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Cybercentrism
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CYBERCENTRISM
AND THE NEW CYBERGENS
2nd edition
Dr. Lansing A. Gordon
Woodbury University
San Diego
Dr. Lansing A. Gordon, currently Assistant Professor of Marketing in the School
of Business at Woodbury University, bases many of his insights on career
experience prior to his academic appointment: senior research analyst, advertising
agency creative director, advertising new accounts manager, marketing &
development specialist, marketing communications manager, fundraising
manager, and television producer for NBC. His doctoral dissertation—
Cybercentrism, A Reinvention of Strategic Nomenclature for e-Commerce: An
Issues and Strategies Thesis Focused on Industrial Automation Segment
Analysis—was researched with the University of Western Sydney, Sydney
Graduate School of Management, Australia.
Cover and interior art: Lansing A. Gordon
Back cover photo: Kenny Wong
Copyright © 2007 by Lansing A. Gordon
All rights reserved. No part of this book may be reproduced or transmitted in any
form or by any means, electronic or mechanical, including photocopying,
recording, or using any other information storage and retrieval system, without
permission in writing from the publisher.
First published in the United States of America in 2007 by University Readers
11 10 09 08 07 1 2 3 4 5
Printed in the United States of America
ISBN: 978-1-9342690-2-2 (paper)
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TABLE OF CONTENTS
Preface
From Techspeak to Tactical: A New Centrism for a New
Century
v
Foreword
vii
Chapter One
Cybercentrism: The New Marketing Management Model
for A Post-Global Era
1
Chapter Two
Cyber Leadership: The New Challenges of An Open
Enterprise System
41
Chapter Three
Factory-To-Business: Discovering The Missing Link in
Fulfillment Strategies
75
Chapter Four
The CyberGens: Rise of A Cyber Media Consumer
103
Chapter Five
Global e-Markets: Cybercentric Lessons in Accelerated
Realities
137
Chapter Six
Cybercentric e-HQ in Crisis: Advertising and Public
Relations Media Strategies
177
Chapter Seven
Cybercentrism’s New Value Proposition: 3G and
Customer Empowerment
201
Chapter Eight
Cybercentrist Insights: The Way Forward
221
Appendix 1.
A Cybercentric Teleology
247
Appendix 2.
Learning to Speak The Language
259
iii
iv
PREFACE
FROM TECHSPEAK TO
TACTICAL: A NEW CENTRISM
MODEL FOR A NEW CENTURY
______________________________
One day in 2001 the e-commerce
bubble burst. A world of overpriced,
steeply speculated software
companies, with Silicon Valley at its
epicenter, collapsed. An entire ebusiness market based upon the
proven, tried and tested tenants of
globalism or Geocentric modeling had
crashed. Out of the devastated ruins
of the global village came only
silence…the e-business tree had fallen
in the forest but nobody knew why, so
it didn’t make a sound. B2B was
renamed ‘Back-to-Basics’ in defeat.
v
While the pundits and old school
strategists frantically searched for
answers in their derailed Geocentric
modeling, new systems visionaries,
industrialists, researchers and
hardware / software imaginers were
busy creating a cyber business
platform for the new millennium. For
nearly a decade a phantom market has
slowly emerged identified only by
techspeak whispered within the
towers of IT. It is the missing link
with many in management only
sensing its reality. It is the ‘centrism’
of a new century but represents a
dangerous blind spot for strategists
who can’t explain it because they
can’t see it. And they can’t see it
because they don’t know what to call
it…………………………..until now.
vi
SPECIAL THANKS
Sincere appreciation is extended to Frost & Sullivan for their continued
interest in this book.
Frost & Sullivan, founded in 1961, has 26 global offices with more
than 1500 industry consultants, market research analysts, technology
analysts and economists. Their mission is to research and analyze new
market opportunities for corporate growth. They are the world leader
in growth consulting and the integrated areas of technology research,
market research, economic research, corporate best practices,
training, customer research, competitive intelligence and corporate
strategy. www.frost.com/
C C
S
Center for
Cybercentrism
Studies
In Association with the
Woodbury University
School of Business
vii
Napoleonic Globalism
Managing the
changes in emarketing is sort of
like Napoleon
arriving at the siege
with ground troops
and ladders to scale
the castle walls and
realizing that there is
no castle or wall. He
receives word that
his coveted, major
markets have been
invaded from cyber
space by aggressive
virtual knowledge
marketers, he is
loosing market share
and his customer
base is bleeding
away. Josephine will
not be happy with
this news.
A Cybercentric mindset has struck fear in the hearts of Napoleonic-styled
competitors laying siege to ‘global village’ markets. Geocentric, bricks-and-mortar
modelers suffer from no longer being relevant. Frontiers, boundaries and borders
once securing nations, companies and their markets are vanquished. The new
marketing field generals must abandon their grip on the bricks and mortar ideas of
‘country of origin’ branding and ‘founding fathers’ mission statements and enter
into a more unpredictable, precarious, cyber-centrically challenged world.
Collaborating virtually across geographies and industries is replacing vertically
integrated businesses…speed and flexibility are winning the market share wars
against immobility and size. Cybercentric strategic battle plans enable marketers to
control the standardization of transnational, one-on-one marketing messages with
devastating accuracy and plan cyber incursions that bypass traditional print and TV
media for computer broadcast television, video streaming, podcasts and webinars
within the blogisphere, cybersphere banners, pop-overs, flashers and hovers, as well
as short films to mobile handhelds and other cellphone marketing techniques.
CHAPTER ONE
CYBERCENTRISM: THE NEW
MARKETING MANAGEMENT
MODEL FOR A POST- GLOBAL
ERA
THEORY
A THEORETICAL REVIEW OF THE EPRG SCHEMA AND THE NEW
CYBERCENTRIC MODEL PREMISE
To study the theory of marketing we could begin with the idea of a ‘storefront’. As manager you
stand inside your establishment and look out the window of your storefront. Outside you see
people, traffic, customers, prospects and competition. The view has changed dramatically from
the last century to the new one. We used to see competitors move in across the street. This
would increase competition for a limited number of prospects. Indeed, competitors could steal
your customers. Today you can’t conceptualize marketing without putting the ‘international’
prefix before it.
As an example let’s say you own a convenience store with a few tables and chairs where someone
could dash in to buy milk and bread or stay longer and order a sandwich and a cup of coffee.
Your competition would range anywhere from the local donut shop, 7-Elevin or Circle-K, to
Starbucks or even a gas station with mini-mart. Now a new store called Famima opens across the
street. Famima is a Japanese mini supermarket and sit down deli convenience chain with plans to
open another 240 stores in the US by the end of 2009 (psfk, 2006). Famima is a Japanese-style
local convenience store offering popular delicacies such as sushi, noodles and Asian groceries
plus banking services and a stationary/newsstand. Famima is focusing on the ‘upscale
convenience store niche’ and may draw away your better customers in cosmopolitan, urban
environments. Your microwaveable burritos may be no match for sushi and steamed dumplings.
There is not such thing as domestic competition where your customers and market share are
defended by territorial dominion. Yet your market plan may have been blindsided because of the
limitations of your Ethnocentric marketing view. This protective, isolationistic veneer has been
torn apart by foreign competitors and an ever increasing virtual shelf space in a fast growing
virtual marketplace.
1
As luck would have it you inherit a large printing plant from a long lost great uncle. The same
premise applies when doing e-business on a cyber business playing field. You cannot expect to
operate a company website for volume printing services and expect to garner most of your
customers within fifty miles of your printing plant. Not only might you engage customers from
other parts of your region (Regiocentrism) you might get customers from both domestic and
overseas locations (Polycentrism). Indeed, your could expect to compete with large domestic,
Asian, and European competitors (Geocentrism) for the same clients. Now the concept of the
‘storefront’ changes. Instead of seeing pedestrians and traffic and competitors across the street
you are viewing an entirely virtual vista.
Antique Geocentric mindsets would see regional differerences in consumer purchase behaviour,
local languages and currencies as obstacles to doing business. Your e-commerce, virtual
storefront on the Web sees these differences as opportunities, with the utilization of translation
and currency software engines providing conveniences for your cyber customers. Unfortunately
there are few sources offering the strategic models and terminology that will help you think in
Cybercentric terms and strategies. Companies are still struggling with increasing pressure to
establish platforms of business operations both on the bricks-and-mortar level as well as virtually.
Doing business and collaborating with business partners in home markets, foreign markets and
concurrently in a cyber realm can be strategically daunting. This is where the new Cybercentric
nomenclature found in this book can provide meaningful insights.
What becomes problematic is that consultants,
strategists, researchers and educators still use many of
the concepts and terminologies common to a past era.
The realities of e-commerce are frequently seen through
the eyes of globalism, with strategies often devised
using outmoded terminologies and antiquated
methodologies.
In offering solutions, this book provides a model that would advance the EPRG theory of
international marketing commonly used by global institutions such as the United Nations. I refer
to many United Nations publication templates (Carter, 1997), with a view to the basic tenets of
the Perlmutter (1969) EPRG architectural concept of global business. Such EPRG premise
discussions are commonly available on-line (Example: www.tt100.biz ).
From the Ruins of the Global Village: Beyond EPRG
The term global village is used to describe organizational structures that still dominate the
business activities of many major corporations. Global village management attitudes (Toyne and
Walters, 1993) represented a mix of dated, ethnocentric and polycentric management
formulations regarding business management and global marketing strategy.
Ethnocentric managers tend to view all foreign markets as similar to the extensions of domestic
markets. At the other extreme, polycentric management concepts view all foreign markets as
highly individualistic. A middle-of-the-road approach identifies geocentric management
practices where there is an awareness of the similarities and differences across markets.
The global village concepts that embrace geocentrism may be short on strategy in some situations
and long on strategy in others. What is missing is the virtual view of a standardization of some if
2
not all of the strategic mix (Gillespie, Jeannet, Hennessey, 2004). Geocentrism today reflects
current thinking in globalism as it represents dated 'bricks and mortar' communications and sales
methods and management thinking. A change from a Geocentric model to a new Cybercentric
model approach is advocated in this book. Global business strategies evolving over time may
suggest the emergence of a 'post-global reality' (Saffo, 2002) that, it is argued, urgently needs a
newly designed 'centrism'.
A post-global era is described as a 'shift' or 'erosion' (Saffo, 2002) of the nation-state's monopoly
on power in the international business arena. Cybercentrism modeling terminology suggests the
emergence of a virtually dominant business world that could eventually cause national boundaries
to dissipate in the minds of consumers and businesses with country-of-origin becoming less
important and company-of-origin becoming more important.
Cybercentrism applied to marketing strategy weighs in
heavily for brand name development and strengthening
as opposed to a ‘tribal’ (Ethnocentric) approach where
brands are altered to fit schizophrenically among major
markets around the world. To this is added a 'new and
growing territory of cyberspace' (Saffo, 2002). A postglobal era may reflect shortened product lifecycles and
markets that may have become more similar than
different, as well as more competitive and unstable.
The terminology proposed in this book represents Cybercentrism within a virtual business culture
where universal values on a massive scale represent an aggregate of commonly held consumer
profiles with products and branding standardized for uniformity. Brand continuity or universality
is critical where a company’s identity is centered within their home page on the Web. Corporate
identity must exist virtually and be accessible to every major market globally and overcome the
common barriers of various currency denominations, trade restrictions and language differences.
