the internal efficiency in the firm. These are all actions that should have been taken before.
Actions like this can also be discussed through a moral perspective. The companies could use the worldwide economic situation as an excuse to fire workers. 

This shows also that the temporary financial crisis actually can lead a long-term transition in business practice. The companies are doing cost efficiency and only the best and most efficient workers can stay in the firm. According to this argumentation the shift in the working values should rather lead to a shift towards that people work harder to not risk being outsourced by the companies which they work for.

However, a lot of big companies were criticised for their selfishness and narrow mindedness in these times, and came under scrutiny from the public and the media; and so in the end, the downturn forced firms and governments to rethink employment practices. The value of work was re-evaluated as employee health was affected by the emerging physical and emotional stresses of the workplace. And as a result, there is an overarching shift towards a more unstructured, individually tailored, diverse workplace where employees attach greater value to leisure and employees are more conscious of employee health.

The point I'm trying to make, though, is that with the global economy rapidly turning into a service economy, emotional labour is becoming the predominant work that people do.
Because of the shift from service to manufacturing, and generally because more secure relationships ensure greater motivation throughout companies, and thus attributes to positive bottom line figures, which stimulate the economy.

Case study 1: An Insight of Emotional Labor at the Walt Disney Company 

The Walt Disney Company, founded in 1923, is a diversified international family entertainment with 4 business segments: media networks, parks and resorts, studio entertainment and consumer products. Its first park and resort, the Disneyland Park, was built in 1952 in Anaheim, California.

It has expanded to include a cruise line, vacation club resort and five resort locations over three continents:

Disneyland Resort, Anaheim, California

Walt Disney World Resort, Lake Buena Vista, Florida

Tokyo Disney Resort, Urayasu, Chiba

Disneyland Resort Paris, Marne La Valle, France

Hong Kong Disneyland, Penny's Bay, Lantau Island

This particular segment is of special interest as it is a prime example of the most successful corporate cultures exhibiting outstanding emotional behavior. Disney executive Bill Ross has said that “this is a feeling business and we make our profits from that.” Disney employees at the front line of the organization are the ones who must provide these feelings. “The work-a-day practices that employees adopt to amplify or dampen customer spirits are therefore a core concern of this feeling business.” (Van Maanen, P.1)

Disney makes the promise of ‘turning the ordinary into the extraordinary’ and making ‘dreams come true every day.’ “In general, Disneyland employees are remarkable for their forbearance and polite good manners even under trying conditions.” (P.10).

Employees’ behavior is said to be governed by these three rules:

First, we practice the friendly smile.

Second, we use only friendly and courteous phrases.

Third, we are not stuffy - the only Misters in Disneyland are Mr. Toad and Mr. Smee.

(P.5)

Frontline employees are carefully recruited and trained to maintain the Disney atmosphere, no matter their role, from sweepers to fast food servers to tour ambassadors.

“During orientation, considerable concern is placed on particular values the Disney organization considers central to its operations. These values range from the "customer is king" verities to the more or less unique kind, of which "everyone is a child at heart when at Disneyland" is a decent example.

Elaborate checklists of appearance standards are learned and gone over in the classroom and great efforts are spent trying to bring employee emotional responses in line with such standards. Employees are told repeatedly that if they are happy and cheerful at work, so, too, will the guests at play. Inspirational films, hearty pep talks, family imagery, and exemplars of corporate performance are all representative of the strong symbolic stuff of these training rites.” (P.7)

They are further supervised and punished, should they slip out of their roles. This places incredible pressure for employees, who must stay in character throughout the entire duration of their shift, no matter which circumstance.

“Throughout the year, each land is assigned a number of area supervisors who, dressed alike in short-sleeved white shirts and ties with walkie-talkies hitched to their belts, wander about their territories on the lookout for deviations from park procedures (and other signs of disorder).” (P.8)

When Walt Disney was alive, newcomers and veterans alike were told how much he enjoyed coming to the park and just how exacting he was about the conditions he observed. For employees, the cautionary whoop, "Walt's in the park," could often bring forth additional energy and care for one's part in the production.

The effort which must be placed into Disney employees’ jobs everyday are reinforced by a feeling of obligation to maintain Disney’s legacy and promise.

“The orderliness- a good part of the Disney formula for financial success- is an accomplishment based not only on physical design and elaborate procedures, but also on the low-level, part-time employees who, in the final analysis, must be willing, even eager, to keep the show afloat.” P. 10. Some employees even go as far as to that they are really "on-stage" at work.

Park employees have admitted to feeling guilty if they ever complained about being too tired to smile. They are aware of the fact that their presence is part of the package being sold and that it crucial that they maintain appearances for the sake of the company. Employees are further kept in check not only by their own self-monitoring but through customer feedback and monitoring.

An interesting and entertaining video entitled 'Confessions of  Disney Employee' demonstrates the Disney worklife through the eyes of an actual past employee: 

What are the consequences of pushing employees to such a constant degree of feigned cheerfulness? 

Disney employees have admitted to feeling 'zoned out' or 'on automatic' once they start their shift, which further results in emotional dissonance. Could this be considered a health risk in the workplace? Should companies be credited for being able to instill such emotional spirit in their employees or criticized for abusing them?  What are your thoughts?

