01 Friedman Globalization

8/3/2019 01 Friedman Globalization

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GLOBALIZATION“THE WORLD IS FLAT”



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Globalization

• Globalization

created a newworldcharacterized by:

– Worldwide

communication – Collaboration

without barriers



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Evolution of Globalization

• Mainly Europeancountries areglobalizing

• Power is the primarydriver

• Industries changed

• Slow pace ofchange

Globalization 1.0



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• Companies areglobalizing

• Reduction intransportationand telecom-munications

costs• Mainly Europeand Americainvolved

Globalization 2.0



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• Individuals and

small groups areglobalizing

• Faster pace ofchange

• Emergence of newindustries

Globalization 3.0



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Evolution of Globalization: Summary

• The World Is Flat (Thomas L. Friedman)

• ―10 Enablers‖

– Key factors enabling Globalization 3.0



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Enabler #1: The Fall of the Berlin Wall

• November 9, 1989

• Fall ofcommunism

• People from theformer communistcountries gained

more freedom



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Enabler #2: Netscape Browser

• August 9,1995

• ―Killer app‖

• Firstmainstreambrowser

• Gaveindividualsaccess to theInternet & set

standards



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Enabler #3: Work Flow Software

• Applications thatallow peopleworldwide to

communicate• XML: applications

―talk‖ to each other

• New possibilities

for informationsharing

• Global currency tofuel commerce



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Enabler #4: Uploading

• Individuals andcompanies

activelyparticipate incontentgeneration on theWeb

• Wikipedia a huge

success



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Enabler #5: Outsourcing

• Outsourcingcompaniesprofited from thedrop intelecommuni-cations costs

• Companies cannow use talentedengineers fromanywhere



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Enabler #6: Offshoring

• Companies setup entire

factories incountries suchas China

– Mass production

– Low costs



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Enabler #7: Supply Chaining

• Integration ofretailers,

suppliers, andcustomers

• Wal-Martbecame an

early leader

– Use of RFIDtags



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Enabler #8: In-Sourcing

• Delegation ofcompany’s key

operations to asubcontractor

– Example: UPSprovides

completesupply chainsolutions tocompanies



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Enabler #9: In-Forming

• In-forming is toindividuals whatoutsourcing,offshoring, andin-sourcing is tocompanies

• Individuals haveaccess tomassive amountsof information



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Enabler #10: The Steroids

• Technologies that

support differenttypes ofcollaboration

– Greater mobility

– Tripleconvergence



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Opportunities for Operating in the Digital World

• Opportunities forreaching newmarkets

– Former EasternBloc countriesprovide newopportunities for

internationalcompanies toreach newcustomers



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• Opportunities of a global workforce: – Low communications costs

– Highly-skilled labor pool

Engineering Graduates in the

United States, Europe, and India

Opportunities for Operating in the Digital World

Based on: Mallaby, 2006



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Challenges of Operating in the

Digital World• Globalization also created a set of

unprecedented challenges:

– Governmental

– Geoeconomic

– Demographic

– Cultural



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Governmental Challenges

• Political System Challenges – Political stability

• Regulatory Challenges – Tariffs

– Embargoes – Export regulations

– Quotas



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Governmental Challenges

• Data-Sharing Challenges

– Transborder data flow regulations

• Differences in standards

– UPC vs. EAN

– Measurement units

– Postal codes, phone numbers, etc.

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7-22

Governmental Challenges2-22

• Internet Access and Individual Freedom

– Content blocking by governments/censorship

• China—Use of VoIP restricted• Germany—Sites with fascist symbols prohibited

– Internet access blocking

• Cuba, North Korea

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Geoeconomic Challenges

• Time Zone Challenges

– Real time meetings across continents difficult

– Working around the clock possible

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• Infrastructure-Related Challenges

– Traditional infrastructure—roads, electricity

– Connectivity—reliable Internet connections

• Challenges Related to Economic Welfare

– GDP growth not distributed evenly throughoutthe world

– Migration

– Some companies used to deal with low marginsand tough competition

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• Demographic Challenges – Differing rates of population growth

World Population,1950-2050(in billions)

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• Demographic Challenges (cont’d)

– Expertiserelated

challenges• Different

concentration

of skilled

workers• Different costs

of workers

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Cultural Challenges

• National Cultures – Power Distance —differences in how societies

handle the issues of human inequality

– Uncertainty Avoidance —risk taking nature

– Individualism/Collectivism —value placed on anindividual vs. a group

– Masculinity/Femininity —degree to which asociety is characterized as masculine/feminine

– Concept of Time —long term vs. short term

– Life Focus —quantity vs. quality of life

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Cultural Challenges

• Cultural Barriers – Language —communication language and norms

– Work Culture —work skills, habits, and attitudes – Aesthetics —art, music, and culture

– Education —attitudes toward education and literacy

– Religion, Beliefs, and Attitudes —spiritual institutions

and values – Social Organizations —family and social

cohesiveness

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Cultural Challenges

• Environmental challenges

– Energy consumption, pollution, workers health

– Shipping

• Other Challenges

– Differences in what is regarded as appropriate

– Standards of dealing with intellectual property

• Network readiness

– Not every country has access to the globalnetworked economy

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01 Friedman Globalization

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