Whereas a Cybercentric post-global business culture may now exist in parallel with many,
persistent global village realities, without cyber orientations in new e-markets management can
get rapidly lost.
Key nomenclatures that are required for identifying new market segmentation and management
methodologies might not yet exist. The migration of e-commerce technologies from consumer
markets into the manufacturing sector, driven by the profusion of Internet-linked networks made
applicable to productivity-enhancing machinery and equipment, may also have eclipsed the
current knowledge base. The cornerstones of global management philosophy, as represented by
the EPRG model (Chakravarthy and Perlmutter, 1985), may have shifted.
The Hunt for Unarticulated Nomenclatures
The vastness of the new ‘cyber store front’ looks far beyond local pedestrian traffic. The
corporate website becomes an engine of commerce and leaps time zones, language and social
customer differences and competes with companies half your size and twice your size. These
concepts are vital to strategic success. The effects of Cybercentrism on pragmatic, competitive
and ideological elements within e-commerce systems environments portrays the strategic roles of
the newly identified nomenclatures in advancing company failure prevention amid outmoded
management models, emerging market segments and technological change.
3
Figure 1.1 shows a listing of nine key factors (first column on left) and explores these factors
through the EPRG declensions. The question is then posed…what comes next?
Figure 1.1. Orientation of a Global Firm: The EPRG Model
Ethnocentric
Profitability
(viability)
Polycentric
Public
acceptance
(legitimacy)
Governance
Top-down
Bottom-up (each
subsidiary
decides on local
objectives)
Strategy
Global
integration
National
responsiveness
Structure
Hierarchical
product
divisions
Hierarchical
area divisions,
with autonomous
national units
Regiocentric
Both
profitability &
public
acceptance
Mutually
negotiated
between region
and it
subsidiaries
Regional
integration and
national
responsiveness
Product and
regional
organization tied
through a matrix
Culture
Home country
Host country
Regional
Technology
Mass production
Marketing
Product
development
determined
primarily by the
needs of homecountry
customers
Repatriation of
profits to home
country
People of home
country
developed for
key positions
everywhere in
the world
Batch
production
Local product
development
based on local
needs
Retention of
profits in host
country
People of local
nationality
developed for
key positions in
their own
country
Factors
Mission
Finance
Geocentric
Same as
Regiocentric
?
?
Global
integration and
national
responsiveness
?
Global
integration and
national
responsiveness
A network of
organizations
(including some
stakeholders and
competitor
organizations)
Global
?
Flexible
manufacturing
Standardize
within region,
but not across
regions
Flexible
manufacturing
Global product,
with local
variations
?
Redistribution
within region
Redistribution
globally
?
?
?
?
Best people
?
everywhere in
the world
developed for
key positions
everywhere in
the world
Source: Adapted from Balaji S. Chakravarthy and Howard Perlmutter, "Strategic Planning for a Global Business,
Columbia Journal of World Business, Summer 1985, pp. 5-6, Columbia Journal of World Business. Adaptation by
John A. Pearce II and Richard B. Robinson, Jr., Strategic Management: Formulation, Implementation, and Control (7th
ed.), Boston: Irwin McGraw-Hill, p. 125.
Personnel
practices
Regional people
developed for
key positions
anywhere in the
region
The constant reformulation process involved in balancing and restraining forces of control of the
workplace and in brokering broader constraints of international marketing are complicated by the
arrival of e-commerce, e-manufacturing and the Internet. The knowledge gap represented by the
empty column to the right of Figure 1.1 argues for the appearance of universal digital terminology
and concepts eclipsing the global paradigm.
Evolving marketing strategies are compared to management models and a case for Cybercentrism
is presented. The writer suggests adding the Cybercentric ‘C’ to EPRG. These arguments are
4
placed into the context of the e-business organization experiencing an emerging era of swift
technological change.
An EPRGC Vision of Centrisms
Achieving an ‘EPRGC vision of Centrisms’ is all about understanding the conceptual split
between old and new marketing management models…from the old industrial economy to a new
electronic-based one. This begins to become evident in the comparative elements of
management, corporate structure, company goals, planning, market positioning, outsourcing,
employment and strategic vision, between Geocentric and Cybercentric models. Graphic 1.1.
shows the fifth element of the EPRG extension identifying Cybercentrism as the next ‘centrism’.
Graphic 1.1. Cybercentrism: The Fifth ‘Centrism’ Model
Ethnocentrism
Polycentrism
Regiocentrism
1.
2.
Management
Model Maturation
Amid Emerging
Markets and
Technologies
3.
Geocentrism
Cybercentrism
4.
Ethno: Ethnic focus
of commerce limited
to single major market
or country of origin.
Poly: From one to
many local markets in
country of origin.
Regio: Commerce
now extends to some
regional markets as
in Asia or Europe.
Geo: Commerce is
now geographical
with a full global
view of business.
5.
Cyber: Virtual networking technology
with standardized e-business platforms:
B2C, B2B and F2B, eclipsing ground-based
ideologies to a world of I2 broadband.
Source: Perlmutter (1969) EPRG; Gordon (2005) CyberGens and the New Cybercentrism
Business strategists approaching this virtually-extended enterprise concept are dealing with a
heterogeneous computing environment connecting different hardware platforms, operating
system environments and user interfaces in order to seamlessly communicate, collaborate and
evolve company systems, and innovate product development and sales strategies.
Cybercentrism is identified in Graphic 1.2 as the next management protocol in the virtuallyextended enterprise. It is also offered as the dominant precept of the acculturation of new
consumer CyberGens. The CyberGen must be seen as a knowledge worker, consumer and
manager. Concerns encompassing the issues of institutional change in value creation (Popper,
Wagner, and Larson, 1998) as well as outsourcing i.e. the ‘erosion of the externalized workforce’
(Kouzman, 1999) appear as unchartered territory to marketing strategists. Graphic 1.2. shows a
virtual networking e-business platform consisting of B2C, B2B, F2B and C2C.
5
Graphic 1.2. Cybercentrism: The Fifth ‘Centrism’ Model
Geocentrism
Geo: Commerce was
now geographical
with a global village
view of business.
4.
Cybercentrism
Cyber:Virtual networking e-business platform
with standardized e-business platforms:
B2C, B2B and F2B, eclipsing ground-based
ideologies to a new world of e-commerce and
Internet 2 (I2) broadband technologies.
C2C
B2C
CyberGens
B2B
With the advent of Cybercentrism
comes a new profile of virtual
manager, knowledge worker
and on-line customer/prospect,
transforming the old industrial
economy to a cyber one.
F2B
Source: Perlmutter (1969) EPRG; Gordon (2005) CyberGens and New Cybercentrism
CyberGens: The Quest for a True e-Commerce-linked Consumer
Segmentation
There is an undeniable link between the virtual connectivity of a pure CyberGen consumerist
ideal and the new e-business evolution from the commercial choiceboard environments of virtual
retail to manufacturing-on-demand changes to the factory floor. Without a clear understanding of
both e-commerce and e-manufacturing and an on-demand world, today’s companies cannot fully
grasp the true nature of competition from product creation to marketing management. Graphic
1.2 shows elements to be Business-to-Consumer (B2C), Business-to-Business (B2B), Consumerto-Consumer and the linchpin concept of Factory-to-Business (F2B) introduced in this book.
To compete in the post-global era companies must virtually expand, leveraging not only the
power of the Internet and internal communication and control systems but doing so with the full
realization that the new electronic economy is only in its infancy and that the changes ahead will
redefine intelligent networks and virtual business relationships. B2B, B2C, F2B transparent
multidimensional cyber networks will blend buyers, suppliers, e-manufacturing and users
seamlessly. The ability of companies to understand and compete in a world of electronic markets
and collaborative relationships will depend upon the efficiencies of their employees, the people
who manage them and a full understanding of the new marketing challenges determining the
retention of their customer base and a standardized approach to prospects.
Every practitioner in the business of managing the marketing, advertising, public relations,
operations and fulfillment of their business is concerned with one or more of the nine factors
shown in Figure 1.1. Each will be examined in detail in terms of CyberGens and the new
Cybercentrism Model. The author’s effort is, first, to clarify and explain where present centrism
6
concepts have failed management and, second, to provide solutions offering logical, practical
alternatives within the proposed model of Cybercentrism.
Fascinating concepts of the evolution of consumerism outline a new breed of consumers, from the
media beginnings of print and radio, migrating from DepressionGens to present day CyberGens,
readers will obtain a grasp of the nature and potential of Cybercentrism…the new centrism for a
new century.
Flawed Ethnocentric Revisionism and the Need to Move On
In 2004 AC Neilson took what seemed to be a giant step backward in declaring that ‘consumer
tastes have been growing more and more tribal’ (Taylor, 2004). In ‘Tribes, Brands and the Fate
of Consumer Marketing’ published by Lyle Anderson Company, ‘…the American social
landscape, and indeed the marketing landscape, is growing increasingly Ethnocentric’ (Taylor,
2004). Nothing could be further from the realities of today’s cyber-business playing field where
twenty-somethings and younger have consumer tastes that are more similiar than
different….where fashion, music and electronic entertainment show little resistance to language
differences and suggest a vast unification of purchase patterns, cultures and tastes.
In light of recent news linking information and
communications technology (ICT) adoption to national
competitiveness and productivity (Deign, News@Cisco,
2005) and the emergence of a broadband boom with
worldwide revenues of modems, routers, and gateways
totaling $4.6 billion in 2004 (Howard, Infonetics
Research, 2005) either one of two things is true. Either
AC Neilson has run out of room within their Geocentric
strategic premise and is literally going backward to
Ethnocentrism or they are simply not paying attention.
As we know, Ethnocentrism is centered at the very early stage of global strategic marketing
maturation and, in ideas examined here, AC Neilson appears to be addressing the realities of
marketing advancements in the only context they can understand using antiquated EPRG
precepts. How can one be blind to the dramatic accomplishments achieved by such companies
as Cisco, Siemens, Thomson, Ambit, US Robotics, D-Link, Motorola, SMC Networks, Sumitomo
and so many others? Today’s cyber culture does not exist in a deepening, primitive cultural
purchase preference quagmire that has its basis for marketing rationale in the Geocentric old
school of cultural and sociocultural isolationism.
Examining this conundrum it becomes quickly evident that the research of marketing trends by
major research firms and marketers, as well as the teaching of marketing principles in the content
of popular marketing and management texts, has to some degree run to the very edge of EPRG’s
Geocentric limits beyond which lies a strategic abyss more commonly seen as a calamitous
knowledge gap.
The conceptual determination of Cybercentrism as presented here runs against the social
landscape directions set by AC Neilson (Taylor, 2004). A Cybercentristic view of the future
steps, beyond business culture as isolative, global tribalism within a global-village view, and
7
embraces the virtual world of e-business. Included in this approach is content suggesting
‘reasons why’ to include Factory-to-Business (F2B) and media waves arguments.
The ‘Universal/Cybercentric’ Theoretical Premise
Examining the distinctive orientations of management of international companies during the
global-village era (Yip, 1989; Baker, 1990) one encounters the well-known EPRG blueprint
identifying four types of management perspectives toward going global. They are identified as
Ethnocentrism, Polycentrism, Regiocentrism and Geocentrism or EPRG (Perlmutter, 1969;
Heenan and Perlmutter, 1979; Perlmutter and Chakravarthy, 1985: Chakravarthy and Perlmutter,
1985). In 1965 Perlmutter devised the EPG segments of the EPRG model and published his
findings in the Columbia Journal of World Business (Perlmutter, 1969) while Heenan and
Perlmutter (1979) together devised the Regiocentric model for the EPRG segment. Since then
there has been no advancement to the EPRG rationale.