Case Study II: Emotional Labor in the Japan Rent-A-Friend Business

Need to make a good impression at a big upcoming social event but don’t have a boyfriend or girlfriend? Need a best man to speak at your wedding but haven’t found one? An ‘uncle’ to support your fatherless children at their sports events? Why not ‘rent-a-friend’ to cure you of these social problems?

Japan is currently experiencing a growing service sector that rents out fake spouses, best men, relatives, friends, colleagues, boyfriends and girlfriends to “spare their clients' blushes at social functions such as weddings and funerals.”

Ichinokawa launched his Hagemashi Tai [I Want to Cheer You Up] agency in 2006, after first attempting to become a qualified counsellor. He opened the agency after being hired to act as best man at a couple’s wedding despite not even knowing them. His act was a success and customers began requesting this service. "People wanted women, old and young people, all sorts, but of course I couldn't play all those roles myself."

He now employs 30 agents of various ages and both sexes, across Japan with the skills and personality to temporarily adopt a new identity. His is not the only agency of this type. These agencies have been growing at a rapid pace in the past years. Another company, Office Agent, is the most well-known and employs 1,000 people.

Agents charge 15,000 yen (£100) to appear at a wedding party, but extra if they are asked to make a speech or to sing karaoke. Preparation is exhaustive, examining every possible question that, if answered incorrectly or not at all, will embarrass clients and ruin the agency’s reputation.

"If I'm pretending to be someone's husband, I make sure I know everything about my 'wife', from her mobile phone number to what 'our' kids have been getting up to lately," says Ichinokawa.

The rise of this service for fake-friends is a symptom of social and economic changes, combined with a deep-seated cultural aversion to giving personal and professional problems a public airing. Japan has a culture of extreme fear of vulnerability and defeat.

The agency received such demands as fake bosses for unemployed men, from divorcees and singles searching for companionship; agents to act as rival suitors; agents to act as uncles to children being bullied at school…etc.

In relation to emotional labor, such a service requires the most extreme of efforts on the part of the ‘agent’ to create a façade of emotions and to stay ‘in character’ throughout the entire duration of the service. Ever single detail about the client must be memorized to truly deliver a believable performance.

One can say that such a service is social cure for those lacking in this dimension in their lives. But is it truly beneficial?

One perspective argues: “However, in helping clients cover up their problems, the agents seem to be acting more in the role of social prostitutes, giving short-term relief that must be kept secret at all costs. Creating the façade of a life without problems is immensely seductive but it is the client who is fooled in the end.”

In a culture that prides itself on the importance of form and structure ­ on putting on a good public appearance - it is perhaps especially shameful when the facts of one's life don't correspond to how they are supposed to be. For many people, these discrepancies convey a terrible sense of failure and inadequacy. Having to hire friends and relatives only highlights the isolation of such clients and how much intimacy is lacking in their lives.

What thoughts come to mind with this type of sector? Is it simply ‘acting in real life’ or social prostitution?

Conclusion

From these discussions, we look at four perspectives related to emotional labour: the organizational perspective, cultural perspective, economical and knowledge management perspective.

The intensity of emotional labour varies from cultures. For instance, we need to manage and meet different cultures needs. Managers should train their staff to become more culturally competent to better serve their global customers.

From the organization perspective, international management implies that organization should be more flexible and responsive to the needs of changing customers groups. In addition, training should be provided to employees, to manage customer relationships. Overall, emotional labor is a revolutionary shift in global business practices, one with big impacts on international management, therefore, one that should not be overlooked.

References:

1.      "Emotional Labor -- Helping Workers Present a Positive Face." - Team Management Training from MindTools.com. Web. 21 Mar. 2012. <http://www.mindtools.com/pages/article/newTMM_44.htm>.

2.         Emotional Labour. Dir. Chendhurnathan. YouTube. YouTube, 27 Nov. 2010. Web. 21 Mar. 2012. <http://www.youtube.com/watch?v=eTvUUaC05G4>.

3.         "List of Countries by GDP (nominal)." Wikipedia. Wikimedia Foundation, 20 Mar. 2012. Web. 21 Mar. 2012. <http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)>.

4.         Hong Kong. VISITOR ARRIVALS IN FIRST 11 MONTHS OF 2011. Web. 21 Mar. 2012. <http://tw.partnernet.hktb.com/pnweb/jsp/doc/listDoc.jsp?doc_id=141094>.

5.         Singapore Airlines. Web. 21 Mar. 2012. <http://singaporeair.com/booking-flow.form?execution=e1s1>.

6.         "Jetstar Airways Cheap Flights, Low Fares All Day Everyday from the World's Best Cheap Fare Airline." Book Cheap Flights. Web. 21 Mar. 2012. <http://book.jetstar.com/SessionExpired.aspx?culture=en-AU>.

7.         Harvey, Michael, and Milorad M. Novicevic. "The Hypercompetitive Global Marketplace: The Importance of Intuition and Creativity in Expatriate Managers." Journal of World Business 37.2 (2002): 127-38. Print.

8.         Law, Kris M.Y., and Angappa Gunasekaran. Dynamic Organizational Learning: A Conceptual Framework 41.62009: 314-20. Print.

