The Lexus and the Olive Tree Understanding Globalization Book by Thomas L. Friedman Report by Baron Stout

Overview Thesis Globalization Explain how a new generation of globalization became dominant and how it effects everything Globalization The inexorable integration of markets, nation-states, and technologies Based on free market Capitalism

Two Times of Globalization End of World War I until 1989 Cold War Period USA vs. USSR 1989 to present Since the fall of the Berlin Wall (Communism)

Globalization Characteristics: Own dominant Culture People Movement Structure & Power

Comparing the Cultures Cold War (Old) Division – The Wall Frozen Regional homogenization Weapons Einstein Friends and Enemies Globalization (New) Integration – The Web Dynamic & Growing “Americanization” Bandwidth Moore’s Law Competitors

Comparing the Cultures Jacob Frenkel: “Before…we started by looking at the local markets, local financial systems and the interrelationship between them, and then, as an afterthought, we looked at the international economy…Now we reverse the perspective. Let’s not ask what markets we should export to, after having decided what to produce; rather let’s first study the global framework within which we operate and then decide what to produce.”

People Movement Demographic Pattern People moved from agriculture and rural areas to urban areas with urban lifestyles

Structure & Power Old System Globalization Nation-states dominated and balanced each other from within Globalization Between nation-states Nation-states & global markets Nation-states & individuals

Structure & Power Between nation-states Nation-states & global markets USA sole superpower Nation-states & global markets Global investors & finance markets Nation-states & individuals Terrorists

Information Arbitrage Having a lot information, from many different sources, and then knowing how to sort it out …in Globalization Knowing as much about the complete makeup of a country and how each one depends on the others

Information Arbitrage Six areas of knowledge Politics Culture National Security Finance Technology Environment

The Lexus & the Olive Tree All that is old and traditional What roots us to a place, culture or family The Lexus All that is new and innovative Drive for sustenance and improvement Global markets

Lexus vs. Olive Tree Cold War Globalization Olive tree vs. Olive tree Norway vs. European Union St. Pierre-de-Trivisy vs. Coca-Cola India tests nuclear weapons

…And the Walls Came Tumbling Down Changes from Cold War system to Globalization The way we communicate The way we invest The way we learn about the world

The way we communicate The Democratization of Technology Computerization Telecommunication Miniaturization Compression Digitization

The way we invest The Democratization of Finance Commercial Paper Junk Bonds Secruitization Online Trading

The way we learn The Democratization of Information Cable Television Compression Internet

Microchip Immune Deficiency MIDSyndrome Countries or companies who fail to take steps to keep up in the global economy

MIDS Stage 1: Pre-microchip (WWI – 1980’s) Less efficient work Top down management style Stage 2: Information Revolution (1980’s – late 1990’s) Lower barriers of entry Increased competition & speed More customer feedback

MIDS Stage 3: Present and near future Companies and Countries restructuring to take advantage of global situation Democratization of decision-making Decentralization of power and information

Conclusion Globalization revolves around embracing and exploiting the Internet and E-business. Keeping up with, or ahead of, technological advances of others will make or break a country or company. Remember your Olive Tree’s and buy a Lexus.