The nature of Globalization,
Business and IT
Technology and globalization go hand-in-hand.
Globalization unleashes technology, which in turn drives
firms to plan production and sales on a global basis.
Technology changes the work we do and in nearly all cases,
the jobs created by it demand more education and training.
It also changes the way business operates by transforming
relationships
between suppliers, producers, retailers and customers.
(Ross, 1993, p. xii)
Dr. Paolo R. Cerotti
ISYS 2394 Session 2 – Semester 2
2014
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Reasons Why You Might Like this
class
1. Multi-culture
((Technology/Strategy/Business/Organisations)
2. Some readings more than a year old (sometimes
really good ideas last more than a year)
3. Course is continually evolving
4. Considerable work load (But consistent with
credits)
5. High expectations
6. Pictures of staff with famous people
7. Collaborative learning environment
8. No Exam
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Paul’s Teaching Assignments:
RMIT University - Melbourne
Bentley University – Boston
University of Maryland – Washington DC
Old Dominion University – Norfolk, Virginia
KAIST – Korea
Seoul National University - Korea
Fudan University – China
Shanghai Institute of Foreign Trade - China
Trisakti University – Indonesia
SIM – Singapore
HK Polytechnic – Hong Kong
Universita’ D’Urbino - Italy
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Paul’s Research
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Globalization
Globalization and IT
International Business
Social Value Creation
Social Technologies
Luxury Business
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Paul’s Awards
• 2013 – Pro-Vice Chancellor’s Award for Teaching Excellence in ISYS 2394
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andBUSM 2112/
2013 – Dean Teaching and Learning Award – Peer Partnership
2012 – Dean Teaching and Learning Award – Peer Partnership Excellence
2012 – Pro- Vice Chancellor’s Award for Teaching Excellence
2011 – Pro- Vice Chancellor’s Award for Teaching Excellence
2010 – Vice Chancellor’s Award for Teaching Excellence –
Internationalisation – For Leveraging professional expertise and networks to
integrate intercultural and international contexts in curriculum and learning
opportunities to produce globally competent graduates.
2007 – Australian Learning and Teaching National Citation Award - for
Outstanding Contributions to Student Learning in area of internationalisation of the
curriculum.
2007 – RMIT University Teaching Award - for outstanding contribution to
Teaching in the category of Team Teaching.
2007 – RMIT University Vice Chancellor’s Award – 2007 Australian Learning
and Teaching Award Winner – RMIT University Award Winner – ALT Award
for Australian University Teaching in the category of Outstanding Contribution to
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Student Learning
Paul’s Experiences
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Grants – In excess of $275,00.00
Hospitality\Fashion industry – Italy and Australia
Education industry – Asia, North America and Europe
Travelling since 6 years of age and still learning and still doing homework.
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Where are we now?
• Global activity strengthened during the second half of 2013, as anticipated in the
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October 2013 World Economic Outlook (WEO). Activity is expected to improve further
in 2014–15, largely on account of recovery in the advanced economies. Global
growth is now projected to be slightly higher in 2014, at around 3.7 percent, rising to
3.9 percent in 2015, a broadly unchanged outlook from the October 2013 WEO.
United States is expected to be 2.8 percent in 2014, up from 1.9 percent in 2013.
Following upward surprises to inventories in the second half of 2013, the pickup in
2014 will be carried by final domestic demand.
The euro area is turning the corner from recession to recovery. Growth is projected
to strengthen to 1 percent in 2014 and 1.4 percent in 2015, but the recovery will be
uneven.
United Kingdom has been buoyed by easier credit conditions and increased
confidence. Growth is expected to average 2¼ percent in 2014–15, but economic
slack will remain high.
In Japan, growth is now expected to slow more gradually compared with October
2013 WEO projections.
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Where are we now?
• Overall, growth in emerging market and developing economies is expected to
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increase to 5.1 percent in 2014 and to 5.4 percent in 2015. Growth in China
rebounded strongly in the second half of 2013, due largely to an acceleration in
investment.