9.      "Organizational Learning." Wikipedia. Wikimedia Foundation, 18 Mar. 2012. Web. 21 Mar. 2012. <http://en.wikipedia.org/wiki/Organizational_learning>.

 Ashworth, Blake, and Ronald Humphrey. "Emotional Labor in Service Roles: The Influence of Identity." Academy of Management Review 18.1 (1993): 88-115. ABI/INFORM. Web.

"The Fear behind Japan's Flourishing Rent-a-friend Business." The Week UK. 25 Sept. 2009. Web. 25 Mar. 2012. <http://www.theweek.co.uk/politics/19611/fear-behind-japans-flourishing-rent-friend-business>.

Gardenwartz, Lee, and Anita Rowe. "Cross-Cultural Awareness." HR Magazine Mar. 2001: 139-41. Web.

James S. Sass (2000): Emotional labor as cultural performance: The communication of caregiving in a nonprofit nursing home, Western Journal of Communication, 64:3, 330-358

McCance, Andrea Silke. "Emotional Labor in Intercultural Service Encounters: An Experience Sampling Study." Diss. University of Illinois at Urbana-Champaign, 2010. Print.

McCurry, Justin. "Lonely Japanese Find Solace in 'rent a Friend' Agencies." The Guardian. Guardian News and Media, 20 Sept. 2009. Web. 27 Mar. 2012. <http://www.guardian.co.uk/world/2009/sep/20/japan-relatives-professional-stand-ins>.

"McDonalds.com." McDonald's. Web. 27 Mar. 2012. <http://www.mcdonalds.com/us/en/home.html>.

Morris, J. Andrew, and Daniel C. Feldman. "The Dimensions, Antecedents and Consequences of Emotional Labor." Academy of Management Review 21.4 (1996). ABI/Inform. Web.

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The Implications of Aging Populations in the World

The Implications of Aging Populations in the World

Introduction to the Concept of Aging Populations



We have chosen to research ‘aging populations in the world’ as our global indicator. “Population ageing is characterized by an increasing proportion of older people while the proportion of younger people declines” (Alvarado and Creedy, 1998). This phenomenon is a result of advancements in health care, improved sanitation and nutrition habits; all of which have contributed to lower mortality rates (specifically infant mortality) and longer life spans. Another significant factor includes reduced birth rates due to innovations in birth control methods and changing lifestyles, particularly in developed countries. Thus, population growth is decreased, creating gradually older populations. (Global Population Aging in the 21st Century and Its Economic Implications P.1). “By 2025, the World Health Organization estimates that there will be over 1.2 billion people over the age of 60—more than double that of today.” (Tretheway and Mak, 21).

This phenomenon brings about several future concerns, as outlined in the International Monetary Fund’s video on Global Aging (See video 1 above):

Economic Impacts: Growth, savings, debt, investment, consumption, labor markets, pension, taxation

Societal Impacts: Family composition, living arrangements, housing demands, migration trends, health care

Political Impacts: Voting patterns, political representation

Of particular concern is the increasing old-age dependency on a decreasing working adult population. “As more time passes and an increasing portion of the population enters retirement, the old-age dependency ratio—the number of old people supported by the average working-age adult—tends to rise.”(Global Population Aging in the 21st Century and Its Economic Implications,16)


This is of great concern as it will impact the current generation’s expenditure on its own needs - education, health, technology as well as its children’s future.


In the Global Sense...


“Population aging is a global phenomenon in the sense that nearly all countries are undergoing a demographic transition that is likely to leave them, in time, with larger and much older populations than they started with.” (Global Population Aging in the 21st Century and Its Economic Implications, 17)


At first glance, the global indicator of population aging is easily attributed to the fact that it is a worldwide phenomenon. However, more subtle links can be found within several sub-themes and aspects impacted by aging population. We have decided to focus on two industries to illustrate the global effects of population aging: the booming industries of health care and tourism. These sectors touch on elements of technology, culture, political and economical systems.


The transition of changing demographics create many impacts on one country, which through globalization, create a ripple-effect on other countries. These international impacts can further offset or intensify the effects of aging populations. (Global Population Aging in the 21st Century and Its Economic Implications, 31)


“Based on the premise advanced by a number of scholars (Cohen, 1988; Mackay, 1997; Marconi, 2001; Tapscott, 1998) that membership of a specific generation has an effect on a person’s consumption patterns there is reason to believe that the demand for tourism goods and experiences changes as members of specific generations reach consumption and life cycle milestones. These milestones commonly include starting a family, reaching career highs and retiring” (Salt, 2003).




The Health Care Industry

According to a report of the United Nations (2006), "the world's population has
continued on its remarkable transition path from a state of high birth and death rates
to one characterized by low birth and death rates." The main reason for this
development is the intense growth of elderly people, which was never experienced
before in history. It is remarkably that women dominate with 55% among the ageing
population aged 65 and over and even 65% among the people aged 80 and over.
Furthermore, there exist geographic differences among the ageing population as
"one out of five Europeans, but one out of twenty Africans, is 60 years or older."