In Figure 1.2, the Universal entry under Marketing Strategies, across from Cybercentrism,
reflects the changes in the marketing premise where standardized products, replacement parts and
services eclipse tastes and preferences for the benefits of price and performance, and take on a
universal similitude. Important in marketing theory is the premise of ‘the utility of
standardization’ and the importance of providing a universal virtual brand presence to diverse
sociocultural buying groups.
Figure 1.2.
Cybercentrism: Evolution Model of Marketing Strategies and Concurrent Management Models
Marketing Strategies
Management Models
1
Domestic/Regional
Ethnocentrism
2
International
Polycentrism
3
Multinational
Regiocentrism
4
Global
5
Universal
Geocentrism
Cybercentrism
Source: Perlmutter, 1969; as modified by Gordon, 2006.
This Universal/Cybercentric premise effects the removal of many of the restrictions that have
kept companies in global bureaucratic organizational limbo, and suggests new business and
leadership dimensions for a digital economy. There will be, increasingly, an impact on the 'value
chains' (Wigand, Picot, and Reichwald, 1997, p.293) that, with Internet-based business platforms,
will bypass the wholesaler and some distributors in the traditional purchase pattern PLC, and
eliminate transaction costs associated with manufacturing middlemen and other intermediaries.
This disintermediation is part of an ‘e-Skip-Gen-Effect examined later in the book.
The Universal/Cybercentric premise also approaches the idea of information value differently
from Geocentrism. Instead of centralized command of information where control of information
is power, this virtual extension of the enterprise gives away information. The vast distribution of
information to management, suppliers and consumers represents a paradigm shift in the concept
of information value as articulated in Cybercentrism.
Linked strategic marketing orientations with management models consistent with ethnocentrism,
polycentrism, regiocentrism and geocentrism or the EPRG model (Perlmutter, 1969) with our
addition of Cybercentrism changes the EPRG acronym to EPRGC.
8
GEOCENTRIC CENTRALIZED MODEL
Global Era shows value chains linked by ground-based
systems furthering the institutionalization of most business
processes and their traditional organizational structures.
Geocentric systems isolation is depicted by ‘sales islands’
and ‘islands of production’.
Enterprise Horizon
Geocentric
Organization
Production Islands
SBU Individualized Profit Centers
Sales Islands
Visual 1.1. Geo-Centralized Model
Associated
Partners &
Venture Groups
in isolation.
Cybercentric
Organization
Strategic
Business
Nodes
Enterprise Achieves
Virtual Lift-off
Enterprise Horizon
Associated
Partners &
Groups
connected.
Open e-Manufacturing Links Production to Manufacturing-On-Demand
CYBERCENTRIC DECENTRALIZED MODEL
The Cybercentric Model restructures the organization
to a virtual process orientation with organizational structures
that are ‘cyberspheric’. Islands of sales and production are
eliminated with interconnectivity and transparency leading
to atypical, information-intensive corporate entities.
Visual 1.2. Cyber-Decentralized Model
9
Cybercentrism: The Knowledge-Based, Virtual Step Beyond Global
Village Doctrine
Visuals 1.1 and 1.2 depict the ground-based, technologically isolated corporate entity in virtual
transformation. The advent of e-manufacturing and the ‘open systems’ software applications
have made the factory floor virtually connected and lifted the centralized organization into the
Cybersphere. Sales islands become interconnected nodes. Partners and groups enjoy seamless
R&D and product development. Perceived as a global information economy structure organized
from its headquarters and affiliates around the globe, the financial, legal, marketing and
management functions of Geocentrism were performed horizontally across the management
spectrum. This platform structure is now seen as vertical in view of changing technological and
market realities. The traditional storefront has been transformed into a vast cyber array of 24/7
market access where customers not only walk in…they virtually drop in.
The most dramatic manifestation of the collapse of global-village doctrine, identified as being
within the Geocentric precept and the latest management construct of the Perlmutter (1969, et al.)
EPRG model sequence is the essential multinational-to-virtual reconfiguration, and the effects
this has had on management and the knowledge worker.
As the organization considers transforming itself into a
"nodal company" (Hamel and Prahalad, 1996, p. 205), the
concept of service becomes ‘cyber’ as interactive media,
remote machine diagnostics, satellite-based
communications, collaboration and guidance systems
become increasingly operational. Rugman (2001) writes
about the eventual end of globalization and contends
that there is a diminishing global economy and fading
homogeneous marketplace.
Rugman (2001) argues that the vast majority of executives and managers, in all business activity
that is now taking place, occurs in a triad of regional blocks: North America, the European Union,
and Japan. We may add China and India to this list of cyber business nodes. This universal
knowledge-based business culture is being formed in what Hinrichs (1997) suggests is an
environment where a digital economy requires digitally literate management.
The Multinational Corporation is Dying
Our purpose in this chapter is to devise a fifth EPRG segment. Referring to Figure 1.1. the space
next to Geocentric was empty. We have added Cybercentric in that space.
Figure 1.3. Cybercentric: A Fifth Model for EPRG
Factor
Ethnocentric
Polycentric
Regiocentric
Geocentric
Cybercentric
Cybercentrism now appears as the next ‘centrism’. We have established that a fundamentally
new business model is emerging that has, metaphorically, moved the earth and dispelled the very
bricks and mortar upon which the global village was built. This Cybercentric/Universal model is
evolving within the advance of Internet technologies and is transforming terrestrial industry
structures and business environments into what we have identified as the virtually-extended
10
enterprise. The virtual community to which the following Keegan quote identifies is what we call
Consumer-to-Consumer or C2C.
“The ‘product value proposition’ is changing. On-line, multimedia-enabled networks
create powerful virtual customer relationships and shift the basic economic business
model values from vendor to customer…mass marketing to mass customization…from
reactive marketing communication to user-interactive…from the goals of opening a new
corporate site, to, instead, establishing and managing a virtual community as a
commercial enterprise” (Keegan, 1989, p. 30).
The global (Geocenric) corporation is dying. It is being overtaken by a universal or virtually
linked (Cybercentric) corporation, different not just in terminology but in focus. Internet
technologies have brought dramatic trends in the interactive media arena of e-commercialism,
shaking such foundational marketing concepts as typological and hierarchical management
precepts that dominated the bricks and mortar global arena. The distinctly separate foreignversus-domestic concepts of the multinational strategist are evolving into a trans-global, virtual
business culture, where the word ‘foreign’ is becoming obsolete.
In the era of e-commercialism now upon us, concepts of traditional corporate structure are
gradually disintegrating (Harbison and Pekar, 1998):
“The wave of delayering, restructuring, and reengineering has left many companies in a
twilight world between the old and the new. Traditional management processes have
been discarded and dismantled; new ones are not always comfortably in place”
(Harbison and Pekar, 1998, xiii).
The premise of company growth, where continuous efforts to provide value to the marketplace
over a prolonged period of time would ultimately result in achieving global status, is collapsing.
High losses among proprietary firms might be associated with an emergent, radical stage of an
industry cycle. The pioneers of technologies that are competing for market share may incur
losses (Hooley and Saunders, 1993). Collaboration by industry leaders to duplicate new
technology movements may attempt to head off new market entrants and retain customers as a
form of defense against unprecedented and threatening change. But there can be no credible
reliance on old and outmoded Geocentric theory.
E-commercialism has disenfranchised the feasibility of
the traditional management premise. The global market
environment is in free-fall. In the new Cybercentric
world, new market entrants can appear in the virtual
marketplace beside long-time market leaders as equalaccess competitors.
Threats to the Current Business Model
Since the advent of the migration of e-commerce technologies from eBay down to the factory
floor, beginning in 1996, management has been asking the kinds of questions that may have
alerted them to the dangers of unconventional and unpredictable changes in the market. Tracking
the evolution of business strategy, one could argue that organizations can no longer maintain that
the Geocentric management model and its strategies of extension and product 'adaptation and
creation' (Keegan, 1989, p.10) can continue to represent market reality. The common rationale
11
for the Geocentric-based firm developing marketing communications globally, for example, is
most often extend, adapt, or create. The rationale for extending present messages, adapting these
messages or creating new ones is predicated upon the economic, social, and cultural dimensions
in markets around the world.
"Are the potential threats to the current business model widely understood? Do senior
executives possess a keen sense of urgency about the need to reinvent the current
business model? Is the task of regenerating core strategies receiving as much top
management attention as the task of reengineering core processes?" (Hamel and Prahalad,
1996, pp. 1-2).
Companies that continue to operate using this rationale may fall out of competition with markets
that have become based on a new virtual platform that operates on Internet connectivity.
Digital Commerce: Finance
Perhaps the greatest and most profound change regarding the emergence of global markets has
been the revolutionary changes in corporate financial structure and the world economy. Capital
movements, not trade, have created a universal economy rendering the macroeconomic concepts
of the nation-state increasingly less applicable (Bartlett and Ghoshal, 2000, pp. 94-98).
A Universal Digital Economy
Figure 1.4. Finance
Factor
Finance
Ethnocentric
Repatriation of
profits to home
country
Polycentric
Retention of
profits in host
country
Regiocentric
Redistribution
within region
Geocentric
Redistribution
globally
Cybercentric
Highly
interactive
digital economic
universe, CAEE
Legend: Cybercentric Actionable Economic Elements (CAEE)
A vast network of supercomputers, linked by broad bandwidth fiberoptic cable to universities,
teaching hospitals, scientific research centers interfaces an ‘international aggregation platform’
(Martin, 1996, p. 50) or a universal business environment that knows no boundaries. Open book
accounting, a natural for e-commerce, incorporates the on-line disclosure of cost information
utilized within B2B supply chain environments in price control (Hoffjan & Kurse, 2006).
Where users can access the Web from any global market
and access the website of a company offering supplier,
business or consumer products and services, they are
exposed to a level playing field offering exactly the same
prices, company images and service capabilities. A
virtual market eliminates the time values of extension
and adaptation. Extending into markets is
instantaneous and adaptation is in the server, not on
the street.
Such a universal, knowledge-based architecture means a company can provide services and sell
products in cyberspace to anyone, anywhere, at any time 24 hours a day, 365 days a year, in five
major languages without leaving the office and without opening a branch office.
12
'No matter how large or small the company or organization, the global barriers that have
traditionally limited multinational transactions no longer apply' (Martin, 1996, p. 47).
Less capital-intensive global firms were, in the past, less affected by economies of scale. But
with the advent of worldwide communications powered by the PC and the Internet methods for
greater opportunities for financial gain have been transformed. As the terms global and universal
are used at times to describe separate concepts, it is appropriate to digress for purposes of
definition. According to Kasvi, Nieminen, Pulkkis and Vartiainen (1998) in studies analyzing
knowledge management in e-business, the word ‘global’ refers to something that pertains to or
embraces the whole of a group of items, or that is comprehensive and total, or involves the whole
world. This represents a working definition when starting to explore those processes that
integrate the world into one comprehensive system:
"Global refers to the end stage of the process of globalization. The meaning of global is
identical with an older social scientific notion of universal. The classics of social
sciences did not write about global. They used the concept of universal instead. The
classics of social sciences wrote, at the time, of increasing international integration
where men had open minds in relation to global phenomena. Later, as national statesocieties consolidated, much more narrow nationalistic social perspectives started to rule
the social sciences. Now, in the 1990's, as globalization seems to be accelerating,
globalization has become the catchword of the decade. It is important to grasp the close
relationship between concepts of global and universal" (Kasvi, Nieminen, Pulkkis and
Vartiainen, 1998, p. 168).
