Key Phases in Globalization

• Water and steam power to mechanize production (1800s)

• Electric power enabling mass production (late 1800s to early 1900s)

• Industrialization and falling trade barriers (1900s)

• Rise of information technology and massive growth in IB (1980s to 2000s)

11/04/2022
 Fourth Industrial Revolution
• Also known as Industry 4.0
• The rise of groundbreaking technologies that will transform international
business, especially:
-- Quantum computing
-- The Internet of Things
-- Artificial intelligence
-- Robotics
-- Autonomous vehicles
-- 3D printing (a.k.a. additive manufacturing)
-- Nanotechnology
-- Biotechnology
11/04/2022
 Effects of New Technologies
• Blurring the lines between the digital and physical worlds

• Boosting the efficiency of global production and international trade

• Transforming IB and international value chains

• National borders and traditional

country-based business models
are losing relevance. E.g., Facebook has
more than 2.3 billion monthly active users
(1/3 of the world) in 150+ countries.

11/04/2022
 The Top Internet Companies
(by valuation, 2018, in US$ billions)

Rank Company $0 $200 $400 $600 $800

1 Apple $915B
2 $828B
3 $781B
4 $770B
5 $556B
6 $484B
7 $477B
8 $173B

11/04/2022
 Percentage Who Can Access the Internet, by Year
  2005 2018

Advanced Economies 50% 81%

Developing Economies 8% 45%

Example: Africa 2% 32%

• More than half the world is now online -- 3.9 billion people.
• Key technologies:
-- Smartphones
-- The Internet of Things (machine-to-machine connectivity online)
11/04/2022
 Internet Penetration Rate, 2018

Sources: IMF, World Economic Outlook (Washington, DC: International Monetary Fund, 2019); United Nations International Telecommunications Union,
ICT Statistics, 2018, www. itu.int; Internet World Stats, Internet Usage Statistics, 2018, www.internetworldstats.com.
11/04/2022
 Implications for International Business
• Cost of transmitting data and information worldwide is basically zero
• Great ability to interact, collaborate, obtain information
• The Internet facilitates finding new opportunities worldwide
• Geographic boundaries are less important
• Lower costs of international interactions and transactions
• E-commerce facilitates global buying and selling. E.g., in China, thousands
of farmers use Internet sites like www.taobao.com to market their produce
• Digital tools improve effectiveness of value chains worldwide

11/04/2022
 Role of Mobile Telephones
• Mobile phones are especially transformative in developing
economies, where many people access the Internet by phone
• The number of smartphone users is more
than 3.5 billion, and growing
• 90% of people worldwide now live in range
of cellular networks. E.g., Vodafone is a
British mobile phone services provider,
offering telecom and IT services to
customers in more than
150 countries.

11/04/2022
 Internet Average Download
Speed, Megabits per Second, 2018

Sources: Fastmetrics, "Internet Speeds by Country (Mbps)," www.fastmetrics.com, accessed March 7, 2019; ITU, Measuring the Information
Society Report Volume 1 2018 (Geneva: International Telecommunications Union, 2018, www.itu.int)
11/04/2022
 Implementing an Industry 4.0 Strategy
• Strategic vision
• Creating a digital culture across the organization (e.g., investing in 4.0,
recruiting digital talent, embedding 4.0 in organizational processes)
• Action orientation (as opposed to a planning orientation)
• Co-opting solutions with partners and
customers
• Example: ABB, based in Switzerland, is
a world leader in industrial robots, with
more than 400,000 robots installed, via
operations and partners in 53 countries.

11/04/2022
 Challenges
• Infrastructure varies substantially by country, e.g., the Internet
• New global competitors that leverage Industry 4.0, e.g., Alibaba, Amazon
• Lack of skills impedes Internet access, especially in developing economies
• Automation, robotics, and AI lead to job loss
• Job losses will mainly affect lower-skill or less-educated workers. E.g.,
McDonald’s installed digital kiosks to take food orders, eliminating jobs.
• Jobs less likely to be lost to digitalization: highly creative or technical
positions, jobs that require interpersonal skills and emotional intelligence

• Education, especially in key fields, can insulate workers

from threat of job loss
11/04/2022
 Number of Installed Industrial Robots
per 1,000 Manufacturing Employees, 2018

• Source: Jeff Desjardins, "7 charts on the future of automation," World Economic Forum, February 25, 2019, www.weforum.org; International
Federation of Robotics, "Welcome to the IFR Press Conference,” 18 October 2018 Tokyo," www.ifr.org, accessed March 7, 2019"
11/04/2022
 Industry 4.0 will Not Make Humans Redundant
• There will be big shifts in the nature and location of jobs. However,….

• Prior industrial revolutions were even more disruptive, but resulted in

countless new, higher-quality jobs. As per the ‘Creative Destruction’ view,
new industries will be created, leading to new and better jobs.
Examples:
-- Automobiles eliminated the carriage and buggy industry
-- Personal computers eliminated the typewriter industry
-- Video streaming technology eliminated the DVD player, which
itself had eliminated the VCR

 New curricula will educate the workers of tomorrow

11/04/2022