A recent publication from the Euromonitor (Travel and Tourism ­ World, 2007)
illustrates the demographic trends worldwide by saying that while
birth rates recovered in the US, the EU shows only a birth rate of 1.5.
According to the `Foresight' (2006), life expectancy has worldwide increased during
the past decade, whereas there is a huge diversity among older people as they can
not be treated as a homogeneous group because of differences in gender (more
women in older age groups), disposable income, culture, socio-economic group or
social class.

Concerning the pharmaceutical industry it can be said that there exists a growing
demand due to the aging population in many developed economies. (The
Economist ­ The World in 2007, 113). Both, the micro and the macro environment of these two industries are influenced by the aging population. The macro environment is often examined with the PEST analysis, which incorporates "the political and economic, social (including legal and cultural) and technological environment." (Hooley et al, 2004, p.94)

Nevertheless,the micron environmental forces, which consist of competitors, customers, dealers, suppliers and distributors, are influenced by the changing demographics (Kotler and Keller, 52).

The Pharmaceutical Industry

The pharmaceutical industry is highly dynamic and profitable but also "consists of
thousands of companies" and the leading `Big Pharma', "a dozen or so multinational
firms", which "account for roughly half of the world's $55o billion retail drug market."
(El Feki, 2005, p. 3) According to `The Economist' (The World in 2007, p. 113)
The sales of pharmaceuticals will increase by 10.4 % in 2007 which represents double the world GDP growth rate. The phenomenon is due to the ageing populations in richer
countries, which "are getting older, and many people suffer form chronic
conditions." (El Feki, 2005, p.3) However, it can be assumed that the ongoing
developments will encourage governments to put pressure on the pharmaceutical
companies to reduce drug prices.

When taking the US as an example, it can be analysed that almost 10 million people
suffer from osteoporosis and another 32.9 million from low bone mass which could be
a beginning stage of osteoporosis. These facts offer massive opportunities to thepharmaceutical industry as the treatment is extremely costly. In fact, global
treatment requirements are expected to double from US $ 5.5 billion in 2001 to over
US $ 10 billion in 2008 due to the aging population and the rising awareness of the
illness. (Wood, 2006) Considering the micro environment, it is obvious that the
demand is increasing constantly through the ageing population. On the other hand,
competition is most likely to increase as well, especially in the prescription drug
business, as many big drug companies such as Boots International and Bristol-Myers
Squibb decided to exit the OTC healthcare market in order to concentrate more on
the more profitable prescription drug market. (Euromonitor ­ OTC Healthcare ­ USA,
2006).

When looking at the UK, it can be assumed that several environmental issues are
caused by the ageing population, such as the increased need for social care.
Pressure is put on the government to provide an appropriate social system and to
cover the increasing costs for healthcare spending. The percentage of the
population over 65 is growing constantly and the power they have can not be
underestimated and should be taken very critical by political parties and their
decision on political objectives and choices. , As a matter of fact, 75% of the voting
population during the General Election in 2005 were people aged 65 and over,
which illustrates the political power this generation has as they assumingly prefer to
vote for the party which offers the most pension health care and pharmaceutical
support. (Age Concern, 2006)

Healthcare Spending

The total global expenditure for health is now more than US$4.7 trillion a year, according to the World Health Organization, and health expenditure as a percentage of GDP has been increasing among all major economies.

Spending on healthcare varies widely from country to country, as do outcomes. Nor is there necessarily a correlation between the amount of money spent and the effectiveness of the healthcare system. The United States spends more on healthcare than any other country, in both relative and absolute terms, yet its healthcare system scores poorly in terms of its overall performance, according to the Commonwealth Fund Commission, a US private foundation that supports independent research on healthcare issues. The Fund produced a report on the performance of the US health system in 2008 (The National Scorecard on US Health System Performance, 2008). The scorecard aimed to measure and monitor healthcare outcomes, quality, access, efficiency, and equity in the United States. It ranked the United States last out of 19 countries on a measure of mortality amenable to medical care.


This poor performance may reflect the nature of healthcare provision in the United States. The country has several types of privately and publicly funded insurance plans that provide healthcare services. However, the

private sector dominates healthcare and the United States is the “only wealthy, industrialized nation that does not ensure that all citizens have coverage” (that is, some kind of insurance), according to the Institute of Medicine, a non-profit organization for science-based advice on matters of biomedical science, medicine, and health.


By contrast, a publicly funded healthcare system, the NHS, dominates healthcare in the United Kingdom,

Table 1. Total healthcare spending as a percentage of GDP, 2007.

(Source: OECD,www.irdes.fr/EcoSante/DownLoad/OECDHealthData_FrequentlyRequestedData.xls)

Country	Healthcare spending, % of GDP
Australia	8.9
Canada	10.1
France	11.0
Germany	10.4
Italy	8.7
Ireland	7.6
Japan	8.1*
Portugal	10.2*
Spain	8.5
Sweden	9.1
Switzerland	10.8 (est.)
United Kingdom	8.4
United States	16.0

* 2006 data; est.: estimate
Japan spends around 8.1% of its GDP on healthcare, almost half the amount of the United States. Yet the Japanese have the longest healthy life expectancy on the planet. Diet and lifestyle clearly play a key role, but the country’s universal healthcare system may also be an important factor. Everyone in Japan is required to take out a health-insurance policy, either at work or through a community-based insurer, according to Key Note. The firm adds: “The government pays for those who are too poor. However, 80% of Japan’s hospitals are privately owned—more than in the US—and almost every doctor’s office is a private business. The Japanese Health Ministry tightly controls the price of healthcare, down to the smallest detail. Every two years, the healthcare industry and the health ministry negotiate a fixed price for every procedure and every drug.”



