1. GLOBALIZATION “THE WORLD IS FLAT”

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

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

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

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

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

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

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

9. 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

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

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

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

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

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

15. 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

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

17. 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

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

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

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

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

22. Governmental Challenges
2-22
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

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

24. 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

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

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

27. 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

28. 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

29. Cultural Challenges Environmental challenges Other 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