GLOBALIZATION

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 companys 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
• ChinaUse of VoIP restricted
• GermanySites 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 infrastructureroads, electricity
• Connectivityreliable 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, 1950-2050 (in billions)
26
Geoeconomic Challenges

• Demographic Challenges (contd)
• Expertise related challenges
• Different concentration of skilled workers
• Different costs of workers

27
Cultural Challenges

• National Cultures
• Power Distancedifferences in how societies
  handle the issues of human inequality
• Uncertainty Avoidancerisk taking nature
• Individualism/Collectivismvalue placed on an
  individual vs. a group
• Masculinity/Femininitydegree to which a society
  is characterized as masculine/feminine
• Concept of Timelong term vs. short term
• Life Focusquantity vs. quality of life

28
Cultural Challenges

• Cultural Barriers
• Languagecommunication language and norms
• Work Culturework skills, habits, and attitudes
• Aestheticsart, music, and culture
• Educationattitudes toward education and literacy
• Religion, Beliefs, and Attitudesspiritual
  institutions and values
• Social Organizationsfamily and social
  cohesiveness

29
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