"Global players herald change to business flow" by Robert Weisman, Globe Columnist | June 22, 2008
Economists have noted a striking feature of this business cycle: Unlike past downswings, the current slump in the United States hasn't been dragging down smaller economies around the globe.
Just ours.
One reason is robust domestic growth in the countries of BRIC - an acronym for Brazil, Russia, India, and China - but also a shorthand for the developing world. Another is that many companies from those nations - some of which entered the global economy as suppliers to Western multinationals - are now exporting worldwide....
How come they all seem like enemies?
The rise of these new global players is key to an emerging trend, identified by a trio of partners from Boston Consulting Group, in which business increasingly is flowing not in the familiar pattern from west to east but in all directions at once. They explore the trend and its implications in a book, published this month, titled "Globality - Competing with Everyone from Everywhere for Everything."
While corporate loots everybody.
In the view of the authors, globality is more than a new word for, or the next phase of, globalization. It's the environment of the future coming into focus today. And while still in its early stages, it's already dislodging traditional business models, shifting power balances, and sending ripples of change into every corner of commerce.
"You can view it as a threat, or you can view it as an opportunity," said Harold L. Sirkin, senior partner in the Chicago office of Boston Consulting Group, who wrote the book with colleagues James W. Hemerling in San Francisco and Arindam K. Bhattacharya in New Delhi. "But if you choose not to view it, you're going to lose. This is happening. It's not something that can be stopped."
While globality may be an outgrowth of globalization, it differs in several respects, Sirkin said in an interview. The firms driving globalization, which took shape in the 1980s and picked up speed in the 1990s, were "home country-centric." Based in the United States, Europe, and Japan, they manufactured in the developing world to reduce costs, and sold standardized products worldwide.
Globality, by contrast, is polycentric, with firms originating in the developing world vying with one another and Western multinationals across multiple markets. Decision making has been decentralized and business models opened up, with companies outsourcing design and tailoring products to different countries....
But while the Boston Consulting Group partners see the globality wave rapidly swelling into a "tsunami" and swamping everything in its path, other business analysts remain skeptical. Market leadership can indeed change, they concede, but not quickly or entirely.
"There's no question companies from the developing world are doing more than they used to," said Nariman Behravesh, chief economist for Global Insight, a research firm based in Lexington. "But they're still small potatoes compared to the big multinationals in the United States, Europe, and Japan. They're still the second string."
Behravesh thinks it will be another 10 to 20 years before companies based in emerging countries begin to challenge Western dominance in higher-skilled industries. And even then, he said, US companies will be able to adjust their own models, as they have in the past. "People said the Japanese would eat our lunch," he recalled. "It hasn't happened. I'm fairly confident the US will continue moving up the food chain. Anything requiring high skill levels will remain here."
What high-skill jobs? Those are all getting outsourced to China and India!!
Sirkin, however, contends the new players already are building the foundation for a global economy based on specialization.
"Japan didn't take over the world, but it did become a leading auto producing country," Sirkin said. "What sets the United States apart is that it has one of the most flexible economies in the developed world. But different countries will have different specialties."
I guess Adam Smith would be happy (although not completely; he didn't see the depraved greed we have).