For our purposes we will distinguish between ‘global’ and ‘universal’. Hinrichs (1997, p. 192)
uses the term 'Digital Economy' (also see Tapscott, 1996) to describe forces that are changing the
traditional economic and financial concepts of globalization. This goes counter to the Kasvi,
Nieminen, Pulkkis and Vartiainen (1998) idea that universal was more classical and precedent to
global. The move from ground-based systems to virtual systems and electronic media would
suggest a movement upward. Systems agility would seem to evolve from ground-based design to
digitally-based design, or from global to beyond the globe or universal. The knowledge culture
impact of a global-turned-universal paradigm, or an evolution to a Universal Digital Economy
may be the best way to describe the forces that are revolutionizing the enterprise, influencing a
corporation’s operations, effecting working efficiency, and impacting its users. 'Digital commerce
is antithetical to brick and mortar' (Martin, 1996, p. 190).
The traditional, Geocentric, multinational strategic approach was based upon an economic
assumption that each national market was unique and independent and assumed that a company's
competitive position in all of its markets was linked by financial and strategic interdependence. It
was recognized that firms that operated their local companies as independent profit centers found
themselves at a disadvantage to competitors playing a 'strategic game of cross-subsidizing
markets' (Bartlett and Ghoshal, 2000, p. 97).
The advent of Cybercentric/Universal digital economy
may show that there is no good financial reason for
managing a firm from any perspective other than
universally, with funds generated in one market
subsidizing its position in another.
13
A Cybercentric modeled company is not without a bricks and mortar location. Pasternack and
Visco (1998, p. 218) use the term 'home universe' when describing a financial management style
that has a wide network. As we proceed into an explanation of the nomenclature of a
Cybercentric concept, note that we have made distinctions between the terms global and
universal, with globalization and the global economy being portrayed as the forerunner to
Hinrichs’ (1997) Digital Economy.
"The Digital Economy requires a new kind of
businessperson: one who has the curiosity and confidence to let go of old mental models and old
paradigms" (Hinrichs, 1997, p. 192).
Companies that have discovered the competitive advantages of business-to-business (B2B)
Internet-based transactions are being transformed out of the Geocentric model. But having
established the possibility of the Cybercentric model, it is further argued that B2B, as a supply
chain procurement discipline, is woefully inadequate in identifying the emerging segmentation of
how e-business really works. “Lifeways based on AIT (Advanced Information Technology) are
not only real and distinctly different, they are transformative. The transformative potential of
AITs lies in the new way they manipulate information” (Hakken, 1999, pp. 1-2).
Cybercentric Marketing Communications
In our theoretical discussion it is important to make clear the departure point from what has
existed to what is proposed to exist. The following quotation exemplifies the mindset of the
outmoded Geocentric marketer:
"The requirements of effective communications and persuasion are fixed and do not vary
from country to country. The specific advertising message and media strategy must often
be changed from region to region and must frequently be adapted from country to
country to correspond with the requirements for effective communication and persuasion
in the particular region or country" (Keegan, 1989, p.496).
This quotation has the indelible mark of flawed Geocentric strategic thought. It reflects
unawareness to the changing directions of business-to-consumer (B2C) or business-to-business
(B2B) communication. Instead of marketing messages being sent to find prospects, the Internet
now offers a media where the prospect goes looking for prospective companies with which to do
business. This reverse of direction in the search aspect of marketing has, to some degree,
overturned the Geocentric premise. Companies are struggling both to maintain familiar
technologies and management models while experimenting with new platforms upon which to
base marketing media decisions. Streaming video advertising has shown significant growth.
Prospects can access a company website, request language translation in their native tongue,
review products and services set in a single, generic format and request additional information or
make a purchase directly or be referred to a local dealer or distributor. This concept of the
universal store begins to unravel the tastes and preferences foundation of Geocentric strategy and
undermines ‘tribal branding’ presuppositions advocated by ACNielson (Taylor, 2005) and
supports others (Watters, 2004).
14
Figure 1.5. Marketing
Factor
Marketing
Ethnocentric
Local product
development
based on local
needs
Polycentric
Product
development
determined
primarily by the
needs of homecountry
customers
Regiocentric
Standardize
within region,
but not across
regions
Geocentric
Global product,
with local
variations
Cybercentric
B2C, C2C
features of
standardization
of products and
marketing
message
strategies.
Legend: B2C Business-to-Consumer
There are, of course, certain products and services that lend themselves well to 'advertising
extension' (Keegan, 1989, p.497) from a consumer standpoint. But, where the business sector is
being transformed, standardized products, replacement parts and services eclipse tastes and
preferences for the benefits of price and performance and take on a universal similitude even as
consumers throughout the virtual commercial world become more similar than different.
With increasing parity in features and benefits among products on the Web, branding, in the
Cybercentric model, becomes more important than ever, as there may be less to distinguish
products one from the other. In the marketing context every firm faces a broad range of strategy
alternatives. The firm with domestic roots considers international, multinational and global
markets. It is argued that those firms not considering a Cybercentric or virtual marketing strategy
may be at a great disadvantage in concurrent areas of focus including new management models,
manufacturing capabilities and other performance and policy considerations.
An understanding of global marketing as incremental is, at its foundation, flawed in today’s
virtually empowered business environment. All marketing is global. The Keegan premise is
locked in dated Geocentric strategic philosophy. If all major markets in the world have access to
your company website, products and services, this access has no time limitations. Markets cannot
be entered sequentially. They must be entered simultaneously. Product launches must appear in
all serviceable markets in tandem and marketing campaigns must not only impact major market
consumers simultaneously, the message must, by nature of access to the company home page, be
as standardized as possible. Marketing messages that favor ethnicity, cultural leanings or contain
nationality overtones can be highly damaging if not managed beneath a well managed universal
brand identity.
Figure 1.6. is an expanded concept from a United Nations publication template (Carter, 1997),
with a view of the basic tenets of the Perlmutter (1969) EPRG architectural concept of global
business. Stage Five, Universal/Cybercentric, is the added element.
New market entry and expansion must consider new value chain advantages brought about by
technologies in the virtual realm. These are distinctive incremental orientations or stages of
management of international organizations that may have changed with the advent of ecommerce. The virtually-extended enterprise and Cybercentric virtual realities may eliminate
some sequential planning strategies heretofore an integral part of global strategy. To clarify the
argument Keegan (1989) notes:
"Global strategy must begin with marketing. Which markets would we target in which
sequence? What objectives should we establish for volume, share of market, sales, and
earnings?" (Keegan, 1989, p. 291).
15
Figure 1.6. Cybercentrism: Adding a Fifth Universal Stage to Global Evolution Doctrine
Management
Stage One:
Stage Two:
Stage Three:
Stage Four:
Stage Five:
Global
Universal
emphasis
Domestic
International
Multinational
Focus
Marketing
Strategy
Structure
Domestic
Domestic
Ethnocentric
Extension
Polycentric
Adaptation
Geocentric
Extension
Cybercentric*
Virtual
Domestic
International
Worldwide area
Management
Style
Manufacturing
Stance
Investment
Policy
Performance
Evaluation
Domestic
Centralized, top
down
Domestic
Decentralized,
bottom-up
Host Country
Adaptation
creation
matrix/mixed
Integrated
Virtuallyextended
enterprise
Cybercentrism
model
Manufacturing
on-demand
Cross
subsidization
SPMS and SBN
(Strategic
Business Node)
Mainly
domestic
Domestic
Lowest cost
worldwide
Domestic, used
Mainly in each
Cross
worldwide
host country
subsidization
Domestic
Home country
Each host
Worldwide SBU
market share
market share
country's market
(Strategic
share
Business Unit)
Source: Adaptation from 'Global Agricultural Marketing Management' (Carter, 1997)
*Cybercentric or Cybercentrism, as a new nomenclature, has its semantic origins in the disciplines of machine
intelligence, computer science, digital information feedback and control (Pangaro, 2001), as well as systems theory
(Heylighen and Joslym, 1992).
Legend: Strategic Performance Measurement Systems (SPMS): Strategic Business Node (SBN), a new
nomenclature for this book, is defined as a Cybercentric progenitor of the Geocentric Strategic Business Unit (SBU).
What Figure 1.6 suggests is the emergence of a fifth stage of market evolution. Each stage is not
limited by time, as the evolutionary process may come from emerging economies or developed
economies. Stage Five adds a new managerial state beyond Geocentrism.
1) Stage One: This stage is domestically focused, with business activity concentrated in
the home market.
2) Stage Two: This stage focuses on home markets but with exports (Ethnocentric). The
firm practices home values, but it intentionally creates an export division.
3) Stage Three: The focus is expanded to multinational (Polycentric) with a high focus
on adaptation to other markets.
4) Stage Four: Viewing the world market (Geocentric) as homogeneous is used to obtain
economies of scale. Also, the firm responds to cost effective differences in various
markets.
5)
Stage Five: Differences in developed markets diminishes further as instant price
parity is achieved through Internet interconnectivity and immediate access to product
information. Cybercentrism, and the extensive proliferation of the virtual
marketplace, with instant access to markets and corporate growth through
acquisitions and alliances, may diminish and finally eliminate the stages concept of
domestic-to-global evolution of firms and their markets.
Stage Five Performance Evaluation in Figure 1.6. identifies Strategic Performance Measurement
Systems (SPMS). This is a real-time system technology, where operators can achieve second-bysecond monitoring of front office sales, back office operations and plant floor activities, and
allow users to get immediate feedback as to how efficiently the system is operating. SPNS
emerges as a profound change in how management can view the entire performance of an
enterprise in real-time.
16
New accounting procedures within the SPNS require operational efficiency data as part of an
activity-based management system (ABMS) utilized for accounting procedures. This represents a
significant change as it reflects not only the new way cost accounting assessment is done in the
plant but suggests the prospect of the utilization of data from the factory-floor-to-management’sdoor in strategic assessment.
Cybercentric Organizational Management Structures: Facing the Risks
Changing the strategic direction of the firm has a high-risk assessment because it may entail
establishing alliances with other companies to stay competitive with the latest technologies. This
change entails dramatic alterations in the highly complex processes of assimilation and
redirection. Other companies are changing strategic direction by shedding their businesses and
laying off large numbers of workers in a concerted effort to simplify company structure before
'engaging in corporate fusion to try to keep in step, twisting themselves into all manner of new
shapes and sizes' (Pasternack and Visco,1998, p. 31).
Figure 1.7. the factor of structure indicating that Cybercentric structure is different in that
companies can be wholly virtual. New market entrants in old or emerging markets may be virtual
with headquarters and brand identity existing on the Web. With larger, established corporations
the structure may be virtually-extended.
Figure 1.7. Structure
Factor
Structure
Ethnocentric
Hierarchical
product divisions
Polycentric
Hierarchical
area divisions,
with autonomous
national units
Regiocentric
Product and
regional
organization tied
through a
hierarchical
matrix
Geocentric
A network of
organizations
(including some
stakeholders and
joint venture
organizations)
Cybercentric
Wholly virtual
or a traditionally
structured
virtuallyextended
enterprise, SBN
Legend: Strategic Business Node (SBN)
Venkatraman (2000), writing in the Sloan Management Review about the evolution in structure of
new business models, noted and identified a point of friction between traditional roles and rules
of business and the new value propositions:
“New business models are those that offer, on a sustained basis, an order-of-magnitude
increase in value propositions to the customers compared to companies with traditional
business models. In doing so, these new models disturb the status quo and create new
rules of business. Traditional companies cannot easily match the value propositions
offered by these new business models without substantially altering their margin
structures” (Venkatraman, 2000, p. 16).
