GLOBALIZATION GLOBALIZATION

““THE WORLD IS FLAT” THE WORLD IS FLAT”

GLOBALIZATION GLOBALIZATION

““THE WORLD IS FLAT” THE WORLD IS FLAT”

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Globalization

• Globalization created a new world characterized by:– Worldwide

communication – Collaboration

without barriers

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Evolution of Globalization

• Mainly European countries are globalizing

• Power is the primary driver

• Industries changed• Slow pace of

change

Globalization 1.0

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Evolution of Globalization

• Companies are globalizing

• Reduction in transportation and telecom-munications costs

• Mainly Europe and America involved

Globalization 2.0

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Evolution of Globalization

• Individuals and small groups are globalizing

• Faster pace of change

• Emergence of new industries

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 of

communism• People from the

former communist countries gained more freedom

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Enabler #2: Netscape Browser

• August 9, 1995

• “Killer app”• First

mainstream browser

• Gave individuals access to the Internet & set standards

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Enabler #3: Work Flow Software

• Applications that allow people worldwide to communicate

• XML: applications “talk” to each other

• New possibilities for information sharing

• Global currency to fuel commerce

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Enabler #4: Uploading

• Individuals and companies actively participate in content generation on the Web

• Wikipedia a huge success

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Enabler #5: Outsourcing

• Outsourcing companies profited from the drop in telecommuni-cations costs

• Companies can now use talented engineers from anywhere

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Enabler #6: Offshoring

• Companies set up entire factories in countries such as China– Mass production– Low costs

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Enabler #7: Supply Chaining

• Integration of retailers, suppliers, and customers

• Wal-Mart became an early leader– Use of RFID

tags

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Enabler #8: In-Sourcing

• Delegation of company’s key operations to a subcontractor– Example: UPS

provides complete supply chain solutions to companies

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Enabler #9: In-Forming

• In-forming is to individuals what outsourcing, offshoring, and in-sourcing is to companies

• Individuals have access to massive amounts of information

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Enabler #10: The Steroids

• Technologies that support different types of collaboration– Greater mobility– Triple

convergence

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Opportunities for Operating in the Digital World

• Opportunities for reaching new markets– Former Eastern

Bloc countries provide new opportunities for international companies to reach new customers

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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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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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Geoeconomic Challenges

• 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

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Geoeconomic Challenges

• Demographic Challenges– Differing rates of population growth

World Population, 1950-2050 (in billions)

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Geoeconomic Challenges

• Demographic Challenges (cont’d) – Expertise

related 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 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

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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 global

networked economy