Growth in India picked up after a favorable monsoon season and higher export
growth and is expected to firm further on stronger structural policies supporting
investment.
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What has changed in business
since we went Global?
• Let’s develop a list
• Are these changes universal?
• What/Who is driving these changes?
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The Internet – the panacea for
all of the troubles in the world?
• Is the internet the great revolutionary tool of the 2ist century?
• Or …is it just a reformation of business process using IT?
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A diagram showing the degree to which different management functions must assume a global or local role.
(Diagram by Prof. Eleanor Westney. Maps courtesy of www.theodora.com/maps used with permission.)
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Let’s talk about the triumvirate
Business/Globalization/I.T.
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Health
Education
Tourism
Banking
Government
Logistics
Food
Manufacturing
Entertainment
Services
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Trends
• What are the new business trends in
2014?
• Does I.T. give value to business?
• Value chain model. (Diagram by Prof. Stuart Madnick.)
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Who is calling for changes?
Who is calling for trends?
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Global Business
World Economic Forum
World Trade Organization
World Bank
United Nations
International Monetary
Fund
Universities
Global Customers
Are YOU???
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Definitions
• Globalization (or globalization[1]), is an umbrella term for a
complex series of economic, social, technological, cultural and
political changes seen as increasing interdependence and
interaction between people, communities, countries and
companies in disparate locations all over the world.
• “There are 152,921 books in English in print on the subject of
globalization. Add to these hundreds in French, German,
Russian, Arabic, Hindi, Chinese, Spanish and other languages.
(Amazon.com Search April 2013)
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Definitions
• The term "globalization" is used to refer to these collective
changes as a process, or else as the cause of (typically)
negative and turbulent change. The distinct uses include:
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* Economically and socially positive: As an engine of
commerce; one which brings an increased standard of
living — prosperity to developing countries and further
wealth to First World and Third World countries. This view
claims that economic prosperity brings about social
prosperity.
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* Economically and socially negative: As an engine of
"corporate imperialism"; one which tramples over the
human rights of developing societies, claims to bring
prosperity, yet often simply amounts to plundering and
profiteering. Negative effects include cultural assimilation
via cultural imperialism, the export of artificial wants, and
the destruction of local society and culture.
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Definitions
• A typical definition can be taken from the International Monetary
Fund, which defines globalization as the growing economic
interdependence of countries worldwide through increasing volume
and variety of cross-border transactions in goods and services, free
international capital flows, and more rapid and widespread diffusion
of technology.
• Globalize means to make worldwide in scope or application, and the
globalization of trade means freer and more intense worldwide trade
across national borders. Technology helps to make globalization
possible. Because computers can be interlinked across companies,
countries and continents, information is no longer weighed down by
geography or time.
• All definitions appear to agree that globalization has
economic, political, cultural, and technological aspects
that may be closely intertwined.
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Economic Globalization
Economic globalization, (i.e. the aggregate change we observe in our
factories, storefronts, indeed generally across our economies and
lifestyles) is caused by four fundamental forms of capital movement
throughout the global economy. The four important capital flows are:
– Human Capital (i.e. Immigration, Migration, Emigration,
Deportation, etc.)
– Financial Capital (i.e. Aid, Equity, Debt, Credit & Lending, etc.)
– Resource Capital (i.e. Energy, Metals, Minerals, Lumber, etc.)
– Power Capital (i.e. Security Forces, Alliances, Armed Forces,
etc.)
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Views about Globalization
• Stiglitz argues that globalization has
opened up world trade and created more
economic development….is this the case?
• Has globalization improved the
competitiveness landscape?
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Globalization
• Nearly every world leader and leading academic and
Nobel peace prize winner has defined globalization
during the past 20 years, for former President Clinton it
was the ‘world without walls’, for Joseph Stiglitz it is
‘the removal of barriers to free trade and the closer
integration of national economies’, for Prime Minister
Blair ‘it is inevitable and irresistable’, for analysts
Marshall McLuhan it is a global village, for President
Bush it is ‘ties and of trade and trust’.