A manager must now contend with a new model of nuclear value-sharing strategies that may
place him or her at odds with the corporation’s traditional culture of control. The manager who
can comprehend this seemingly attritional future of corporate change must cope with the
following aspects:
x replacing the premise of physical selling space with virtual selling space i.e. from a
ground-based Strategic Business Unit (SBU) to the network concept of a Strategic
Business Node (SBN)
x changing the concepts of acquiring customer brand loyalty to the 'ownership of
customer relationships' (Hagel and Armstrong, 1997, p. 109). Relationship branding is
17
x
x
x
simply getting the consumer to feel that the image of a brand embodies his or her
personal and peer group values.
evolving the core value of interactivity and user-control among management in a new
e-media era.
anticipating trends toward dramatically expanded markets and services to include
virtual provision of maintenance optimization, industrial supply chain planning, and
supplier enablement.
recognizing the importance in the shift of power away from the corporate vendor to
the consumer, and away from traditional authoritarian management to participative
governance (McLagan and Nel, 1997).
Organizational change often takes place at several levels simultaneously. Improving automation,
reengineering its systems architecture, and completely changing its strategic outlook can
accomplish accelerating a firm’s position in the marketplace. As Figure 1.8 below shows, each
category of change comes with its own level of risk. Figure 1.8 shows that the higher the risk, the
higher may be the return.
What may give the nomenclatures being advocated in this book some significance is that they
exist within the first risk segment of Figure 1.8. And what gives changes in organizational
strategy such high levels of risk is not only the departure from the tried and true, but the
increasing of the levels of resistance to change by opposing forces within and beyond the
organization.
Source: Adaptation from Malhotra (2000) 'Risk and Return in the Old World of Business', Figure 2.
RISK
HIGH
1 Reassessment
Figure 1.8. Assessment of Risk at Three
Levels of Organizational Change
1. Change strategy
of major strategies
in management models
and market segmentation
2. Change design
3. Change operations
2
MODERATE
Reengineering
of workflow and
processes-radical redesign
3
LOW
Operations
Automation
LOW
MODERATE
RETURN
18
HIGH
Strategic Preparedness: Management's New Digital Literacy
Strategists in the Cybercentric virtual enterprise, it is argued, must contend not only with
assimilating the new concurrent development concepts of new product development (NPD), but
also with shedding old Geocentric-based principles. No longer is new product development
handled like an assembly line, where pieces of the product puzzle were dealt with separately in
independent manufacturing facilities. Today's Cybercentric knowledge manager must think
strategically in terms of systems and cross-functional teams.
Figure 1.9. Strategy
Factor
Strategy
Ethnocentric
Global
integration
Polycentric
National
responsiveness
Regiocentric
Regional
integration and
national
responsiveness
Geocentric
Global
integration and
national
responsiveness
Cybercentric
Virtual
integration via
internetworkability
and SES
Legend: Strategic Ecosystems (SES)
New Product Development (NPD): Utilizing Concurrent Systems
Strategies
Figure 1.9. raises the stakes of the global-to-virtual strategic mix by taking the concepts of
management systems integration into the virtual realm. New products are developing using
simultaneous or concurrent development processes. Knowledge managers must conceive, plan,
and execute the creation of new product development (NPD) strategy thinking in concurrent
systems strategies. The objectivist strategic model common to Geocentric SWOT (Strengths,
Weaknesses, Opportunities, and Threats) analysis (Hamel, Prahalad, Thomas, and O'Neal, 1998,
p.306) may have evolved into a nonstandard assessment of unpredictable change or what this
author calls the Strategic Ecosystem (SES) approach fostering new product development from a
‘full ecological impact’ perspective where all elements present in the product life cycle (PLC) of
a product or service have influence and sway in its creation.
Business strategists approaching a virtually-extended
enterprise concept, relative to knowledge management,
are dealing with the concept of internetworkability; a
heterogeneous computing environment connecting
different hardware platforms, operating system
environments and user interfaces in order to seamlessly
communicate, collaborate, and evolve company systems,
and innovate product development and sales strategies.
When Intel develops a new chip, for example, the design of the new product must have
concurrent development (Gossieaux, 1999). Product, process, and supply chain must all develop
concurrently. At the product stage, market requirements, functional specifications, product
development and testing must evolve before the product is launched. At the process stage,
systems architecture, implementation, and testing must proceed before implementation. Supply
chain planning should include architecture, development, testing, and requirements of the system
before the supply chain management plan is complete. Most NPD steps are highly collaborative
19
in nature as well as distributed across the virtual enterprise. This process would dramatically
benefit from customer and supplier involvement. Recent research by major accounting firms
such as Ernst and Young, according to Gossieaux (1999), demonstrate that having customers and
suppliers on virtual design teams can effectively cut time to market cycles:
"National markets, currency controls, and cumbersome communications processes made
national (Ethnocentrism) or regional (Regiocentrism) selling organizations an
appropriate structure 15 years ago. The globalization (Geocentric) of capital flows,
communications networks, and the operations of corporate customers have rendered that
model obsolete" (Slywotzky, 2000).
The strategic nature of digital literacy, 'the ability to access networked computer resources and
use them' (Gilster, 1997, p. 31), is that it has mutability, with the ability of taking on any
structural form of technology communication. Generations of management models have evolved
to bring us to the era of e-commercialism. In the most recent past, the premise of company
knowledge creation and growth, where continuous efforts to provide value to the marketplace
over a prolonged period of time would ultimately result in achieving global status, was diluted.
Currently, that same result can be created, using a virtual Cybercentric platform, in a fraction of
the time. E-commercialism has destroyed that portion of the Geocentristic premise. The global
market environment is in free-fall in that companies and their manufacturing segments, with the
aid of Internet technologies, can transform themselves from local or regional to virtual, as it were,
overnight. This accelerated change may reveal, in the not too distant future, requirements for a
new Cybercentric platform upon which to base the management of an accelerated, virtual
knowledge creation platform for the organization, stretching from the factory-floor upward.
“I call it a ‘Web incarnation’ because what we are doing is not creating a new business,
but rather taking the 18 years we’ve been in business and leveraging our experience
context via the power of the Web. We will provide the kinds of services we provide now,
but taking the knowledge base, which is rather expensive when you sit one-on-one with a
client/prospect and use the Web to create expert systems. If I had to say there was one
basic fundamental philosophy of what we’re doing it is filling a gap” (Clarke, 2000).
Knowledge-Critical Systems
Knowledge-critical areas of a Cybercentric model include strategic applications such as sales
force automation and customer support. These front-office knowledge systems have made their
way to back-office control and manufacturing areas of the organization. These transactionoriented knowledge management systems are being used to support and help organize the backoffice knowledge systems of financial management, manufacturing, and distribution, (Hill,
1999). Manufactures at the sales and distribution levels, increasingly, covet this type of
knowledge systems integration because it enhances their ability to continuously improve
customer service.
The software that the knowledge worker needs to
interface between work and machine is critical. This is
called the human-machine-interface (HMI) or manmachine interface (MMI) and is instrumental to his or
her performance at the PC/machine interface level.
20
The prevalent e-commercial marketing environment exerts downward pressure on knowledge
managers and strategists in manufacturing considering a product's time to market, inherent
benefits, quality, the outcome of knowledge creation on product ingenuity (invention, reinvention
and R&D) in the face of competition, and even profit margins (Smith, 1996). Human machine
interface and Supervisory Control And Data Acquisition (SCADA) software (Fraser, 1997)
leverage the power and connectivity of today's knowledge worker in front-to-back office
networking.
PC Technology: Cybercentric Knowledge Management Strategy
Cybercentrism’s PC-based technologies enable the replacement of Geocentric’s traditional,
hierarchical approach to doing business with an open, horizontal, peer-to-peer solution. Utilizing
a unique, deterministic control engine, open control software liberates a sales and service
operation or a factory’s shop floor by seamlessly linking its critical production information
directly into the enterprise management system. The technology is user-configurable, making it
applicable to both manufacturing and IT management. This networking feature of the PC lends
itself well to the enterprise that is reengineering its management structure from the traditional
hierarchical configuration to horizontal management architecture, reflecting the peer-to-peer
nature of this technology. A knowledge manager needs only a desktop PC to access the corporate
intranet, extranet and Internet to obtain linkages to the corporate information environment and the
corporate production system.
Barriers exist in the form of 14 different languages, a
score of time zones, diverse business structures and
dozens of currencies, all demanding access to the
corporate virtual information and marketing
management systems. Active server technology breaks
down these barriers by initiating and managing active
flows of data. The firm, in many cases, comes to be
defined by its knowledge management tools.
Figure 1.10. shows the phrase manufacturing on demand, an industrial phenomenon emerging
from virtual Internet interconnectivity. This new technology has produced what this book
establishes as a new e-segmentation called Factory-to-Business (F2B), which has materialized in
the marketplace due to Cybercentristic effects. Figure 1.10 shows F2B and manufacturing-ondemand as features of the technology factor under Cybercentrism.
Figure 1.10. Technology
Factor
Technology
Ethnocentric
Mass production
Polycentric
Batch production
Regiocentric
Flexible
manufacturing
Geocentric
Flexible
manufacturing
Cybercentric
Manufacturing
on demand, F2B
Technology Management: A Knowledge ‘Systems’ Mentality
There are critical new orientations for aspiring to Cybercentric management. They evolve around
the premise of technology mastery as management leaves the era of global enterprise ideology
and enters a new virtual storefront vision of the market. The new role of the customer or supplier
as proactive user has thrown into question the viability of such weathered concepts as ‘Trickle
21
Down or Waterfall’ product life-cycle models for product strategy deployment as well as aspects
of the ‘Shower Approach’ (Keegan, 1989, pp. 30-31). Figure 1.11. shows the putative* level of
impact (low, moderate, high) of PC technologies on strategic action in the areas of Management,
Operations, Training, and Financial departments within the organization.
Figure 1.11 shows three levels of impact on strategic factors common to the application of PCbased systems in the enterprise. A prudent means of improving the financial bottom line, for the
virtually-extending enterprise, may lie in the implementation of a PC-based control platform
including simplification and standardization, while extending the useful life of existing capital
equipment and available controls.
The selection of the technology and thus its procurement is often left to operations. The
operations branch of the organization is mainly concerned with making the system work. This
means making sure that the systems purchased comply with standards and protocol already
installed in-house. While the main concern for operations is compatibility and functionality,
management and finance have major concerns for cost.
Figure 1.11.
