CHAPTER 16: Global Trends

1. The significant challenges to globalisation include:

Globalization will drive networked global company

Globalized economy will increase political stability but reach and benefits will not be
universal
Globalization process will evolve with financial volatility and a widening economic
divide
Potential brakes on global economy include sustained financial crisis or prolonged
disruption of energy supplies
Regions, countries and groups feel left behind and will face deepening economic
stagnation, political, ethnic, ideological and religious extremism
Developed countries will be forced to focus on 'old-world' challenges while
concentrating on the implications of 'new-world' technologies

Uncooperative point of view:

Reduced trade barriers and investment increases asymmetry between groups that
can cross international borders and groups that cannot
Globalization starts conflicts within and between nations over domestic norms and
social institutions embodying them
Globalization makes it difficult for governments to provide social insurance

Radical point of view:

Obtain financial resources for development from within instead of foreign investment
Implement measures of income and land redistribution
De-emphasize growth and maximize equity a Make strategic economic decisions
subject to democratic choice
Subject private sector and state to constant monitoring by civil society
Create a new production/exchange complex that includes community cooperatives,
private enterprises and state enterprises but exclude TNCs
Encourage production of goods at community/sub-national level

Demographic trends:

Increase in world population will come from developing world

Age pyramid in industrialized countries will shift towards aging people, increasing
pressures on health care, social services and pension management
Increase in cross-border migrations and intense urbanization will create megacities of
more than 10 million people

Asymmetric development - the unequal development of people living below a certain

poverty level will generate conflicts and ultimately disrupt global trade and investment
Emerging economies - China (the emerging giant):

Projected to catch up with US GDP in PPP terms by 2020

Has built a large industrial base with progressively modernized state-owned
enterprises

Likely to become a global economic and political power with corporations challenging
established global firms

Regional blocks:

As alternative to globalization, regional blocks emerging as the dominant form of

economic structure
Examples include EU, MERCOSUR, NAFTA, ASEAN, APEC, MAU, SADC
Ethnic, religious and cultural friction - increased search for community identity
(religious, ethnic, linguistic) which will develop against globalization, as evidenced
by the Balkans area
Global criminal activities - increasingly cross-border, e.g. drug trafficking

Natural resource and environment:

Environmental issues:

These issues will become mainstream issues in the developed world

Main future concerns are water supply, global warming and deforestation

Technological developments:

Internet: a global tool abolishing physical distance for multimedia transmission with
usage spreading throughout the world
Internet technology creates the basis for the development of global virtual
marketplaces and makes borders irrelevant, in practice, governments still can control
the physical flow of goods and access to websites
Biotechnology: genetic engineering will raise fundamental ethical and environmental
issues.

2 There are four publications that set out possible future scenarios:
Global Trends 2015 (US National Security Agency):

Majority of the world's population benefit from globalization (inclusive globalization)

Majority of people do not enjoy the benefits (pernicious globalization)
Regional economic integration (regional competition)
Economic and political tension between United States and Europe, Asia generally
prosperous and stable (post-polar world)

Millennium Project (UN University):

Periods of explosive growth of Internet-accelerated globalization (Cybertopia)

Richer countries experience a period of robust GNP growth (the rich get richer)
Concomitant unemployment and under-employment produce pressure on economic
system and foster political unrest (a passive mean world)
Loss of Western industrial leadership, growing Asian economic and political power
and US economy on a downward slope (trading places)

Global scenarios 1998-2020 (Shell Corporation):

Existing institutions and organizations successfully adapt to new and evolving

complexities and global corporations continuously reinvent themselves (the new
game)
A fragmented world with changing values and unequal development (people power)

Which World? (World Resources Institute):

Free market prevails with economic reforms, privatization and deregulation,

globalization achieved with transnational corporations as core players in the world
(market world)
Widespread social instability with rising conflict and return to protectionism (Fortress
world)
Social, environmental, economical and political issues are harmoniously managed
(transformed world).

3 Emerging theories of global management with two major company models:

Individualized corporation with a portfolio of three key processes by which new
management competencies and roles are defined:

Key processes are the entrepreneurial process, the integration process and the
renewal process
The new organizational model is based on a network relationship instead of the
traditional hierarchical structure
The new management roles are the operating-entrepreneurial role of front-line
managers, the management-developer of senior and middle-level managers and
the top-level institutional builder of top leaders

Meta-national

The networked organization implies the coordinated combined effort of

'unbundled' business units, some 'internal' to a corporation (e.g. subsidiaries),
some 'external' to a corporation (e.g. partners, suppliers, distributors) and some
in between (e.g. joint ventures, strategic alliances)

Assumes competitive advantage is obtained at three levels:

Ability to identify and access new competencies, innovative technologies and

lead market knowledge
Speed and effectiveness with which companies can connect scattered pieces of
knowledge and use them to create innovative products and services
Ability to optimize the efficiency of global sales, distribution, marketing and supply
chains to leverage those products, services and processes innovations across
global market rapidly and cost-effectively.