Tuesday, July 25, 2006

From "Mini Me" to Globally Integrated Enterprises?

The head of IBM thinks multinational corporations are dinosaurs:

To succeed in this challenging global environment, Palmisano contends, IBM should be the last multinational corporation. Don't panic, Big Blue shareholders: He's talking evolution here, not extinction. In recent essays for the Financial Times newspaper and Foreign Affairs magazine, Palmisano went public with his big-think idea: The era of the multinational corporation is coming to a close. The very word "multinational," writes Palmisano, "suggests how antiquated our thinking about it is. The emerging business model of the 21st century is not, in fact, 'multinational.' This new kind of organization--at IBM we call it 'the globally integrated enterprise'--is very different in its structure and operations." Its many components, from back office to manufacturing to product development, will be dispersed around the planet in a vast network. Failure to adopt this model, he concludes, is not only bad for the immediate bottom line but in the long term will also exacerbate the many conflicts surrounding globalization. "People may ultimately elect governments that impose strict regulations on trade or labor," he warns, "perhaps of a highly protectionist sort. Worse, they might gravitate toward more extreme forms of nationalism, xenophobia, and antimodernism."

You can find the entire US News & World Report article here. The change can produce operational gains while undercutting political support for the antiglobalization movement.

The view that extensive economic ties reduce the chance of military conflict is less persuasive. Economics can be quickly trumped by other considerations. As I recall, France and Germany had strong trading relationships before the Second World War. The North and the South traded heavily before the American Civil War.

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