The Travel Industry

The global tourism industry is a significant one, with a share of 9% of global GDP and 235 million people working in the sector. (Global Travel and Tourism Summit)

One can say that the global travel industry has been aided by the advancements in logistics in Globalization 4.0, which is enabling more growth and opportunities for exports around the world (Brutton). International logistics and tourism are significantly linked and are affected by similar effects of global changes. For instance, the 2001 terrorist attacks, which characterized Globalization 3.0, “slowed the march of globalization” both in reduced travelling around the world and more intense scrutiny of international package deliveries. Now, with the “world becoming flatter” in Globalization 4.0, international business and trade is becoming increasingly more important, thus creating a need for more advanced logistics. These improvements in logistics “will continue with new technologies and processes for moving goods efficiently across borders. In fact, logistics is the key to ensuring that global trade continues to expand and thrive.” (Brutton). This will also directly impact the travel industry due to its similarities and create greater opportunities in the sector.

However, recent studies and analyses have shown a global downturn in tourism due to the state of the economy. Plunkett Research has analyzed the current state of the industry and has found the several key aspects:

“Both the lodging and airline industries suffered from recessionary cutbacks in business travel. Hotels saw lower occupancies and were forced to lower prices in order to stay competitive, while many routes in airline travel had to be reevaluated due to fall in demand. But seizing this opportunity, online reservation services have prospered and grown to be a major source of traffic. Discount airlines such as Southwest (LUV) and JetBlue (JBLU) gained market share while other airlines cut back services. The symbiotic relationship between the two has helped both services weather the recent economic storm. The silver lining of the industry has seen cruise liners become ever more popular. With 12 new ships launched this year, they look to expand even further once the economy rebounds.”



The rebounding economy should enable the industry to recover its losses. But the economy is not the only element influencing tourism. Many factors impact global tourism namely eight which have been identified by the World Tourism Organization: economics, technology, demography, infrastructure and facilities, politics and legislation, environment, international trade, and safety and security (World Tourism Organization 1995). However, another factor should be taken into consideration: that of population aging due to its effect of significant demographic and social changes. (Glover & Prideau, 27)

“Tourism demand is a function of the availability of personal time, financial resources and destination attractiveness. It is also influenced by social and economic change, domestic and international political considerations and new technology. As one of the variables that defines social change, population ageing determines patterns of demand” (Glover & Prideau, 35).

Many forecasts of the tourism sector suggest that population aging will have a major impact on the industry in the upcoming years (Klaus Weiermair, 2). Demographic observations of the travel industry in developed countries demonstrate that an aging population appears to result in higher travel expenditures, especially beginning at age 45 and until age 75, when the rate of tourism spending decreases. (Tretheway & Mak, Emerging tourism markets: Ageing and developing economies, 20)

“The older population has the time to travel and experience the world that may have eluded them during the years of raising a family or pursuing career commitments. Higher income enables greater exploration. […] Demographics are changing with ageing populations in the developed world as well as in economies such as China. The older tourist will seek a different experience than the younger tourist” (Tretheway & Mak, 21).

“Demographic characteristics play an important role in the choice of tourism activities and destinations and are usually included in visitor surveys” (Glover & Prideau, 26). As demographic changes occur due to increased elderly age groups, this would inevitably impact the demand in the tourism sector. This creates a need to modify characteristics of products and services as the population ages, to attract the most numerous group.

Tourism demand will be impacted with changes in demography. Leisure activities are dependent on the availability and usage of time, money and space, according to Martin and Mason’s model (1998). These resources are furthermore influenced by changes in technology, society and economy, which create new trends in activities and demand patterns (26). An increasing number and proportion of older individuals in a society suggests that the older generations’ consumption patterns and preferences will have a significant influence on overall tourism demand. An aging population is likely to create changes in the patterns of demand for the choice of activities and destinations. As a consequence, tourism demand is likely to change over time.

“The group that currently drives population ageing is the baby boomer generation. The size of this generation, coupled with increased life expectancy and low fertility rates, has led to a dominance of the baby boomers’ values, beliefs and demand patterns making this generation an important target market. The first of the baby boomers are now entering retirement and as they do so, their impact on the demand for travel products is likely to be felt by many destinations and suppliers” (Glover & Prideau, 28).

Baby boomers are shown to travel more frequently than previous generations due to several factors: higher disposable incomes, improved transportation, better accessibility of destinations, their better health due to advanced health care and need for social belonging and interaction. These factors overshadow the price of a leisure trip – they are more likely to disregard high cost and consider other elements when planning a trip. “In addition to active holidays those who have the financial resources also seek meaningful, significant and authentic experiences, which can range from adventures such as trekking through the Himalayas to educational cultural explorations including study-tours to historic sites in Europe and Asia” (Glover & Prideau, 30).

