by Kent Brittan

It is difficult to pick up a newspaper these days without seeing a plethora of articles dealing with one aspect or another of globalization. Virtually all of these articles are written by observers of the phenomenon and reflect a view from the “Outside In”, that is, the current and forecasted future state of affairs as the observers see it. This information is often interesting, but does not usually explain why things are happening. Nor are the comments detailed enough to be useful to those whose companies are directly impacted by globalization and which seek guidance as to what to do. This paper proposes, therefore, to give a perspective about globalization by some leading practitioners who have been deeply involved in the entire decision-making process companies use when thinking about the new global environment. Bob Moffat, Senior Vice President, Integrated Operations of IBM, Mike Eskew, CEO of UPS, Keith Nosbusch, CEO of Rockwell Automation, and Carmen Castilloof SDI, have joined me to give a view from the “Inside Out”. The objective is to make it clear that large companies are navigating their way in the world of today with a different mindset and using a disciplined set of processes to make the right choices. Seeing globalization from this perspective will hopefully be useful to the supply base of large companies, and in particular, to women and minority-owned businesses in their effort to keep up with their customers.Major Forces at Work
Thanks to all the media attention and what the world’s shoppers see in their stores on a daily basis virtually everyone on the planet has a basic understanding of what globalization is all about. In some quarters globalization is seen as the principal force of the 21st century. But despite having received most of the attention of the media, globalization is not the only unprecedented major change in the world. There are others.The Aging Population
The first of these forces, for which there exists absolutely no historical record (other than Methuselah in the Bible), is the extension in life-span and an ever-growing number of older people in the developed world. This “aging population” in the major economies, including China, is placing a strain upon governmental and business resources to maintain promised health care and pension benefits that are reaching massive proportions. The environmental and other socio-political impacts of the demographic shift to the right are still unpredictable, as we are only in the early stages of this transformation. It is surprising that the developed world is only now waking up to the full magnitude of the potential problems to be faced, even though these demographic trends were apparent thirty years ago. We can safely say, however, that this huge social burden is occurring at the worse possible time for the G8 countries, most of which are trying to cope with the transfer eastward, that is to say, the “globalization”, of portions of their manufacturing and service industries with the potential of a resulting decrease of their tax base. A good example of the globalization trend meeting the aging population is the dramatic growth in low cost medical services for Europeans in Asia and the creation of a “medical tourism” industry as we speak.

The Increasing Power of Women
Another major current metamorphosis of society currently going on, and equally unprecedented in world history, is the transfer of power to women in virtually every walk of life. Again, this structural shift of control from male to female is in its early stages, but, like the demographics above, the educational statistics for enrollments and test scores in schools are a good guide as to the future. What is of particular interest for us in this project is the rapid rise of women in business. Women-owned businesses in the USA grew at a 42% rate over the last decade or about twice that of all firms. About 40% of all American businesses are more than 50% women-owned (Source: Center for Women’s business Research). An article in the Financial Times (October 2, 2006), pointed out the huge contribution of women to the increase in GNP of the large industrial countries over the past years. The growth of the female workforce, now at two thirds of the women working age in the United States versus one third fifty years ago, has thus far compensated for lower birth rates and the negative demographic effects of the aging population. Similar female employment statistics are found not only across Europe but in South East Asia as well. To the extent that this transfer of power is accompanied by female entrepreneurs seizing the opportunities created by globalization will make this phenomenon all the more powerful. The Economist (from the Financial Times article) has concluded that this increase of women in the working population has contributed more than China to the growth in the world’s GNP.

Environmental Changes
Another major unprecedented force is the environment, namely climate change, which is finally receiving the attention it deserves. Politicians are using global warming as a platform plank in their campaigns and corporations are seriously addressing the issue of sustainability. More importantly Earth’s population is beginning to feel uncomfortable on an individual basis with the changes in weather patterns that each person can observe unfiltered by news analysis. The recent Stern Report in Great Britain predicts a far shorter time frame for the effects of climate change to occur .The report also gives a startling estimate of the cost of remedying the environment, and the resulting significant negative impact on the GNP of the major economies. But not all the news about climate change is necessarily bad for business. Many new industries will be created; others will have to reinvent themselves. All of these opportunities are in front of us, as very little has been done thus far to avert a change in the climate.

While the subject of this review is globalization, it important nonetheless to keep in mind these other trends because they are interdependent and will be continually impacting and molding one another in numerous and unpredictable ways in the years to come. The other day I attended a globalization seminar where the speakers were all economists. Virtually the entire morning was spent trying to evaluate which periods in economic history could best tell us about the probable future. Fortunately, during the Q & A someone in the audience suggested that perhaps the unprecedented forces operating at this time make economic history obsolete.

Appendix
Biographies
Kent Brittan, former chair, United Technologies International Operations
Carmen Castillo, CEO, SDI
Michael Eskew, Chairman and CEO. UPS
Robert Moffat, Senior Vice President, Integrated Supply Chain, IBM
Keith Nosbusch, CEO, Rockwell Automation