[OPE-L] World Is Not Flat, Academic Says

From: glevy@PRATT.EDU
Date: Sun Dec 16 2007 - 21:12:58 EST

NY Times, December 15, 2007

World Is Not Flat, Academic


(Reuters) - One of the most talked-about books of the last  two years
was "The World is Flat," in which author Thomas
 argued that borders between countries were becoming
less and less

 Now, Pankaj
Ghemawat warns in "Redefining Global Strategy" (Harvard,
$29.95) that businesses suffer when they follow such globalization
logic too far.

The real state of the world is neither
globalized nor local, Ghemawat  writes. It is semiglobalized, and
will remain so for decades to come.

Ghemawat, on
leave from Harvard and visiting professor of global  strategy at IESE
Business School in Barcelona, found that the average  level of
globalization in investments, phone calls, tourism and  immigration
is just 10 percent.

 And some measures, like the
international share of total Internet  traffic, are actually
decreasing. "This calls into question the other  common myth
that even if the world isn't quite flat today, it will be
tomorrow," he said.

He cites Google Inc,
Coca-Cola Co and Wal-Mart Stores Inc as examples  of companies that
have suffered when they tried to treat all the world the same.

Google, whose English-language search engine and
Internet advertising  businesses are explosively successful, has
struggled for market share  in Russia because of a difficult language
and has run into censorship  difficulties in China.

Wal-Mart has failed to replicate its U.S. success uniformly around
the world, and even pulled out of Germany. Its most profitable >
operations abroad are in Canada, Mexico and Britain, places that
according to Ghemawat are culturally or graphically closest to the
United States.

"The point is not that Wal-Mart
shouldn't have ventured into more > distant markets, but instead, that
it needed to think differently  about how to compete in them --
something it is now starting to do in  markets such as India,"
he said.

Under Ghemawat's analysis, Coca-Cola lost
its way as it seesawed  between extreme centralization under Roberto
Goizueta in the 1990s  and excessive localization under Douglas Daft
between 2000 and 2004.

Now, Coca-Cola is attempting
to compete in a way that neither ignores  the differences between
countries nor caves in to their cultures and  customs entirely.
"It recognizes the reality of semiglobalization," he writes.

And, Daimler's purchase of Chrysler was doomed because the
costs of  combining such different companies exceeded the savings, a
point  Ghemawat made at the time.

 "Obviously the world is not yet flat," Friedman replied
in Foreign  Policy magazine. But the evidence of
"flattening" and globalization  is all around.

 "Anyone who thinks that some protectionist
measures are going to put  YouTube back in the bottle ... is blind to
the dramatic changes that  have already taken hold," wrote
Friedman, who is also a columnist for  the New York Times.

For Ghemawat, it is not globalization, but
"semiglobalization" that  accounts for the success of
Japan's Toyota Motor Corp, which has  overtaken General Motors Corp
to become the world's biggest automaker.

anticipates expanded free-trade agreements within the  Americas,
Europe and East Asia, but not across them, according to > Ghemawat.

"This is a more modest -- but also more realistic --
vision in which  neither the bridges nor the barriers between
countries can be  ignored."

Editing by Jeffrey Benkoe)> >

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