There are two trends within the industry characterized by global aging. The first trend reveals that as they grow older, baby boomers demand the same type of products as before but the product features need to be adapted to their new position in the life cycle, new family situation and older age. The second trend shows that baby boomers display differing tourism demand patterns from the previous generation. “Destinations that focus on the older traveler need to adapt to these changes and cater for a younger audience of seniors in order to remain competitive.” (Glover & Prideau, 35)

There are several implications in the international management context. The aging population’s impact on tourism must be taken into consideration for managers, not only in the tourism industry, but also in companies in which travel is necessary to conduct business. For managers in the travel and tourism industry, two main decisions will need to be considered: first, if their product and marketing should be focused towards an aging population (which will require frequent modification of their product package over the years) or a fixed age group; second, if their products and services should be adapted to meet changing demand. The first decision requires analysis of current target markets and their future profitability; as well as the own company’s ability to service its customers. The second decision involves greater implications in the fact that modification of tourist products will require change of the destinations themselves, as the products are inseparable from places they are consumed. This creates cultural, social and economical impacts in the local destination, should the managers decide to modify their tourism products in order to attract more tourists – the elderly generation.

 This second decision also impacts international managers unrelated to the tourism industry but who require travel in order to conduct business. With changes made to the industry to accommodate the aging population, several features are impacted: the means by which they travel as well as the destinations to which they travel. For instance, airports and other modes of transportation (train, boat…etc.) could be tailored to mostly fit the needs of the elderly. Furthermore, changes to the destinations themselves could be done to accommodate older tourists, which could directly impact the local business and indirectly influence the way in which business is conducted for the managers. (Glover & Prideau, 27)

“It is apparent that destinations and tourism suppliers need to develop products and services that have the capability to appeal to multigeneration markets rather than focusing only on one generation” (Glover & Prideau, 31). Should managers not take the aging population in consideration, an important segment will be overlooked. In order to remain successful in the promotion of their product and services, they must consider the differences in the demand profiles of specific generation groups. “The development of products of this nature will need to be undertaken within a number of parameters including: many baby boomers will have greater financial resources as a result of personal investments or superannuation funds; they will have more time available and seek to travel more often; they are likely to be fastidious about their destination choice as a result of past travel experience; and they will search for different activities and experiences due to their values, beliefs, state of health, education, and travel experience” (Glover & Prideau, 34).

Managers must consider the customer’s travel knowledge and ensure that their products satisfy the older market’s expectations. International competition should also be considered. Baby boomers have been observed to prefer more exotic locations with lower concerns about security and unfamiliar territories that may not speak English. For example: destinations in the South Pacific which are “that are accessible by air, comparatively cheap and considered more exotic” can create a serious threat to similar destinations in Australia. Therefore, a unique selling proposition separating them from other destinations will need to be included (Glover & Prideau, 35)

However, a balanced approach must be taken in deciding on a product portfolio for a tourist destination and the management of tourist products, at the risk of a “product gap” occurring in the market, which would create a drop in profit (Glover & Prideau, 36).

Impacts of International Management in the Global Context

  1. Government policy: The government is responsible for the health care of the elderly, which is a great expenditure. There is a need for government to implement types of policies that deal with this expense to follow with the aging population.

Examples in Hong Kong, U.S., China and Canada have been taken into consideration to illustrate this concept:

 Hong Kong

It is estimated that only 4% of those over the age of 65 posses coverage at present. One of the reasons has been attributed to the rising premiums among the elderly population. In order to release the burden of growing aging population, the Hong Kong government announced an insurance subsidy scheme which intended to sweeten the voluntary health insurance coverage proposal. This scheme has been in debate for many years since 2008. Hong Kong government has made an agreement with the insurance companies by providing insurance plans with the guaranteed renewability and availability of packaged medical services at the city’s private medical facilities. It is expected that the scheme will cost HK$2 billion annually. However, Hong Kong government has already eased some parts of health care expense to the individuals themselves (Lamb, Public Health Insurance).

United States of America

For the case in the U.S., according to the Census Bureau data, it is estimated that 46 million Americans are without health insurance. Many young workers simply do not consider health insurance. 18.3 million of the uninsured are under age 34. This group of people will inevitably become old in the future, at which point they will have to become the responsibility of the U.S. government.

An act has been introduced (America’s Affordable Health Choices Act of 2009), with the aim of ensuring that 97% of the U.S. population receives health insurance by 2015. The bill of all Americans are to be covered by either private or government administered health insurance. Under the Affordable Health Care Choices Act, health insurance will be mandatory. Individuals who fail to carry adequate coverage will face a tax penalty of 2.5% of their adjusted gross income (Longley, About the U.S. Government)

China

China has been putting efforts on the social security protection of its citizens. Regarding pension, China has a system to ensure that its citizens are able to maintain some income after their retirement. Both employee and employer have to contribute a fee on a monthly basis. The portion contributed by the employees is placed into a personal fund, which individual can draw on after retirement; while, the contributions made by employers are placed into a social pool. Therefore, even if citizens have used up the personal portion of their pension, they will still have some income to support themselves.