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“Globalization is neither new or a folly’, said
Amartya Sen, but a global movement of ideas, people,
technology and goods from one region to others,
benefiting the people at large”(Sen, 2001, n.p.)
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Globalization in Practice
• “In 2003, some 25,000 US tax returns
were done in India. In 2004, the number
was 100,000. In 2005, it was roughly
400,00. In a decade you will assume that
your accountant has outsourced the basic
preparation of your tax returns-if not more”
Thomas L. Friedman, 2005, page 13
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Globalization in
Practice
• Dalian in China has become to the Japanese what
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Bangalore is to America.
The Japanese are outsourcing their call centers to the
Chinese.
The Chinese are in Dalian are taking Japanese as a
second language.
The Chinese are so focused on leading the world in the
next century that they are ready to brush up on their
Japanese and take all the work Japan can outsource.
(Thomas L. Friedman 2005)
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Mayor Xia’s ideas on
Globalization
• Chinese youngsters are more ambitious than Japanese or
American youngsters in recent years.
(Thomas L. Friedman, 2005)
• Eat your dinner because there are millions of Chinese
students starving to death.
• Eat your rice there are millions of
Capitalist children starving to death.
• Education
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Mayor Xia’s ideas on
Globalization
• “It is like building a building. Today the
USA is the designer, the architect and the
developing countries are the bricklayers
for the buildings.
• But one day I hope we will be the
architects.” (Thomas L. Friedman, 2005) Will this
happen ?
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Friedman’s conversation with
Jaithirth Rao in India
• “We can predict our future. But we are
behind you. You are defining the future.
America is always on the edge of the next
creative wave…..”
• (Thomas L. Friedman, 2005, page 15)
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Globalization of Innovation – A
Change
• Satyam Cherukuri at Sarnoff speaks of the end of the old
model of a single American or European multinational
handling all the elements of the product development
cycle from its own resources.
• More and more American and European companies are
outsourcing significant research and development tasks
to India, Russia, China, South America and Eastern
Europe and at times to Cambodia, Vietnam and Laos.
This is what we mean when we speak of the
“globalization of innovation”. (Thomas L. Friedman,
2005)
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Guarded Globalization
(Bremmer 2012)
• Pre 2008 – Coca Cola - - 200 countries,
Lockheed Martin – 805 revenue from US
government and 95% workforce in the US
• Post 2008 – Slow moving, selective,
nationalism and regionalism mix.
• Strategic importance of industries at home
and in countries they wish to enter
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State Capitalism
• Russia, India and Brazil
• Control the wealth that markets generate –
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governmetns play a dominant public sector
companies and politically loyaly corporations.
EG. 73 Chinese companies listed in 2012
Fortune Global 500, 65 are state owned.
Russia – 50% are state owned
UAE – oil companies and wealth fund dominate
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State Capitalism
• Google, Facebook and Yahoo which may,
and has been used by the US government
to read emails around the world can be
seen as a form of State Capitalims.
• Gathering Data – Is this valuable?
• Greater scrutiny for US IT companies
• Will this inhibit Globalization?
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Ten Forces that Flattened the
World
• Berlin Wall 11/9/89
• Amatya Sen (Indian Nobel Prize Economist), said
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“ The Berlin Wall was not only a symbol of
keeping people inside East Germany, it was a
way of preventing a kind of global view of our
time…
If I celebrate the fall of the wall it is because I
am convinced of how much we can learn from
each other. Most knowledge is learning
from others across the border.” Discuss
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Ten Forces that Flattened the
World
• The New Age of Connectivity: when the web
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went around and Netscape went public –
8/9/95.
Work Flow Software- Read and Discuss pages
91-92
Harnessing the Power of Communities
Outsourcing Y2K – Read and discuss pages
131-132.
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Off-shoring
“Every morning in Africa, a gazelle wakes up
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It knows it must run faster than the fastest lion it will be killed
Every morning a lion wakes up
It knows it must outrun the slowest gazelle or it will starve to death.