The Impact of PC Technology on Strategy
Strategic Action
Management Operations
Support a trans-enterprise
communications system plan
(knowledge & information)
Assess the costs of new
technology adoption
Plan the timing of new
technology implementation
Automate data capture and
distribution systems (HMI)
(SCADA)
Utilize the processing
capabilities of OS such as
Microsoft Windows NT
Adopt open systems
architecture: methods & tools
for managing technology
migration risks
Define standards and implement
technology migration
Redeployment and retention of
existing systems (retrofit) as
competitive advantage and cost
saving measures
Training
Financial
High
High
High
High
High
High
Low
High
High
High
High
High
Moderate
High
Low
Moderate
Moderate
High
High
Moderate
Moderate
High
High
Moderate
Low
High
Low
Low
Moderate
High
Moderate
High
Source: PC-Based Controls, Frost & Sullivan Research, Syndicated Report
#A001-10, (Gordon, 2001d)
Every sector of company operations is affected with a measured 'high' impact, at some juncture,
of strategic development. Assumptions about markets have changed. Where the impact on
management is high, in support of a company-wide PC-based system with open systems
22
architecture as shown in Figure 1.11, the role of implementation is often left to operations. This
may point to a flaw in strategic implementation where management does not have, and is not
required to possess, current expertise in newly adopted technologies. What Figure 1.11 also
shows is that the financial arm of the enterprise does not possess, and may not be required to
possess, expertise at the define-and-implement levels of overall strategy.
The supply chain management (SCM) function of industry is also being reengineered by the
technology migration of advanced information data systems.
Seeking cost reduction out of product purchase may be only part of a viable strategy, and the
traditional lines of resistance are imposed between operations and financial management. A
baseline of the possible risks concerning technology adoption would have to include the
outcomes of any final agreement among management, finance and operations. Solutions would
require the joint management of inter-organizational aspects of technology transfer and the
empowerment of training to facilitate the assimilation of these new technologies with minimum
trauma to workers.
The EPRG model was designed before these aspects of ecommerce existed. Creating a product has been
transformed from mass production to batch and flexible
manufacturing systems. Manufacturing-on-demand
brings an entirely new element of instantaneous
Cybercentric order response to the e-business and its
factory floor.
Figure 1.11 points out possible areas of weakness in the strategic implementation of technology
migration that feature, first and foremost, the degree of technological expertise or ignorance on
the part of managerial decision-makers. Not to recognize, it is argued, the presence and new
requirements of a Cybercentric model change in vital areas of operations and management may
have detrimental consequences.
"The conservatives who follow the adoption cycle are looking to get by with the safest,
cheapest technology they can find. Fundamentally, they are afraid of technology
purchases - afraid they will choose the wrong thing, afraid they won't be able to make it
work right, afraid they will break it or just make themselves look stupid trying to use it;
so they will choose only a fully proven, absolutely bulletproof solution - and even then
will worry about it" (Kiamy, 1993, p.23).
A Technology Evolution to Cybercentrism
Figure 1.12 shows the evolution of industrial control technologies linked to management models
within EPRG, with the recent addition of the Cybercentric link. The figure shows a progression
of industrial controls technologies with the far right column showing possible management
models. The key feature here is where we see the gradual change from Ethnocentric to
Regiocentric in the 1970s and Regiocentric to Geocentric leading into the 1990s. Cybercentric
management orientation, first recognizably occurring in 1997, is seen as being concurrent with
Geocentrism in the new millennium.
23
Figure 1.12 shows that Regiocentric effects are mainly tied to hardware-based technology
solutions. This changed dramatically in the 1980s with the introduction of proprietary software
products tied to computers and the PC, whose solutions could be more easily shared among
corporate subsidiaries. Figure 1.12 also shows the Regiocentric model reflecting hardwarefocused solutions in the 1970s and 1980s, the Geocentric model supporting proprietary software
islands of automation in the 1980s and 1990s, and the Cybercentric model emerging from
approximately 1997 into the 2000s, supporting an era of off-the-shelf software solutions.
The proprietary nature of these solutions, however, kept software solutions confined within the
special interests of in-house legacy systems that shared suppliers and clients. It was not until
1997 when the market changed significantly again, with the introduction of inexpensive, off-theshelf software solutions beyond the reach of proprietary domination, that Cybercentric influences
began to impact the market.
Figure 1.12.
The Emergence of a Cybercentric Management Model
Linked to Industrial Controls Technologies ,1950-2000
Year
Technology
Dominant
Management
Models
1950s
1960s
1970s
1980s
1990s
2000s
Standard 1" punched paper tape – NCs,
hard wired electrical circuits,
relays/contacts
Microprocessors in early CNCs –
ending NC technology dominance.
Microprocessors, proprietary hardware
and electrical circuit programs
First controls designed with
specialized hardware and software there is no standardized products or off
the-shelf computers for machine
control
PLCs and CNCs begin to lose market
share to "soft" controls technology and
'open systems' emerge.
'the network is the computer' –
networkcentric and server-based
platforms - PCs are in the server room
Ethnocentric
Polycentric
Ethnocentric
Polycentric
Ethnocentric
Polycentric
Regiocentric
Regiocentric
Geocentric
Regiocentric
Geocentric
Geocentric
Cybercentric
Source: World PC-Based Controls Markets, Frost & Sullivan Research (Gordon, 1999b)
Legend: Regiocentric: Hardware-focused solutions
Geocentric: Proprietary Software with Islands of Automation
Cybercentric: Open Systems: Off-the-shelf software solutions
While Ethnocentric and Polycentric designs existed in diminished presence throughout the time
period covered in Figure 1.12, in both developed and underdeveloped markets, industrially-linked
technology change in highly developed markets in the US, Europe, Australia and Asia, impacted
the evolutions of these systems into modern times. Figure 1.12 suggests the dominance of overall
management models beginning in 1950s through to the early 2000s.
24
What has taken place is that, as the Internet-based supply chain emerged, the ability of
manufacturing technology to break from its isolation has linked technologies to business design
as never before:
"Technology can make you lose, but it can't make you a winner. To create and capture
persistent value, technologies and products must be linked to successful business
designs" (Slywotzky, 2000, p. 271).
It is vital that new management model development begin at the core of the company structure
envisioned as the factory floor. This reasoning is based on the fact that the ‘open’ factory with its
systems software linkages to management actually ‘talks’ to decision-makers in the Cybercentric
model. Therefore our analysis includes terminology such as CNC and PLC, which are new
terminology that must be recognized as basic terminology within the new, cyber-business
stratagem.
Confronting Dysfunctional Front-Office Isolationism
PC technology adoption and operating systems (OS) implementation into the manufacturing
sector has faced some dysfunctional barriers. The fragmentation of communications capabilities
from front-office to the factory floor may be a strategic handicap instituted by single-minded
management:
"In the 'old world' ways of doing business, products were vertically integrated and
managed in a fairly autonomous fashion. This created two undesirable outcomes. First,
it contributed to the development of a 'silo' mentality that created barriers to sharing
resources across businesses. This was particularly dysfunctional in an industry where
technology benefits in one area have to be passed quickly into other areas and common
manufacturing platforms and uniform design represent enormous sources of competitive
advantage" (Hax and Wilde, 2001, p. 107).
Ironically it is the ‘communications silo’ concept that personifies the new structural management
requirements for Cybercentric corporate management. There are many examples of the prevailing
disconnect between potential information technology investments and organizational
performance. Two of these can be identified in the manufacturing space as the PC-based control
technologies seen as taking over the PLC (Programmable Logic Controllers) market in the late
1990s, as well as operating systems (OS). A view of the historical migration of manufacturing
technologies, relative to Cybercentrism, brings significance to the evolution of the PC into the
manufacturing environment. Two main technologies, the PC and operating systems (OS), have a
major impact on the understanding of the nature of technology migration into the e-commerce
environment.
The speed with which companies can adapt to meet the challenges of technology-assisted
knowledge management may determine success or failure within the new Cybercentric model.
Distinct among these technologies is PC-based control products and a large collection of
operating systems (OS) and the continuing battle regarding Microsoft’s Windows dominance
over other system platforms. The startling speed with which this e-commerce transformation into
manufacturing has occurred may make familiar technologies obsolete for the commercial and
industrial knowledge worker. Change in technology will bring with it a market crowded with
new software, and littered with users confused by technological alternatives, and confounded by
large price and feature differences in available solutions.
25
The PC and the all-prevalent Windows NT operating system spearhead the emerging emanufacturing technological transformation. This has been driven by two equally formidable
forces. First in appearance was the Pentium Pro in 1995, followed by the Pentium Pro II in 1997,
and Pentium III, IV and so on. The performance of these off-the-shelf office and industrial
hardened PCs has placed them on par with the Unix-like operating systems (OS) as they evolve
further. This offering of a broad area of technology, intended to deliver continuous business
solutions, should facilitate Enterprise Resource Planning (ERP) (Lewis, 1999) to include server
consolidation, data mining, mission-critical applications, and infrastructure and performance
management.
Understanding A Critical Moment in a Company’s Virtual Growth:
Ethernet and TCP/IP
Don’t decide that you can have a marketing management career and not know what TCP/IP
means. The future of business communications and knowledge worker networks may be
extensions from information highways that have their origins at the e-business and emanufacturing levels. Internet commerce has grown explosively in the past several years, but it is
in danger of lacking a reliable building foundation at a critical moment in its growth from
manufacturing to e-manufacturing. The first option of the Internet commerce platform will be the
Ethernet and TCP/IP running over either 10 meg or 100 meg, with hundred-gig connections in the
office environment. Recent advancements in Ethernet and the emerging Fast Ethernet technology
will enable systems to handle mission-critical knowledge control responsibilities currently being
managed by existing industrial automation networks (Johnson, 1997).
Knowledge managers should be aware that in the near future the Ethernet might also be a conduit
that unites the front office with the factory floor. Trans-enterprise knowledge creation and
innovation may, in part, utilize this most basic of LANs (Local Area Networks). To the
technology-assisted knowledge manager, the Ethernet network(s) will not be just one system, but
many. This will be part of a newly interconnected global corporation. The knowledge manager
will have a sweeping view of operations from the vantage point of a powerful gatekeeping PC.
The Internet will be the embodiment of the virtual corporation. The concept of trans-enterprise
innovation emerges from a Cybercentric vision that ensures that total knowledge integration is
only a click away.
Model Evolution Definitions: Past, Present and Future
The growth of a company was seen as having an evolution in management strategy that took it
from a regional or Regiocentric stage to a global stage over a twelve- year period. Figure 1.13.
provides definitions of each management orientation in the EPRG schema plus Cybercentrism.
Companies have been forced, in recent times, to reengineer themselves to meet the priorities of
virtual customer segments, regardless of geography. Life cycles are accelerating, with lost control
of prototype skimming strategies (Toyne and Walters, 1993), impacting the competitive nature
and structure of foreign markets. Expansion strategies among firms include assessments of
company resources and market segments served and perspectives on goals in the global arena.
Each company, depending upon its development, has been seen, in the past, as having a defined
growth pattern.
Rather than being distinct in nature from EPRG origins, the Cybercentrism model complements
several of Perlmutter's (1969) initial concepts. Perlmutter did not equate superiority with
nationality, and espoused the concept of subsidiaries as satellites and not independent states.
And, although his original writings identified only what he called 'EPG profiles' (ethnocentric,
26
polycentric and geocentric) of management (Bartlett and Ghoshal, 2000, p.82), his ideas for a
truly worldwide product line and lofty management ideals, identifying trust as the single greatest
obstacle, remain topical. Figure 1.13 shows the definitions of each element of the EPRGC
schema with the inclusion of Cybercentrism as the fifth ‘centrism’.
Figure 1.13. EPRGC Defined
x
Ethnocentrism is associated with a home country management orientation where overseas
operations are secondary. Structure is complex in home country but simple in other countries.
