Globalism
Business competitiveness has now evolved to a level of sophistication that many term globalism: global competition characterized by networks that bind countries, institutions, and people in an interdependent global economy. The invisible hand of global competition is being propelled by the phenomenon of an increasingly borderless world. As described by Kenichi Ohmae, The nation-state itself- that artifact of the eighteenth and nineteenth centuries-has begun to crumble, battered by a pent-up storm of political resentment, ethnic prejudice, tribal hatred, and religious animosity.3
As a result of global economic integration, extrapolation of current trends will lead to world exports of goods and services of $11 trillion by the year 2005, or 28 percent of world gross domestic product (GDP). As reported by the World Trade Organization, differences in regional output growth rates have narrowed as economic activity picked up in Western Europe and the transition economies. It is fl clear that world trade is phenomenal and growing and, importantly, is increastoingly including the developing nations.
Almost all firms around the world are affected to some extent by globalism. Firms from any country now compete with your firm both at home and abroad, of and your domestic competitors are competing on price by outsourcing resources anywhere in the world. It is essential, therefore, for managers to go beyond operatin only in their domestic market, because bydoing so they are already behind the majority of managers who recognize that they must have a global vision for their firms and that such a vision starts with preparing themselves with the skills to and tools of managing in a global environment. Companies that desire to remain globally competitive and to expand their operations to other countries will have 115 to develop a top management cadre who have experience operating abroad and who understand what it takes to do business in other countries and to work with
al people in and from other cultures.
As another indicator of globalism, foreign direct investment has grown more than three times faster than the world output of goods. The European Union (EU) has now caught up with the United States to share the position of the worlds In largest investor. Investment by global companies benefits developing economies through the transfer of financial, technological, and managerial resources and ts through the development of local allies, which later become self-sufficient and have other operations. Global companies are becoming less tied to specific locations, and their operations and allies are spread around the world, as they source and coordinate resources and activities wherever is most suitable, and as technology allows faster and more flexible interactions and greater efficiencies.
Small companies are also affected by and, in turn, effect globalism. They play a vital role in contributing to their national economies-through employment,
new job creation, development of new products and services, and international operations, typically exporting. The vast majority (about 98 percent) of businesses in developed economies are small and medium-sized enterprises (SMEs), typically referred to as those having fewer than 500 employees. Though many small businesses are affected by globalism only to the extent that they face competing products from abroad, an increasing number of entrepreneurs are being approachedby potential offshore customers, thanks to the burgeoning number of trade shows, federal and state export initiatives, and the growing use of Websites, with the ease of making contact and placing orders on-line. In the United States, for example, more than half of the companies with annual revenue under $100 million export their products.6
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