It doesn’t matter whether you are a lion or a gazelle.
When the sun comes up, you better start running”
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Why are we all running?
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China has become an unparalleled country for off-shoring, it has 160 cities with
a population of one million or more.
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Can India beat China in off-shoring or will it be the Middle East or South
America that will win this race or a trading block of Chinese culture nations?
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CHINDIA ?????????
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Ten Forces that Flattened the
World
• Supply-Chaining – eg HP will sell 400,00
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computers in one day during the Christmas
season, throughout 4000 Wal-Mart stores.
Insourcing – Read and discuss pages 167-8.
Informing – Google, Yahoo, MSN Web Search
The Steroids – Digital, Mobile, Personal and
Virtual
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Views about
Globalization/Innovation Thinking
• Garelli has mapped the world competitiveness landscape.
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Competitiveness is not the accumulation of certainties
Competitiveness is developed through ‘trial and error’
Strong competitiveness models accept internal criticism
Competitiveness also thrives on thinking the unthinkable
The future is not what it used to be
• Who wins?
• Who loses?
• Why?
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Views about globalization
• Legrain argues that globalization is blurring the
borders between nation states….is all the world
one?
• Do you feel at home anywhere in the world?
• Is it globalization or Americanization or
Californiazation?
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Views about globalization
• Giddens argues that globalization creates
new economic and cultural zones e.g.
around HK, Nth Italy. Silicon Valley,
Middle East and South America.
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Views about globalization
• Singer argues that since globalization the
gap between the rich and the poor
countries has increased….why?
• However, on another measure life
expectancy has increased in developing
countries from 55 to 66 yrs!
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An emerging problem!
• The new business conflict: IT consolidation vs.
globalization by Alan Saldich (2006)
www.snwonline.com/behind/conflict_03-27-06.asp?article_id=675
• The world is getting smaller, companies have
operations all over the place, and IT is getting
more powerful by the month. You would think
that connecting a global enterprise seamlessly
would be easier than ever, but in fact it's getting
more difficult in some ways. Why?
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USA and President Obama
• No. 1 Economic Superpower
• Image, politics, wars, attitude, finance
• Stimulus package
• Austerity measures
• Rescue of major industries
• Automobile, Banks, Sub-prime issue
• Some degree of recovery
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USA – Home of
Globalization ?
• Home of H and H
• The American Century
• The Barbie Case study
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Globalization Where is it?
• Globalization is happening everywhere and
it is not only in the world of IT!!!
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Globalization of Gambling
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USA
Las Vegas
Atlantic City
Reno
Macau
Australia
Virtual gambling
• Why is gambling a global phenomenon?
• Does IT support this global business?
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The Globalization of Sushi
• http://www.cbsnews.com/video/watch/?id=4423
723n
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Where do we find Sushi?
Why is it a global phenomenon
Global Supply Chain
Role of IT for Sushi
The Sushi Economy: Globalization and the
Making of a Modern Delicacy
by Sasha Issenberg
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Globalization of Icons
• http://www.youtube.com/watch?v=HsdYP
KGYxrI
• Why is this Icon a global phenomenon?
• Why are business icons more recognisable
that ever before?
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Globalization of Sport
• ‘The United States of America is truly the only melting pot in the world. It is
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the only country the blends so many different ethnic and culturally diverse
individuals from all parts of the world, from all walks of life. One of the things
I cherish most about sports is that no matter who you are, what you look like,
what you believe in, all of that is put to the side if we are cheering for the
same team…the only colors that matter are the home team. You will see the
rich next to the poor, black, white, and Asians all cheering together. This is
what makes sports truly remarkable’.
