Why There Are Heirarchies
i Business
in
B i
(and why they dissolve)
-1-
Geodesic Networks
 Network of participants
p
p
 Community of interest
 Often global
 Non-hierarchical, web-like
structure
 No central node
 Long history
-2-
Historical Examples
Construction contractors in ancient Rome
11th Century English mine
Medieval trading networks
John Jacob Astor
-3-
Emergence of Managerial
Capitalism
Mass Production
( l economies)
(scale
i )








Textiles
Mining
Primary Metals
Flour & cereal
Tobacco
Business & agricultural
g
machines
Household appliances
Automobiles
Mass Distribution
(
(scope
economies)
i )

Railroads
—Compared with wagon
trails
—Compared with river
transport
—Compared with canals



Refrigerated storage &
transport
Telegraph & telephone
Mass Media
High Volume Throughput
-4-
The generic value
chain for a firm:
Support
Activities
Firm Infrastructure
Procurement
Technology Development
Human Resources Development
Inbound
Logistics
Operations
Outbound
Logistics
Marketing &
Sales
Service
Primary Activities
-5-
Geo-Social Differences
 United States
 World’s fastest-growing mass market
 Great Britain
 Slower growth
 smaller space
 more disruption by world wars
 Germany
 Interessengemeinschaft
 Japan
 Late to industrialize
 Feudal social base
-6-
Heirarchies Are Coming
Unglued
Economies of Scale
are Eroding



Automated Production
Seamless Coordination via
Internet
Flexible Fabrication
Facilities as “Common
Carriers”
Carriers
Economies of Scope
are Eroding




Disintegration of Mass
Media
Commoditization of
transportation for goods
Easy travel for people
Smooth flow of money
Mass Customization
-7-
The Challenge Ahead
How will communities of interest take
action without heirarchies?
-8-
Challenge Ahead
Loss of Growth Dynamism
 Exports
 Production
 Shift to service sector
-9-
- 10 -
Challenge Ahead
 Productivity
oduc v y Co
Conundrums
u d u s
 Excess capacity
 Capital formation & interest rates
 Innovation and diffusion of technology
 Management failure
 Comparative productivity measures
 Stagflation
- 11 -
Challenge Ahead
G
Global
ob Interdependence
e depe de ce
 Political interdependence
 Financial interdependence
 Trade interdependence & domestic economy
—Import penetration
—Adjustment
 The New Competition
p
 Knowledge business
- 12 -
Geodesic Networks:
Future Possibilities
 Project
j financing
g involves
network of participants
 Community of interest
 Often global
 Non-hierarchical, web-like
structure
 No central node
- 13 -
Exhibits 1-15
- 14 -
- 15 -
Exhibit 2: Index of Real GDP
250
200
Japan
Canada
France
German
Italy
United States
United Kingdom
150
100
50
1978
1977
1976
1975
1974
1973
1972
1971
1970
1969
1968
1967
1966
1965
1960
1955
1950
0
Year
- 16 -
- 17 -
Population Density
( People / km2 )
- 18 -
GDP (PPP) per capita 1975
- 19 -
GDP (PPP) per capita 1980
- 20 -
GDP (PPP) per capita 1990
- 21 -
Economic Map
- 22 -
GDP (PPP) per capita 2000
- 23 -
- 24 -
Purchasing Power Parity of GDP per
capita 2003 (U.S. = 100)
PPP of GDP for the countries of the world (2003). The US is the base country, so it is 100. The highest index value, for
Bermuda, is 154, so the same goods are 54% more expensive in Bermuda than the United States.
- 25 -
GDP 2005
- 26 -
2006 GDP (by Purchasing Power Parity) as
a percentage of the top producer (U.S. = 100)
http://upload.wikimedia.org/wikipedia/en/2/28/2006gdp_ppp.PNG
- 27 -
GDP 2007
- 28 -
- 29 -
Focus on Poland
- 30 -
The physical value chain from a
global perspective: What
opportunities?
Support Activities:
•Technology Development
•Human Resources
Development
Service
Distribution&
Marketing
Fabrication
Refining
Basic Extraction
Physical
Realm
Value Added at
Each Step
- 31 -
Future Possibilities
Renewable Fuels Power
Geothermal
Ocean Thermal Layers
By-product is fresh water
Tidal
Hydrogen Conversion
- 32 -
Virtual Value Chain &
Information Operations
GATHER AND APPLY IN THE PHYSICAL REALM
STORE AND TRANSFORM IN THE INFORMATION REALM
APPLY
PRESENT
DISTRIBUTE
SYNTHESIZE
Infosphere
SELECT
ORGANIZE
GATHER
- 33 -