Building-Managing a Business without Borders– Borderless Global Business: World is Flat… Baloney, Borderless is Myth…

Borderless business–‘world is flat’: Three primary changes at the dawn of the 21st century are the keys to the changing world. One, addition of China, India, the former Soviet Union and other countries with a combined population of 3 billion to the global world economy…

Second, technological changes such as the Internet that have made distance less of a factor. Third, shift from hierarchical, vertical power structures in business and government to democratic, diffuse ones in which it is easier for individuals to make their own destinies.

This triple convergence– new players, new playing field, new processes and habits for horizontal collaboration – are the most important forces shaping global economies and politics in the early 21st century… ~Tom Friedman

 

Borderless business: Building and managing a value system that emphasizes seeing and thinking globally is the bottom-line price of admission to today’s borderless economy. On a political map, boundaries between countries are as clear as ever. But on a competitive map, map showing the real flows of financial and industrial activity, those boundaries have largely disappeared. Eaten away by persistent and ever speedier flow of information.

According to Kenichi Ohmae; today people everywhere are more able to get information they want directly from all corners of the world. They can see for themselves– tastes and preferences in other countries, styles of clothing now in fashion, sports, lifestyles… Major changes in communications and information technology, rapid progress in transportation, active international institutions, trade agreements, commitments to globalization… have resulted in significant economic-financial interconnection between nations and markets, which in effect creates ‘borderless world’.

Capital investment, technology, information– do not have nationalities anymore; they flow, essentially, freely in-out through national borders… A recent study by ‘Hackett Group’– involving nearly 200 executives representing companies in U.S., Europe, Asia-Pacific– found that most companies fully realize that growth is no longer limited by physical borders… the globalization of business functions is, in part, driving the increasing need for knowledge about– customers, suppliers, employees, operations…

Certainly, globalization has detractors, but for today’s business leaders, the issue is not to debate the merits of globalization but to learn how to thrive in the global marketplace.  The winners in this ‘new normal’ for business won’t be those with the biggest offices or the most radical architecture, but those that keep a firm eye on the bottom line, while remaining open to the possibilities of new business and organizational structures underpinned by managed technologies…

In the article Borderless Business: Pros and Cons by Steve Purdy writes: Conducting business is becoming increasingly more global as technology, mobility and revenue opportunities in emerging markets are tempting enterprises to expand into new markets in order to reach new customers. While the world continues to face well-documented economic challenges, from austerity measures in Europe, to the sluggish recovery in the U.S., and from inflation concerns in Asia to geopolitical instability in the Middle East, going global can deliver a new avenue for prosperity– despite the current climate.

According to HSBC; world trade is predicted to grow by 86% in the next 15 years as global markets boost their demand for traded goods. The global economy presents immense opportunities for investment and commerce, and with the right focus and commitment, businesses can succeed in the global marketplace… Selecting a new market for a business operation requires balanced consideration of many factors, including; personnel, costs, legal and regulatory concerns…

New technology underpins regulatory best practice around the world, and as emerging markets improve their technological infrastructure they are increasingly becoming revenue opportunity markets for the global business community.  In addition to a local market presence and strong technology platform; a critical key driver fuelling globalization is the top-tier talent pool that can be found in developed and emerging markets.

A flexible work strategy, which gives workers access to a professional workplace when needed, has been shown to increase productivity and work-life balance. A recent World Bank Report found that more countries are implemented business reforms to make it easier for overseas firms to trade with them… Emerging markets in Africa and Asia showed particular improvement in terms of business regulations, construction permits and easing the administrative burden of tax compliance.