In the medical insurance sector, employees and employers are required to make contributions in the medical insurance fund. Chinese citizens can defray some of the costs of medical expenses. Individuals can receive a small amount of money from their medical insurance card, though they will still need to bear a certain percentage of the medical fees (Livermore, Understanding China’s Social Security System)

Canada

Health care has been a dominant issue in Canada’s federal elections. The following are a list of different parties’ platforms on health care:

Liberal Party on Health Care

The Liberals support a publicly funded health care system with universal access.
• They have guaranteed that health transfers to the provinces will grow by six percent each year for the next 10 years.
• As a result of the 2004 Federal-Provincial Health Accord, the provinces have agreed to benchmarks for wait times for priority medical procedures.
• The Liberals are promising a Canada Health Care Guarantee, which includes $300 million to increase capacity in teaching hospitals to reduce wait times; $50 million to speed up wait list management; $10 million to Canadian Institutes for Health Research for development of future wait list benchmarks; 10 million for patient-management programs for doctors for wait list management and to help patients navigate the health care system; and $75 million for a Health Care Guarantee Fund to help patients with travel costs to receive treatment in another province.
• The Liberals are promising to invest $100 million over 5 years to bring 1000 new family doctors on stream.
• The Liberals will put $300 million over five years into a new National Cancer Strategy.
• The Liberals propose the establishment of a Canadian Mental Health Commission for information, knowledge exchange and public awareness, in cooperation with provinces and other stakeholders.
• The Liberals would also invest nearly $700 million into a Public Health Strategy to bolster the public health system, including support for new vaccine programs and preparedness for infectious diseases.
• The Liberals plan to provide $500 million in new support to assist Canadians with disabilities.

Conservative Party on Health Care

The Conservatives support "a mix of private and public health care delivery, as long as health care remains publicly funded and universally accessible."
• They will work with the provinces to develop comprehensive plans for cancer, mental illness and heart disease, including implementing a $26-million five-year Canadian Strategy for Cancer Control. • The Conservatives plan to immediately compensate all those who contracted hepatitis C from tainted blood.
• The Conservatives propose improving access to natural and complementary health products and supplements.

NDP on Health Care

The NDP want to stop the "creeping privatization" of health care in Canada and improve public health care.
• The NDP propose a Protection of Public Health Care Act. Through the legislation and agreements with the provinces, the NDP would make stable, long-term federal transfers for health care contingent on a commitment that the money would not be used for a profit-making insurance system covering medically necessary services.
• The NDP support investment in long-term care for seniors, starting with an expansion of 10,000 units in 2006 to a total of 40,000 new units by 2009.
• The NDP would work with the provinces and territories to phase in a national prescription drug program, beginning with coverage for key catastrophic drugs.
• The NDP would increase the coverage for home care.
• The NDP propose the establishment of a Health Care Provider Training Fund, with a goal of adding 16,000 health care providers to the system, especially nurses and nurse practitioners. (Munroe, Federal Health Care in Canada) The Canadian case illustrates that health care is not only an influential issue to government policy but also a critical political issue.

Overall, the increasing aging population around the world becomes a global management issue. Many countries are now managing their own social security health care system. Governments need a well-established system to ensure that the elderly are able to maintain their quality of life when they are retired. However, it is crucial that the system does not bring too much burden to the society. Hong Kong, the U.S.A, China and Canada have shown some examples of how governments are managing their health care system under the impact of global aging population. For example, policies are launched to make sure that each individual contributes in their medical insurance fund. This is important and essential to maintain long term economic stability in the country.

2. Domestic Medical Tourism

With the influx of an aging travelling population, it does not simply bring traditional tourists to the tourism. In fact, they also bring domestic medical tourism. For instance, some health care providers, within the U.S. actually market themselves as medical destinations. One American base provider - the Cleveland Clinic, welcomes thousands of patients, both national and international for treatment each year. In addition, there are many insurance companies such as AXA, which provides 24-hour international medical insurance assistance.

Medical tourism is a term coined by travel agencies and mass media to describe the rapid growth of travelling across international orders to obtain health care. High cost of health care, long wait times for certain procedures, the ease and affordability of international travel, improvements in both technology and standards of care in many countries are the factors that have led to the increasing popularity of medical travel.

“The cost of surgery in India, Thailand or South Africa can be one-tenth of what it is in the United States or Western Europe, and sometimes even less. A heart-valve replacement that would cost $200,000 or more in the US, for example, goes for $10,000 in India--and that includes round-trip airfare and a brief vacation package. Similarly, a metal-free dental bridge worth $5,500 in the US costs $500 in India, a knee replacement in Thailand with six days of physical therapy costs about one-fifth of what it would in the States, and Lasik eye surgery worth $3,700 in the US is available in many other countries for only $730. Cosmetic surgery savings are even greater: A full facelift that would cost $20,000 in the US runs about $1,250 in South Africa.” (University of Delaware publication, UDaily).

However, there are some concerns in legal and ethical issues.

Medical tourists may be subjected to some unfamiliar legal issues when receiving medical care abroad. Although some countries present themselves as attractive medical tourism destinations and provide some form of legal remedies for medical malpractice, these legal avenues may be unappealing to the medical tourist. Patients might not be covered by insurance or receive compensation via malpractice lawsuits when problems arise.