The values and interests of the parent company guide strategic decisions. Firm is concerned
with its legitimacy in its domestic country (Perlmutter, 1969; Perlmutter & Chakravarthy,
1985). Model applied to subsidiaries is that of the parent company.
x
Polycentrism connotes a host country focus where subsidiaries are established in overseas
markets. These are varied and independent. A polycentric multinational is mainly concerned
with legitimacy in each host country. Characterized by fragmentation of strategies between
the parent company and its subsidiaries (Perlmutter, 1969; Perlmutter and Chakravarthy,
1985).
x
Regiocentrism relates to an integrated regional management approach…increasingly
complex and regionally interdependent. The firm tries to link strategies and interests between
and among subsidiaries. A Regiocentric multinational tries to balance the viability and the
legitimacy of the multinationals (Perlmutter, 1969; Perlmutter and Chakravarthy, 1985).
x
Geocentrism is linked with an integrated world structure of continued physical growth and
tied to centralized/decentralized management strategies.
Highly complex and worldwide
interdependent. Firm utilizes a Geocentric or global marketing infrastructure and likely to
have enhanced global new product development capabilities (Heenan and Perlmutter, 1979).
These geo-mechanisms enable multinational corporations (MNCs) to transfer knowledge
across borders at the organization level, with a primary focus on broad strategic decisionmaking premises and the structuring of headquarter-subsidiary relationships (Subraminiam
and Venkatraman, 1998).
x
Cybercentrism encompasses the management of the highly interactive digital economic
universe, capturing a ‘real time’ vision of market realities without physical size limitations to
corporate operations or growth. The Cybercentristic enterprise may be wholly virtual or a
traditionally structured virtually-extended enterprise engaged in the B2C (Business-toConsumer) features of Internet e-commerce, the B2B (Business-to-Business) elements of
cyber-alliances including e-procurement in supply chain management, and the F2B (Factoryto-Business) aspects of e-Manufacturing including virtual product design, remote
diagnostics/maintenance, and manufacture-on-demand. Cybercentrism espouses a trust in the
knowledging process with information sharing and virtual teamsmanship.
Sources: Perlmutter, 1969; Heenan and Perlmutter 1979; Perlmutter and Chakravarthy, 1985;
Subraminiam and Venkatraman, 1998; which has been modified by Gordon, 2001a, 2001b, 2001c
27
Note: This material is structured to support the definition of Cybercentrism as listed here. This definition
should not limit the further development of alternative interpretations of this model in expanded areas of
research.
Management attitudes of national and international companies responsible for establishing
potential competitive advantages relative to the EPRG schema have been the subject of some
research (Wind, Douglas, and Pearlmutter, 1973; Toyne and Walters, 1993). Howard Perlmutter
(1969) of the Wharton School first identified the distinctive management orientations of
international companies. Figure 1-7 shows these four structures plus a fifth with Cybercentrism,
suggesting a re-examination of traditional knowledge cycles and strategic premises such as
international product life cycles (IPLC) (Giddy, 1978).
Decentralization of Management Culture: PeopleSoft and Hewlett Packard
The new virtual connectivity potential provided by Internet technology changes the cultural
working environment in several important ways with customers, suppliers, partners and
employees. Technical innovation, creativity and the knowledging process are central to the
Cybercentric model. Figure 1.14. makes note of the virtual nature of the Cybercentric culture.
Ethan Watters (2004) suggests that choices in today’s generation exhibit a nation-wide, perhaps
global, phenomenon of extended ‘tribal’ affiliation beyond the nuclear/ethnic family which may
be accelerated by on-line chat rooms and the increased availability of virtual social connectivity.
The Cybercentric Virtual Culture
Figure 1.14. Culture
Factor
Culture
Ethnocentric
Home country
Polycentric
Host country
Regiocentric
Regional
Geocentric
Global
Cybercentric
Virtual
Software companies such as PeopleSoft (Duffield, 2002) provide the ability for employees and
organizations around the world to virtually extend their enterprise to real-time operations.
PeopleSoft claims to be one of the few companies to provide a suite of application software with
a pure Internet architecture offering benefits that reflect the Cybercentric paradigm shift away
from Geocentric ideologies:
‰
Customers enter their own orders, check inventory, track shipments, pay invoices,
and enter support inquiries 24/7 (24 hours a day, seven days a week).
‰
Suppliers monitor customer demand, check inventory, replenish supplies, monitor
their performance, and check settlement status from anywhere in the world.
‰
Partners get instant information on products and promotions, place orders, check
availability, view shipment status, and request support online - all in real time.
‰
Employees manage their own benefits, administer their own deductions, purchase
their own supplies, book their own travel, and submit their expenses.
These values have diverse structural characteristics and present abstractions originating from the
nature of software solutions as well as the Cybercentric organization's virtuality, or placelessness.
28
The success of PeopleSoft in such diverse areas as Customer Relationship Management, Supply
Chain Management, Financial Management, Human Capital Management and Application
Infrastructure suggests that every organization may eventually have to operate in real-time to
drive competitive advantage. Dave Duffield (2002), Chairman of the Board of PeopleSoft, adds
visionary provisos for his Internet architecture company that go against the grain of hierarchically
structured global firms. These include core values focusing on people, customers, innovation,
quality, and profitability.
Changing the Concepts of Management Evolution
With no technological change, industry and commerce might stay at a steady-state value. But
more and better ways of manufacturing products and administering services is ongoing and part
of technological history. The invention of new and better ways of making things is constantly
pushing the production forward (DeLong, 2000). What is important about this feature of
technological change regarding long-term growth is the velocity of push.
Heavy, discrete industrial sectors, unlike the facile process manufacturing commercial sectors are,
often, the last to change. DeLong (2000), offers an interpretation of technological change that
depends upon a constant. The dependable shifting outward of technologies pushes out the
production function. DeLong surmises that the economy steady-state is pushed to higher levels
of output-per-worker and capital-per-worker by technological change. However, the production
function impacted by what I term e-skip-gen technologies, or electronically accelerated skipgeneration technologies, affects economic growth in ways that emulate the velocity of push
(Delong, 2000).
Figure 1.15.
The Evolution of Company Incremental Growth Strategies
Stage Two
Stage
Stage Four
Stage Five
Domestic
International
Multinational
Global
Universal
(Ethnocentric)
(Polycentric)
(Regiocentric)
(Geocentric)
(Cybercentric)
Years 1-3
Years 4-6
Years 7-9
Years 10-12
One Year
70%
Ethnocentric
30%
Polycentric
80%
Polycentric
20%
Ethnocentric
Stage One
60%
Polycentric
40%
Geocentric
60%
Geocentric
40%
Polycentric
Up to 100%
Cybercentric
__________________________________________________________________________
Source: Adaptation from 'International Business Strategy: Three Alternatives', Keegan 1989, Table 10-1, p. 302.
Figure 1.15. suggests that a new market entrant, using advanced information technology (AIT)
might, in as little as one year, accomplish the same thing as an established corporation in terms of
visibility and value. A Cybercentric company could establish a competitive virtual platform trade
presence nearly comparable to that of a market-leading, Geocentric-based company with the use
of existing virtual networks, logistics outsourcing and the hiring of contract knowledge workers,
emerge in full form in the defiance of every text book rule of growth and development.
Stage Five in Figure 1.15. suggests that incremental company growth strategies is an obsolete
concept. Velocity, when ascribed to virtual technology migration and development of the PC
accelerates the 'normal product development cycle' (Slywotzky, 2000, p.187), and can transform a
29
company from ground-based to virtually-extended operations in as little as a year's time through
the implementation of a Web presence and Internet-based platforms.
The argument for the presence of a Cybercentric model in Figure 1.15 suggests that the ability of
a new market entrant to establish a competitive market presence without experiencing the arduous
progression and complexity of Geocentric growth is a reality. Companies in the process of virtual
extension, or new market entrants, might, as an example, develop 100 percent virtual trade
capacity in as little as one year through the installation of a corporate website containing an
interactive product catalogue with purchase and fulfillment capability. This places the virtual
contender's products in direct competition with traditional market leaders. The integration of a
corporation’s production of goods and services has strong impact on the value chain where
location is a debatable competitive issue.
The Internet and its information and marketing communication technologies, coupled with the
vast outsourcing capabilities of B2B connectivity, may have changed forever the vision of
competition in the marketplace. In doing so it may have made irrelevant the placement of a
corporation’s global locations as well as brick-and-mortar growth patterns necessary for a firm to
compete. Competitors taking more than a decade to achieve a strong market presence via bricksand-mortar in the past must now defend their market share utilizing new technologies.
In an e-commerce scenario common to the virtuallyextended enterprise, there is ‘company-of-origin rather
than a country-of-origin. Brand equity exists equally in
each major market. Products appearing on the Web, or
within a B2B manufacturer/supplier intranet, are not
limited by spatial barriers from being built and offered
anywhere in the developed or underdeveloped world, as
long as users can log-on and pay for the merchandise.
In this sense Internet-driven Cybercentrism is
dispelling the argument that markets do not develop
simultaneously and exist with parity.
A virtual enterprise's identity finds symbolic identity in its marketing accessibility by consumers,
its links to suppliers, retailers, university laboratories, and public contractors. Its image is locked
in its virtual accessibility and its communications systems (Mulgan, 1997).
Figure 1.16. is a summation of Cybercentric nomenclatures that point to Cybercentrism as a fifth
evolution to the EPRG model (Chakravarthy and Perlmutter, 1985). These nomenclatures
employed in modeling can be seen as preliminary steps toward new platform concepts. The
Ethnocentric, Polycentric, Regiocentric, Geocentric journey to flexible e-commerce scenarios
have emerged toward a preferred or advisable pathway to competitive advantage beyond
ideological global market reatraints.
Figure 1.16. illustrates the spread of the nine original business strategy factors left to right. What
Perlmutter called a ‘Tortuous Evolution' (Perlmutter, 1969, p.12) of multinational corporations
may, with the Cybercentric model, be reveal themselves as somewhat less tortuous with the
addition of a new platform of Cybercentric strategic managerial options.
30
Figure 1.16.
Cybercentrism: A Fifth Evolution EPRG Nomenclature
Factor
Mission
Ethnocentric
Profitability
(viability)
Polycentric
Public
acceptance
(legitimacy)
Bottom-up (each
subsidiary
decides on local
objectives)
Governance
Top-down
Strategy
Global
integration
National
responsiveness
Structure
Hierarchical
product
divisions
Hierarchical
area divisions,
with autonomous
national units
Home country
EthnoGens
Mass
production
Product
development
determined
primarily by the
needs of homecountry
customers
Host country
PolyGens
Batch production
Repatriation of
profits to home
country
People of home
country
developed for
key positions
everywhere in
the world
Retention of
profits in host
country
People of local
nationality
developed for
key positions in
their own
country
Culture/
Consumerism
Technology
Marketing
Finance
Personnel
practices
Local product
development
based on local
needs
Regiocentric
Both profitability
& public
acceptance
Mutually
negotiated
between region
and it
subsidiaries
Regional
integration and
national
responsiveness
Product and
regional
organization tied
through a matrix
Regional
RegioGens
Flexible
manufacturing
Standardize
within region,
but not across
regions
Geocentric
Same as
regiocentric
Global
integration and
national
responsiveness
Global
integration and
national
responsiveness
A network of
organizations
(including some
stakeholders and
competitor
organizations)
Global
GeoGens
Flexible
manufacturing
Global product,
with local
variations
Redistribution
within region
Redistribution
globally
Regional people
developed for
key positions
anywhere in the
region
Best people
everywhere in
the world
developed for
key positions
everywhere in
the world
Cybercentric
Collaborative
knowledge and
innovation.
