The Next Crisis?
The events of the last several years have, again and again, demonstrated that business thinkers need to pay at least as much attention to what's happening outside their organizations and industries as to what's going on inside. Terrorist attacks, accounting scandals, bursting economic bubbles and the uncertainties of war – these events have had dramatic and unforeseen effects on many corporations.
So what's the next crisis that could change the global business landscape? One controversial analysis comes from Barry Lynn, the writer of a June 2002 cover story in Harper's Magazine. In essence, he argues that many of today's manufacturing companies are becoming so reliant on global outsourcing that today's economic system – and the U.S. system in particular – could collapse like a house of cards in the face of tomorrow's calamity. He writes, "We now live in a world where a single earthquake, or terrorist attack, or embargo, could in a moment bring [the U.S.] economy to a halt and, if played right by some smart state, might well threaten the very fundaments of [U.S.] national wealth and power."
He notes, for example, that in 2001 almost 90% of the world's computer motherboards were manufactured in Taiwan. Of course, every place on earth is subject to natural or man-made disasters, and Taiwan is no exception. On September 21, 1999, a deadly earthquake caused short-term supply problems for various computer manufacturers, but it could have been much worse if the quake had been stronger or had struck in a slightly different location. Taiwan is also subject to political tremors. Just last Friday, the U.S. Defense Department reported that China's military modernization threatens Taiwan. "The Chinese doctrine is moving toward the goal of surprise, deception and shock effect in the opening phase of a [military] campaign," the Pentagon stated in a report submitted to the U.S. Congress on July 12th. "A coercive campaign may seek to deter or punish Taiwan through the sudden application of violence."
The point is not that companies should be frightened away from using suppliers or building facilities in Taiwan and China but that, generally speaking, they should diversify their suppliers in such a way that they're able to quickly adjust supply chains in the face of a crisis, wherever in the world it occurs.
Although Lynn's article focuses on the manufacturing operations of U.S.-based corporations, similar arguments could be made for service operations. The global outsourcing of service and professional jobs became a trend in the 1990s, and some experts predict it will accelerate over the next decade. Countries such as Ireland, Canada, Jamaica, India, and the Philippines absorbed many of the outsourced jobs. Clerical work, accounting, customer support, legal services, software design, scientific research, and pharmaceutical development are all amenable to being handled by countries with lower wages and computer-literate workers. And Russia has recently become attractive as a center for offshore programming, according to Strategic Direct Investor magazine.
On one hand, these trends serve to form ties that bind nations together, creating what politicians and business people alike hope will be a more prosperous and peaceful world. On the other hand, the events of the last year have lent weight to the viewpoint of scholars such as Prof. Stanley Hoffman of Harvard University, who cautions in Foreign Affairs magazine that "globalization is neither inevitable nor irresistible." Hoffman warns that the process of globalization tends to generate its own backlash, fueling resistance to real or perceived economic inequities and to a Western culture that threatens local religions, cultures, and political autonomy. During the 1990s, many business thinkers seemed to underestimate the dangers and difficulties of globalization. Today, a more balanced and realistic estimation might be in order, one that allows organizations to develop business plans that are not only economically efficient in the short run but flexible and sustainable over the long run.
More information on the Pentagon report can be found at
http://www.i4cp.com/fYB9SZ
A 500-word preview of Stanley Hoffman's Foreign Affairs article, "Clash of Globalizations," can be found at
http://www.i4cp.com/cEbLCZ
A link to Strategic Direct Investor can be found at
http://www.i4cp.com/11ggAj
To read how U.S. and European companies are outsourcing service jobs to workers around the globe, please see
http://www.i4cp.com/7HDHHh
Barry Lynn's article, "Unmade in America: The True Cost of a Global Assembly Line," can be found in the June 2002 edition of Harper's Magazine.
So what's the next crisis that could change the global business landscape? One controversial analysis comes from Barry Lynn, the writer of a June 2002 cover story in Harper's Magazine. In essence, he argues that many of today's manufacturing companies are becoming so reliant on global outsourcing that today's economic system – and the U.S. system in particular – could collapse like a house of cards in the face of tomorrow's calamity. He writes, "We now live in a world where a single earthquake, or terrorist attack, or embargo, could in a moment bring [the U.S.] economy to a halt and, if played right by some smart state, might well threaten the very fundaments of [U.S.] national wealth and power."
He notes, for example, that in 2001 almost 90% of the world's computer motherboards were manufactured in Taiwan. Of course, every place on earth is subject to natural or man-made disasters, and Taiwan is no exception. On September 21, 1999, a deadly earthquake caused short-term supply problems for various computer manufacturers, but it could have been much worse if the quake had been stronger or had struck in a slightly different location. Taiwan is also subject to political tremors. Just last Friday, the U.S. Defense Department reported that China's military modernization threatens Taiwan. "The Chinese doctrine is moving toward the goal of surprise, deception and shock effect in the opening phase of a [military] campaign," the Pentagon stated in a report submitted to the U.S. Congress on July 12th. "A coercive campaign may seek to deter or punish Taiwan through the sudden application of violence."
The point is not that companies should be frightened away from using suppliers or building facilities in Taiwan and China but that, generally speaking, they should diversify their suppliers in such a way that they're able to quickly adjust supply chains in the face of a crisis, wherever in the world it occurs.
Although Lynn's article focuses on the manufacturing operations of U.S.-based corporations, similar arguments could be made for service operations. The global outsourcing of service and professional jobs became a trend in the 1990s, and some experts predict it will accelerate over the next decade. Countries such as Ireland, Canada, Jamaica, India, and the Philippines absorbed many of the outsourced jobs. Clerical work, accounting, customer support, legal services, software design, scientific research, and pharmaceutical development are all amenable to being handled by countries with lower wages and computer-literate workers. And Russia has recently become attractive as a center for offshore programming, according to Strategic Direct Investor magazine.
On one hand, these trends serve to form ties that bind nations together, creating what politicians and business people alike hope will be a more prosperous and peaceful world. On the other hand, the events of the last year have lent weight to the viewpoint of scholars such as Prof. Stanley Hoffman of Harvard University, who cautions in Foreign Affairs magazine that "globalization is neither inevitable nor irresistible." Hoffman warns that the process of globalization tends to generate its own backlash, fueling resistance to real or perceived economic inequities and to a Western culture that threatens local religions, cultures, and political autonomy. During the 1990s, many business thinkers seemed to underestimate the dangers and difficulties of globalization. Today, a more balanced and realistic estimation might be in order, one that allows organizations to develop business plans that are not only economically efficient in the short run but flexible and sustainable over the long run.
More information on the Pentagon report can be found at
http://www.i4cp.com/fYB9SZ
A 500-word preview of Stanley Hoffman's Foreign Affairs article, "Clash of Globalizations," can be found at
http://www.i4cp.com/cEbLCZ
A link to Strategic Direct Investor can be found at
http://www.i4cp.com/11ggAj
To read how U.S. and European companies are outsourcing service jobs to workers around the globe, please see
http://www.i4cp.com/7HDHHh
Barry Lynn's article, "Unmade in America: The True Cost of a Global Assembly Line," can be found in the June 2002 edition of Harper's Magazine.