Besides, receiving medical care abroad can be subjected to ethical issues. One example is the illegal purchase of organs and tissues for transplantation in countries such as China. “China initially lacked appropriate institutions, effective laws and regulations to keep pace with its rapid economic development” (Hennig). Some doctors in China are corrupted with brokers to do organ transplantation. Patients, local or non-local, can receive organ or tissue transplantation only if they can provide higher compensation to the doctor.

These issues are crucial for domestic medical tourism. We are experiencing economic globalization. There are interrelationships of goods and services among countries. It is important that countries should work together to adjust their own rules or policies to meet the global economic demand. For the case of domestic medical tourism, governments may need to work together to collaborate a common rule or regulation so that the legal and ethical issues can be resolved (Chase-Dunn, Globalization: A World-Systems Perspective).

Conclusion



Our global indicator is aging population, which through the points discussed demonstrate the technological advancements leading to longer life spans. Aging population impacts the world, through our examples by increasing health care costs and greater global travelling. It is therefore important to manage the aging population internationally.

From the perspective of the government, policies are needed to ensure that the growing health care costs do not affect the living quality of the citizens. One more point is how the world is going to do with the medical travelling. Should there be any rules or agreements globally to protect citizens in their medical travelling? How are governments going to work with each other to management the aging population?

The blog provides a first glance at the aging population towards the globalization. The important thing is that we do not treat aging population as a problem or a burden to the society but as a solution or opportunity to the world. As the opening video demonstrated, the elderly bring legacy, wisdom, culture and many great values. We should focus on involving them in policies to better their lifestyles but also to provide insight for the future generations.


Extension:

Thank you for your great comments! We have addressed some additional issues on the topic below:

I agree with the fact that the ageing population will have a serious impact on tourism. In that sense, managers will have to change their products in consequence. However, according to my sources retired people go less in holidays than younger one (http://hal.inria.fr/docs/00/06/89/13/PDF/espso_def.pdf). In your blog, you do not define the age bracket in which your study is principally based. Are you talking about retired? Or pre retired? If your based our study on retired people, you have made a mistake. Thus, managers should not only focus their decisions about ageing people. It is another market segment with opportunities that should not be neglected, but the most part of the effort should go to younger people.

To address your question, the study we looked at focused on baby boomers (those born between 1946 and 1965) and seniors (no distinct definition; varies between ‘older than 50 years’ or ‘over 65 years’). This includes both the pre-retired and retired population. We wanted to look at your source but the link did not work.

In conclusion, I would have liked to see a more thorough discussions of how we should deal with these demographic changes, and less recount of facts and illustrations of the current state. Personal reflections on ethical dilemmas and concerns would be interesting to read.

An aging population is a sign of development for countries who are obviously increasing the quality and quantity of life they are offering to their citizen but it could, according to me, lead to major social distortions, frustrations and conflicts.

I feel surprised about your team's point of view. Most people would think that the ageing people are the burden of the society as they have no productivity to the community after their retirement and they would cost a lot to the government such as the medical cost and housing cost.

We understand your comments about the negatives of global aging and concerns about how to handle the possible issues - our group decided to originally take positive perspective on the matter as we knew that on the surface, global aging appears to have many consequences:

-          Economic consequences – potential need to invest heavily in future health care services

-          Effects on the wealth of nations

-          Elderly not contributing to the society anymore

-          Need for the young to take time to care for the elderly – reallocation of resources to the elderly

Additional information on economic consequences: http://www.mrrc.isr.umich.edu/publications/briefs/pdf/rb068.pdf

As the elderly already face negative bias and stereotypes, we decided to focus on a positive outlook and what they could contribute. But it is true that many potential risks can arise from global aging phenomenon if measures are not taken early on to deal with them.

“It's not just Europe -- China and other emerging-market economies are aging fast, too. There are solutions, but it's time to act”

Possible solutions include:

Two important elements of growth are increasing the labor force and productivity. Countries must try to improve productivity to maintain current growth levels by maintaining the size of their labor forces (they could persuade older workers to retire later, encourage stay at home parents to find work or receive more immigrants.) This is a challenge in Europe, where productivity growth has only averaged 1.3% since 1995.

Policymakers can try to boost private savings in stock and bond funds, find less expensive methods to provide elder care, attract young immigrant workers, and encourage companies to hire or retain elderly workers. For instance, in Finland, new government and corporate policies are increasing the average retirement age.

“Around the world, governments and businesses are searching for creative policies in each of these areas as they come to grips with one of the most profound social transformations in history. "Right now all of these issues are being dealt with piecemeal," says Ladan Manteghi, international affairs director for the Association for the Advancement of Retired Persons' global aging center. It all adds up to a big agenda -- one that will determine whether the global economy that achieved such astounding progress in the youthful 20th century will continue to prosper as it matures in the 21st.”

(http://www.businessweek.com/magazine/content/05_05/b3918011.htm)

 

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"Medical Tourism." Wikipedia, the Free Encyclopedia. Web. 10 Feb. 2012.

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Yan, Lily. "Illegal Organ Trade Rife in China." ABC News. 16 Nov. 2009. Web. 12 Feb. 2012.