American Football and the Superbowl
Soccer
Basketball
Cricket
Rugby
Tennis
Karate
Golf
Swimming
The Summer and Winter Olympics
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Globalization of Lingua Franca
• English is the language of business,
computing and aviation
• Mandarin
• Spanish
• Arabic
• English
• Hindi
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Globalization of Education
• Thousands of students travel each year
around the globe for education
• Boston – the new Athens
• Magic names: Harvard, Yale, UCLA,
Georgetown, Oxford, Cambridge, Trinity
College, St. Andrews, Chulalangkorn,
Beijing and Beijing Uni, Fudan University,
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KAIST, La Bocconi, Sorbonne etc.
Globalization of Movies
• Hollywood
• Bollywood – ‘Slumdog Millionaire’
• Asian Film Industry
• Spanish Film Industry
• Globalization of Music
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Globalization of Fashion
• T-Shirts, Jeans, Baseball caps, Polo shirts
• American streetwear
• Italian Fashion
• French Fashion
• Japanese Fashion
• Must have bags and accessories
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Globalization of Food
• McDonalds
• KFC
• Pizza
• Chinese Food
• Italian Food
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Globalization and IT of Romance
and Dating
• Dating and IT
• MySpace is the new booty call”
• “I had this guy leave me a voice mail at work, so I called him at home, and
then he emailed me to my BlackBerry, and so I texted to his cell, and now
you just have to go around checking all these different portals just to get
rejected by seven different technologies. It’s exhausting.” He’s just not
that into you”
• Digital Dumping
• Chat roulette
• Social Technologies – Facebook, Twitter, Blogs
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Globalization and Business IT
• Where is it happening?
• Is it only in the USA?
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China
• China 2nd highest foreign exchange
reserves $432billion
• Domestic savings of $2.5trillion
• Setting the pace in the global economy,
expected
• No. 2 Economic Power in the World
• China ranked number 2 in world
purchasing power.
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China
• Establishes international business norms
and rules – A mix of Socialism with
Chinese characteristics – a new mode of
Globalization.
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Micro-regions go global – Italy
• Italy – Region of Emiglia Romagna – known as
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the food bowl of Italy.
Exports pasta, cheese, wine, confectionery etc.
Modena – Lamborghini, Maserati, Balsamic
Vinegar
• Maranello – Ferrari – sales in China
• Parma – Parmesan Cheese
• Carpi – Knitwear for Armani, Versace, Gucci etc
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Italy
• Bologna – Packaging Industries, Shoes – home
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of Bruno Magli, Rosetti,Industrial Machinery etc.
Vicenza – Jewellery – Bvlgari, Pomellato etc
Sassuolo – Ceramic Tiles
Parma – Ham etc. Machinery
Forli – Confectionery – Flamigni
Faenza – Handpainted porcelain
Ravenna – Mosaic tiles
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Italy
• Towns work with the rest of the world.
• Extremely competitive
• Italy’s taxation laws favours small companies
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especially mom and pop shows – less than 15
employees
High level of specialization
Clusters of co. making one article eg. buckles,
buttons, shoe laces, embroidery etc.
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Italy
• Niche production
• Italian achieve global dominance in supply of
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high end, price inelastic products.
Thrives in a global economy
Survives the challenge from China of low
production cost.
Global appetite for luxury goods – high standard
of manufacture, craftsmanship, high prices =
desirable product
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Italy
• Luxury goods sell on brand, high recognition,
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conspicuous consumption and brand loyalty.
French and English luxury brands use Italy for
production of apparel, bags and shoes –
Chanel/Dior/Hermes/Burberry etc. uses Italy for
scarves, shoes etc.
Italians too small to globalize
Defeated the globalization tidal wave and the
China phenomena by Specializing.
Can all industries do this?
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Surviving globalization
• Italian towns survive in the global economy by
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specialising and maintaining the ability to price
high.
High quality.
Nurturing the ‘Made in Italy’.
Romance, History and Culture of Italy
Case study – Salvatore Ferragamo
Producing items for which there is an inelastic
demand and thus escaping the Chinas of this
world.
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Finland, Norway and Denmark
• Trailblazer in telecommunications
• Nokia TeliaSonera
• R&D in software engineering, data security and the Linux
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computer operating system
World Economic Forum declared Finland the most
competitive country in the world in 2002 and 2003
First in networked connectivity and compatibility
Most responsive to IT and e-business opportunities.
