GLOBALIZATION “THE WORLD IS FLAT”

1. GLOBALIZATION “THE WORLD IS FLAT”

2. Globalization created a new world characterized by: Worldwide communication Collaboration without barriers Globalization

3. Mainly European countries are globalizing Power is the primary driver Industries changed Slow pace of change Globalization 1.0 Evolution of Globalization

4. Companies are globalizing Reduction in transportation and telecom-munications costs Mainly Europe and America involved Globalization 2.0 Evolution of Globalization

5. Individuals and small groups are globalizing Faster pace of change Emergence of new industries Globalization 3.0 Evolution of Globalization

6. The World Is Flat (Thomas L. Friedman) “10 Enablers” Key factors enabling Globalization 3.0 Evolution of Globalization: Summary

7. November 9, 1989 Fall of communism People from the former communist countries gained more freedom Enabler #1: The Fall of the Berlin Wall

8. August 9, 1995 “Killer app” First mainstream browser Gave individuals access to the Internet & set standards Enabler #2: Netscape Browser

9. Applications that allow people worldwide to communicate XML: applications “talk” to each other New possibilities for information sharing Global currency to fuel commerce Enabler #3: Work Flow Software

10. Individuals and companies actively participate in content generation on the Web Wikipedia a huge success Enabler #4: Uploading

11. Outsourcing companies profited from the drop in telecommuni-cations costs Companies can now use talented engineers from anywhere Enabler #5: Outsourcing

12. Companies set up entire factories in countries such as China Mass production Low costs Enabler #6: Offshoring

13. Integration of retailers, suppliers, and customers Wal-Mart became an early leader Use of RFID tags Enabler #7: Supply Chaining

14. Delegation of company’s key operations to a subcontractor Example: UPS provides complete supply chain solutions to companies Enabler #8: In-Sourcing

15. In-forming is to individuals what outsourcing, offshoring, and in-sourcing is to companies Individuals have access to massive amounts of information Enabler #9: In-Forming

16. Technologies that support different types of collaboration Greater mobility Triple convergence Enabler #10: The Steroids

17. Opportunities for reaching new markets Former Eastern Bloc countries provide new opportunities for international companies to reach new customers Opportunities for Operating in the Digital World

18. Opportunities of a global workforce: Low communications costs Highly-skilled labor pool Opportunities for Operating in the Digital World Engineering Graduates in the United States, Europe, and India Based on: Mallaby, 2006

19. Globalization also created a set of unprecedented challenges: Governmental Geoeconomic Demographic Cultural Challenges of Operating in the Digital World

20. Political System Challenges Political stability Regulatory Challenges Tariffs Embargoes Export regulations Quotas Governmental Challenges

21. Data-Sharing Challenges Transborder data flow regulations Differences in standards UPC vs. EAN Measurement units Postal codes, phone numbers, etc. Governmental Challenges

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 Governmental Challenges 2-22

23. Time Zone Challenges Real time meetings across continents difficult Working around the clock possible Geoeconomic Challenges

24. Infrastructure-Related Challenges Traditional infrastructure—roads, electricity Connectivity—reliable Internet connections Challenges Related to Economic Welfare GDP growth not distributed evenly throughout the world Migration Some companies used to deal with low margins and tough competition Geoeconomic Challenges

25. Demographic Challenges Differing rates of population growth Geoeconomic Challenges World Population, 1950-2050 (in billions)

26. Demographic Challenges (cont’d) Expertise related challenges Different concentration of skilled workers Different costs of workers Geoeconomic Challenges

27. National Cultures Power Distance—differences in how societies handle the issues of human inequality Uncertainty Avoidance—risk taking nature Individualism/Collectivism—value placed on an individual vs. a group Masculinity/Femininity—degree to which a society is characterized as masculine/feminine Concept of Time—long term vs. short term Life Focus—quantity vs. quality of life Cultural Challenges

28. 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 Cultural Challenges

29. 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 global networked economy Cultural Challenges