Virtual team forms
of knowledge
integration and
control
Virtual integration
via
internetworkability
and SES
May be wholly
virtual or a
traditionally
structured
virtually-extended
enterprise, SBN
Virtual
CyberGens
Manufacturing on
demand, F2B
Engaged in the
B2C features of
Internet ecommerce, the B2B
elements of cyberalliances and the
F2B aspects of emanufacturing
Highly interactive
digital economic
universe, CAEE
A ‘real time’ vision
of market realities
without physical
size limitations to
corporate
operations or
personnel growth
Source: From an expanded concept from a United Nations publication template (Carter, 1997), with a view of the basic
tenets of the Perlmutter (1969) EPRG architectural concept of global business Adapted from Balaji S. Chakravarthy
and Howard Perlmutter, "Strategic Planning for a Global Business", Columbia Journal of World Business, Summer
1985, pp. 5-6.
Legend: SBN: Strategic Business Node; F2B: Factory-to-Business; SES: Strategic Ecosystem,; CAEE:
Cybercentric Actionable Economic Elements
Figure 1.16. incorporates the full range of Cybercentric factors revealing Internet-based
competitive intelligence systems and highly interactive software as key competitive and
knowledge management factors in a new digital economy. Figure 1.16. shows the completed
figure referenced at the beginning of the chapter showing the replacement of the question marks
as they first appeared in Figure 1.1.
The modeling in this book is aimed to extend the Perlmutter EPRG schema in ways that attempt
to make sense of emergent phenomena of a globalized business environment of the late 20th
century and the emergent virtual realities of the 21st century. Transfer of knowledge is frequently
31
accomplished by human capital (Teece, 2002) and the purchase of new technology. The tangible
inputs of technology transfer will ultimately necessitate the use of comprehensively descriptive
nomenclature forming a benchmark of necessity for new strategically useful terminology.
Summary
This has been a discussion of theory with arguments advocating the acceptance of Cybercentrism
as the fifth ‘centrism’ in the EPRG schema. Distinctive orientations of management of
international companies during the Global-Village era (Yip, 1989; Baker, 1990) were outlined, as
we have discussed, in the well-known EPRG blueprint identifying four types of management
perspectives toward going global. Again they are identified as ethnocentrism, polycentrism,
regiocentrism and geocentrism or EPRG (Perlmutter, 1969; Heenan and Perlmutter, 1979;
Perlmutter and Chakravarthy, 1985: Chakravarthy and Perlmutter, 1985). In 1965 Perlmutter
devised the EPG segments of the EPRG model and published his findings in the Columbia
Journal of World Business (Perlmutter, 1969) while Heenan and Perlmutter (1979) together
devised the Regiocentric model for the EPRG segment.
Essential to understanding the difference between Geocentric and Cybercentric model concepts
can be reduced to two basic factors: one is geography and the other is time. The commonly held
management concepts of globalists would be that these marketers could focus on target audiences
in separate and isolated locations or major international markets (Sandhusen-Barrons, 1993). In
their minds there still remains the essentials of product life cycles over distance and time.
Products can be launched as ‘new’ in several markets progressively over time according to the
adoption of technologies, the assimilation of needs and product awareness. Cyberists, however,
realize that in the new world of the Web, prolonged product life cycle (PLC) planning over time
is reduced to zero. In the Cybersphere, all major markets are aware of the product instantly as it
is launched in all major on-line markets simultaneously. The concept of sequential market
geography is that there is none…ground-based marketing ideologies are fatal. The concept of
time is reduced to now/24/7. The whole idea of market segmentation must be adjusted to
consider instant availability, blurringly fast product life cycles and learning curves in high-tech
categories partnered with the intricacies of manufacturing-on-demand.
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Glossary
ABMS: activity-based management system
CAEE: Cybercentric Actionable Economic Elements
Cybercentric / Cybercentrism: See Figure 1-7, p. 32
EAI: enterprise application integration
e-manufacturing: E-Manufacturing is the evolutionary state of manufacturing impacted by technologies
common to Internet e-commerce, the B2B (Business-to-Business) elements of cyber-alliances including eprocurement in supply chain management, and the F2B (Factory-to-Business) aspects of network-enhanced
production including virtual product design, remote diagnostics/maintenance, and manufacture-on-demand.
To achieve connectivity of the factory floor to the rest of the enterprise via a trans-enterprise
communications network is the basic tenant for e-Manufacturing technology migration.
EPRG: Ethnocentrism, Polycentrism, Regiocentrism, Geocentrism. These four nomenclatures are
distinctive orientations of management of international companies during the Global-Village era and are
outlined in the well-known EPRG blueprint identifying four types of management perspectives toward
going global. In 1965 Perlmutter devised the first three segments of the EPRG model and published his
findings in the Columbia Journal of World Business (Perlmutter, 1969) while Heenan and Perlmutter
(1979) together devised the fourth IPRG segment. Perlmutter and Chakravarthy published further
variations in 1985.
ERP: Enterprise Resource Planning (ERP). ERP provides the essential front office planning, scheduling
and authorization backbone for the vertical process to function.
ftp: File transfer programming
37
GUI: Graphical User Interface
HMI: Human-Machine Interface software usually programmed with user-friendly icon features that make
the control process easier to learn and utilize. HMI/SCADA (Human-Machine Interface/ Supervisory
Control and Data Acquisition).
IT: Information technology
LAN: Local Area Network
MIS: Management of Information Systems
MES: Manufacturing Execution Systems (MES). This is a resources oriented software that utilizes
available inventory, labor, and equipment necessary to fulfill orders and get the job done on the factory
floor.
NBER: National Bureau of Economic Research
OS: Operating system
PC/NT-based Control: Personal Computer with Windows NT software in a Local Area Network.
PLC: Programmable Logic Controller
SBN: Strategic Business Node, a new nomenclature for this book, is a Cybercentric progenitor of the
Geocentric Strategic Business Unit. The SBN is seen to be the replacement business structure for ebusiness. Vertical SBNs, operated by a management elite, would dictate managerial, financial, strategic IT
edict from wired hyperspace bunkers.
SBU: Strategic Business Unit
SBN: The strategic business node (SBN) is an evolution of the Geocentric strategic business unit (SBU)
evolving from the presence of Cybercentric spatial networks of Web communication and the patterning of
economic functions and information flows. As the global economy expands into a universal economy it
incorporates new bricks-and-clicks markets demanding advanced services and the units (nodes) required to
join the Internet and corporate intranet network systems and command their evolving linkages.
SCADA: Supervisory Control and Data Acquisition
SCM: Supply Chain Management (SCM). This includes Supply Chain Planning (SCP) and Supply Chain
Execution (SCE) which uses software based on a constraint-anchored optimization algorithm premise
SMP: symmetric multi-processing
TCP/IP: Transport Control Protocol/ Internet Protocol, the basis for communications on the Internet
VLANS: Virtual Local Area Networks
_____________________________________________
Semantic Origins of the Cyber Prefix for Cybercentrism: Cybernetics and Artificial Intelligence
The Cyber in Cybercentrism can be identified as having a close association with Cybernetics. Artificial
Intelligence and cybernetics are often associated one with the other. "Artificial Intelligence (AI) uses
computer technology to strive toward the goal of machine intelligence and considers implementation as the
most important result; cybernetics uses epistemology (the limits to how we know what we know) to
38
understand the constraints of any medium (technological, biological, or social) and considers powerful
descriptions as the most important result.
The field of AI came into being when the concept of universal computation [Minsky 1967], the cultural
view of the brain as a computer, and the availability of digital computing machines were combined. The
field of cybernetics came into being when concepts of information, feedback, and control [Wiener 1948]
were generalized from specific applications (e.g. in engineering) to systems in general, including systems
of living organisms, abstract intelligent processes and language" (Pangaro, 2001).
Systems Science: Cyberspace
Systems Theory is the trans-disciplinary idea of the abstract organization of phenomena, independent of
their substance, type, or spatial or temporal scale of existence. Where Cybercentrism has its focus in the
Internet-driven realm of cyberspace, the spatial abstraction applies. "Real systems are open to, and interact
with, their environments, and that they can acquire qualitatively new properties through emergence,
resulting in continual evolution. Rather than reducing an entity (e.g. the human body) to the properties of
its parts or elements (e.g. organs or cells), systems theory focuses on the arrangement of and relations
between the parts, which connect them into a whole.
This particular organization determines a system, which is independent of the concrete substance of the
elements (e.g. particles, cells, transistors, people, etc). Thus, the same concepts and principles of
organization underlie the different disciplines (physics, biology, technology, sociology, etc.), providing a
basis for their unification" (Heylighen and Joslyn, 1992).
Cyborgs, Cyberspace, and Cybermarketing
"Computer theorists use the term cyberspace to refer to the notional social arena we enter when using
computers to communicate. Cyberspace can be used more generally to refer to the potential lifeway or
general type of culture being created via Advanced Information Technology (AIT)", the congeries of
artifacts, practices, and relationships coming together around computing" (Hakken, 1999, p. 1).
Ethnographer Hakken, in his book Cyborgs @ Cyberspace (1999), sees the cyber prefix, and the word
cyberspace, as representing a culture. "The new computer-based ways of processing information seem to
come with a new social formation, or, in traditional anthropological parlance, cyberspace is a distinct type
of culture" (Hakken, 1999, p.2). In this application, management culture can also utilize this prefix,
attaching it to the centric suffix utilized by the Perlmutter (1969) EPRG models.
Keeler, in his book Cyber Marketing (1995), defines the cyber prefix in its application to marketing, and
more, as a meeting point for the world of computers and communications. Most of us would define
marketing as whatever you do to promote the growth of your business. It can include market research,
publicity, advertising, sales, merchandizing and distribution, and customer service and support.
The dictionary definition of cyber is the science of the control of complex systems, but in popular usage it
has come to have a different meaning. Cyber has to do with the non-physical place, where computers and
communications meet" (Keeler, 1995, p. xxi).
39
Reaching The Strategic Tipping Point
A man walks outside
on a rainy day with no
umbrella, no hat and
not even a newspaper
to protect his head
from the downpour.
Yet, his hair does not
get wet. Why?
In strategic thinking,
problems are often
solved based on past
knowledge…by
drilling deeper into the
same model premise.
Unfortunately you
may dig so deep that
your only solution is
that our man must
have a hole in his
head. You have
reached a strategic
tipping point where
logic fails. That’s the
value of a new model
mindset. You think
laterally not vertically.
You subscribe to the HP credo 'management by walking around' (Packard, 1996), where
managers and supervisors maintain a touchy-feely contact on a routine basis with
faithful workers. Unfortunately you now hire outsourced employees placed in remote
world locations who communicate with the company by email, phone, intranet and
webcam. You struggle to stay in contact with these valuable knowledge workers by
flying your managers to far-flung global locations exhausting your team and your
budget. Even after initiating a ‘management by shuttling around’ policy employees are
not loyal to the company mission and lack control. Thinking laterally you now grasp the
trends of the decentralization of management and virtual corporate placelessness that
has contributed to new technical and organizational infrastructures of both old and
emerging firms in the new millennium. Switching from a Geocentric to a Cybercentric
model mindset you quickly realize that management by objective (MBO) is rapidly
being replaced by management by control (MBC). You realize the man has no hair.