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Multinationals in Cambodia
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• Cambodia is at the start of Globalization
• Multinationals in Phnom Penh
• Multimillion dollar contracts with Adidas,
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Columbia, Nautica, Nike and Speedo
One factory worth $4million USD
90% female– 10% male
Salary for machinists $75.00USD a month
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Cambodia and IT
• Staff of 4000
• Investment by Chinese Industrialists
• Owner Chinese/US
• Fabrics from Taiwan, Thailand, USA and
Europe
• High level of IS infrastructure
• Design studio in the USA sends designs to
Cambodia
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Cambodia and global business
• UN Ethics Creed in every section in English and
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Cambodian
ISO 9001
Safety regulations
Motivational cards around the factory “ Keep our
factory clean we can make it”
All staff over 18 years of age
Managers says “ I have to be a good manager
so my staff can be good workers and we will all
benefit”.
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India and Globalization
• India – 500 million people under the age
of 25 – What does this mean for India?
• India and mobile phones –
• 2002 – 6.5 million
• 2009 – 506 million
• 2015 Estimates – 1.04billion
– Source (Kunai Bajaj, Managing Director of BDA Consultancy)
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Russia, Globalization and a Free
Economy
• Russia – a new frontier for global business
• Wealthy Russians – taste of luxury goods
• Immigration to Londongrad
• Capitalism at work – GFC in 2008-09, but the IMF
is more optimistic about it and expects a 1.5-percent
growth of the GDP.
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Globalization and South
America
• Petrobas - 38% of the value of BM&BOVESPA
• Brazil 10th biggest economy - aircraft,
• electronics, cars, ethanol, textiles, footwear, iron
ore, steel, coffee, orange juice, soybean and
beef
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Industries in South America
Car Manufacturing
Tourism
Coffee
Drugs
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The Arab Economies in a Changing
World
• http://www.apple.com/trailers/wb/syriana
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Dubai meltdown
Trouble in the Middle East
What next for U.A.E.?
Lebanon ???
Oil
Tourism
Economic downturn in late 2008-2011
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Japan and Globalization
• Golden age of Japanese globalization 1980’s –
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mid 1990’s
Japanese Manufacturing
Japanese Auto makers
Japanese technology
Giants in global business: Toyota, Sony,
Recent problems at Toyota – Class action suits
in the USA
Natural Disaster in Japan 2011
Aging population
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Globalization and the United States
of Europe
• Fortress Europe - EU
• Countries affected by the GFC
• Greece
Britain
• Portugal
Ireland
• Spain
Iceland
• Italy
• France
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The Dark Side of Globalization
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Human Trafficking
Counterfeit Goods
Drugs
Arms
Slavery
Unethical Working Conditions
Corruption
Conflicts around the world – Ukraine and Gaza
Malaysian Airlines disaster
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Blood Diamonds and Globalization
• http://blooddiamondmovie.warnerbros.co
m/main.html
Tiffany & Co.
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The Bottom Billion
Paul Collier 2007
• Why the poorest countries are failing?
• Millenium development goals
• Africa, Central Asia and parts of South
America
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Making Globalization work for the
least developed countries
• 2.5 billion people live on less than $2.00USD a
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day
http://www.nationsonline.org/oneworld/least_de
veloped_countries.htm
• ‘Globalization and exclusion trap’
• LDCs are not homogenous – influence
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insignificant
How do we make ‘G’ work for LDCs?
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The next phase
• The next phase of globalization is not
going to be more Americanization, but
more “glocalization”, more and more local
content (web and free technology) made
global.
• Thomas L. Friedman, Chinese Finding their Voice,
International Herald Tribune, Oct. 22/23, 2005.
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The Road to Prosperity for all?
• Capitalism Magazine says, "Anti-
globalization protesters can rail all they
like against the evils of capitalism...
Wealth is the only remedy for poverty,
and capitalism is the only real way to
create wealth."
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