The Lexus and the Olive Tree: Understanding Globalization by Thomas L. Friedman

Author:Thomas L. Friedman [Friedman, Thomas L.]
Language: eng
Format: azw3, pdf
Publisher: Farrar, Straus and Giroux
Published: 2000-06-15T04:00:00+00:00

How Good Is Your Country or Company at Making Friends?

We have moved from a world where everyone wants to go it alone—where the rugged individualist is the executive role model and the vertically integrated company that does it all is the corporate model—to a world where you can’t survive unless you have lots of allies, where the Churchillian alliance maker is the executive role model and the horizontally allied company is the corporate model.

In a global economy, you cannot survive in certain industries unless you are able to compete on a global basis and you cannot do this without alliances. It is easy to see why. In a number of industries, such as semiconductors, aerospace, telecommunications and pharmaceuticals, notes Stephen J. Kobrin, the Wharton School expert on globalization, “the scale of technology has grown to the point where even industry leaders may not have the resources to mount a competitive R&D effort alone, given the enormous costs involved, the uncertainty of outcomes, and, importantly, shortened product life cycles.” Also, the sheer amount of scientific and technical knowledge required to develop certain complex products in today’s world increasingly requires several firms to pool their resources. Moreover, the only way these firms can ever recover their huge investments in research and development is by selling not just to their national markets, which are too small, but to the whole wide world, and this also requires allies. This increased pressure for alliances, concludes Kobrin, “is one of the features of this era of globalization that is not only new in degree but also new in kind. It is one of the features subtly knitting the world together, and promoting more globalization, in ways that are not always apparent.”

Alliances are not mergers. They involve two companies keeping distinct identities, but agreeing to work together in a very intimate way, and they are now forming all over the world at a pace never seen before. One place where alliances are most obvious to the naked eye is in the airline industry. Look at the ads for the “Star Alliance”—which is an alliance of six airlines to book seats on one another’s flights, through reservation code sharing, and to honor one another’s frequent flyer programs. This enables the member airlines, by partnering, to offer their customers one-stop shopping for travel anywhere on the globe. They know that in today’s world they have to be able to offer such service, but they can only do so through an alliance, because no one of them could possibly cover the world alone. Their ad shows an elongated airplane in which the nose section is from United, the front cabin Air Canada, the midsection SAS, Varig and Thai Airways and the tail section Lufthansa—all next to the revealing headline: “Star Alliance: The Airline Network for Earth.” And now who’s their competitor? Another airline alliance, of course. It’s called “One World,” and its ads boast: “Now you can look forward to recognition on seven of the world’s finest airlines. With access to even more lounges.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.