Being able to deal with the local legal and regulatory red tape should be top priority when a business is looking to expand into a particular market. Businesses should be looking for transparent and predictable legal and regulatory rules that are conducive for businesses. Reductions in corporate income tax for certain markets have helped increase ability to attract business from foreign countries. Businesses without borders are reshaping the global economy…

In the article Globaloney–Myth of Borderless Economy by Ian Fletcher writes: We live in a borderless global economy, and to dispute this is to risk being considered, not simply wrong, but ignorant. Yet this widely held belief does not survive serious examination when we get down to the hard numbers… The world economy remains what it has been for a very long time: a thin crust of genuinely global economy (more visible than its true size due to its concentration in media, finance, technology, and luxury goods) over a network of regionally linked national economies, over vast sectors of every economy that are not internationally traded at all…

On present trends, it will remain roughly this way for the rest of our lives. The nation-state is a long way from being economically irrelevant. Most fundamentally, it remains relevant to people because most people still live in the nation where they were born, which means that their economic fortunes depend upon wage and consumption levels within that one society…

Capital is a similar story: Capital cares very much about where it lives, frequently for the same reasons people do. (e.g., few people wish to live or invest in Zimbabwe; many people wish to live and invest in California)… Although liquid financial capital can flash around the world in the blink of an eye, this is only a fraction (under 10%) of any developed nation’s capital stock. Even most non-human capital resides in things like real estate, infrastructure and types of financial capital that don’t flow overseas, or don’t flow very much at all.

As a result, the output produced is still largely tied to particular nations. So although capital mobility causes big problems of its own, it is nowhere near big enough to abolish the nation-state as an economic unit. Will it do so one day? Unlikely. ‘Inevitable globalization’ is a catch phrase that doesn’t accurately describe current trade, economic or political reality…

In the article Challenge of Change in Borderless World by John Psarouthakis writes: Fifty years ago the U.S. with 27% of world’s gross domestic product (GDP) was the world’s economic power. The ‘poor’ countries of the world, such as; India, China… were barely making 4% of the world’s GDP each. Now let’s jump ahead in today’s world. Let’s look at the state of the economies about 50 years later and see what changed: The U.S. portion of the world’s GDP has dropped to 22%, whereas ‘poor’ countries of 50 years ago are growing at a rate, such that, in another 20 years or so, their economies will surpass those of the U.S., Western Europe, and Japan together.

However, companies, today, still run business using traditional models that are no longer effective in the rapidly changing and high-uncertainty global marketplaces. For example; traditional business planning is based on ‘world of high-certainty’ and achieving specific business performance goals, numbers… In contrast, today’s marketplace reality is ‘world of high-uncertainty’ where there simply isn’t enough accurate information-knowledge to predict, with any degree of certainty, what business performance goals, numbers… might be achievable. 

While further insisting that management stick to the traditional rigid business plan with expectation that the business will– make numbers, deliver earnings… However, this can be dangerous commitment to a flawed business strategy with unrealistic goals when underlying business logic-strategy may have shifted. An argument that is central to modern business thinking is the need to use different disciplines when operating in an environment where there are many more uncertainties-assumptions– than there is knowledge.

Then, one must think ‘out of the box’. In such a world, forget about a short-lived, often meaningless ‘competitive advantage’… it’s a concept built for 20th century. In 21st century, there is nothing more asymmetrical– more disruptive, more revolutionary, or more innovative– than the world-changing power of an ‘idea’. Where are the ideas in your organization? The breath of impact of today’s rapid change including; sophistication of communications, greatly broadens the number of people, globally, who know something about and will be affected by new ideas.

As a result, we are closely interrelated with and more interdependent on other people than ever before. Therefore, each of us, whatever our role, must be more aware of other people, globally, as we initiate and adopt change…

Let us imagine, a borderless world: A world where borderless means: People can move from one place to the other without Visas. Goods and services can be bought and sold without import/export duties. Education is free (at least basic education). People would be free to do what they want to do (lawfully)…

According to Pravin Koshti; the leading economic ‘-isms’ and many spiritual/religious ‘-isms’ have been trying to do that for years. The economic ‘-ism’ are capitalism and socialism: Socialists want it by making a world a single big society where everyone is working for the society… Capitalists are trying to do it through single-minded profiteering… But until now, the results are mixed at best. USSR (Russia) failed, and is becoming more capitalistic, China is becoming more capitalistic, U.S. is walking on the way to become more socialistic…

But, is there a middle path where these ‘-isms’ can work together: Some people think– yes, and other say– impossible. But ‘what if’ the world was unified in different ways: For example;  ‘what if’ we really become an educated world, without politics, without divisions, without borders… and removed egos, greed… would that facilitate a kinder and gentler– borderless world?