Globalisation is a dynamic force in international business. It encourages development of international trade, services and foreign investment. It also thrives on active market activity in the regional spheres as well as local spheres. It is process which combines in its function economic, technological and political forces. In most common term it refers to economic globalisation which implies the incorporation of the national economies and international economies. This is achieved through trade, direct foreign investment, the flow of the capital, spread of technology and the migration of the workers. It also implies removal of political and social barriers to induce greater interaction, integration and productivity.
Lynn, has been a strong advocate of cautious globalisation, in his book ‘End of the Line’, he dissects the anatomical structure of globalisation. He projects the story of several American corporations which are entangled in the network of the global production system. He shows how a traditional factory has multiplied into dozens of branches across the world. He leads us to examine free trade, how free trade has made American citizens depend on the goodwill of many different people and places across the borders of the American national boundaries. He also addresses the issue of how executives and entrepreneurs at companies like General Electric, Cisco, Dell and Microsoft have introduced new ways of adaptation to the companies which have branched off in various parts of the world. He believes that these executives are driven by ideology rather than long term safety and benefit of the society at large. He also points in the light of the global exposure to the fact that global system becomes more and more susceptible to the impacts of the rising terrorism, war and disasters of nature. He draws out attention to the lurking dangers which are inherent in the fragile structure of globalisation. He tries to show us that globalisation is a great force which induces prosperity and promotes peace and harmony with the intertwined structure of interdependence, but this is possible only if one masters the complexities of globalisation and approaches it cautiously, in a way that protects and advances one’s national interest.
He has very judiciously, addressed his strong stance on the debate related to outsourcing. He merges with the story which supports with clarity and originality his exposure in the context of political decisions which can potentially infuriate political extremes. He presents in a very forthright manner which is appealing to the citizens and confirms their concern regarding loss of US autonomy in the context of economic decisions. He points to how fragile the system is dependant on the global production system. He urges citizens to wake up and be active in doing what needs to be done to avoid any catastrophic failure in the connection of global system. He addresses the fact that today’s outsourcing has created something which is very new, and something outside all previous experience as a nation. It has encouraged global communication and transport revolution, which have evolved in the past few years to enable “companies to hire suppliers located not simply on the far side of the town or far side of America but on the far side of the earth.”(Lynn, 2005).According to him this opening of the new dimension gives rise to the new global system which has been lurking with dangers, which are not in favour of American citizens and to the world.
Lynn has given a sobering wake up call to direct our attention to the limits and traps of globalisation. He points to the fact that American companies have become excessively dependant on China, India and other manufacturing based companies. It is important to identify the nature and the degree of this dependence. He highlights the attention to the over outsourced economy. He points to the fact that in the present situation we depend largely on other countries to get the work done. This has its own complexity. This dependence is fine as long as harmonious relationship exists economically and politically. Any conflict between the two nations can have disastrous and devastating impact economically than has ever been imagined. It is also interesting to evaluate critically that nation’s mutual economic dependence on the same system of production does not guarantee peace. America depends intimately not only on China, but on many widely located unstable regions like Korean Peninsula, the Indian Subcontinent, the Middle East and few countries on the periphery of Europe.
The focus given the dangers of outsourcing at such a large scale has its inherent lurking catastrophes like a problem or a natural disaster in a remote province of China has the capacity to put large part of American electronic business in trouble. There is potential threat that they can go out of business. There is lack of foresight in the decisions and the visions of the business leaders who are mostly focused on the next quarter bottom line results and overlook the dangers which are presented if they lose their control supply line. There is also the impediment posed by the national security restrictions and regulations which needs to be taken into consideration. The general public needs to be made aware of these existing dangers which lurk under the surface of prosperity and peace. The integration is at the cost of unpredictability and catastrophe which is not completely under control. The objective should be to boost the control line.
Another factor which emerges on the scene is the evaluation of the benefits, dangers and the inevitable global competition. These three are the central forces which shape the economic and the social structure of America in the light of globalisation. He urges the citizens to look into the example of 1999 earthquake scenario in China to make clear choices regarding the future decisions of their country. The story of 199earthquake which devastated Taiwan and had its rippling impact on United States and other parts of the world is the classic case. The earthquake toppled buildings, knocked out electricity and killed 2,500 people. Interestingly within hours and days of the disaster factories which were located in California and Texas began to close. These factories were cut off from their supply of semiconductor chips which impacted companies like Dell and Hewlett Packard, which began to secure assembly lines and send workers home..(Lynn, 2005) This kind of disaster if it had happened a decade earlier would have just had local impact on lives and businesses. But this disaster had its impact cascading into serious global crisis. The story of the quake instantly illustrates how closely linked the world has become and there are serious and calculated risks of very different nature which one normally anticipates. The risks which we face now are new and dynamic with very complex characteristics. This needs to be understood and taken into consideration in the wake of globalisation. The intricate web of dependence is very delicate and complex.
Berger makes an interesting note that more than two million jobs disappeared from America between the year 2001 and 2004, in which half a million has been in the high tech industries alone. Berger, has also pointed to the rising fear that no American job is safe from the competition of the low wage countries. The power of cheap labour has been the lurking fear shadowing the American economy. Cheap labour is very demanding and dominating in the context of decision making for profit both in services and manufacturing. It is also interesting to observe that previously jobs which did not fall under this category are now outsourced for profit and benefit to the management. Jobs in the field of finance, market research, industrial design, computer system design, paralegal research, reading X-rays, textile and manufacturing and many others are growing in the list of outsourced jobs. This trend is risky. This calls for very delicate balance and understanding between the two companies and the nations. This new and intimate interdependence has been established in the name of success and efficiency.(Berger, 2005).
The nexus of today’s global economy is highly based on interdependence and networking. Business men know that problem in one part of the continent can impact the whole chain of performance and specifications cannot be met. Any severe disruption of commerce in one place would impact and cause economic damage on a scale which would be greater than most conceivable terror attack. The specialization and concentration of the production system would impact all areas of performance be it semiconductors, automobiles, medical devices or aerospace.
The present economic crisis is the live example of such phenomena where the intricate balance and collapse of one economy has widespread impact on other parts of the world. Unfortunately in this case the collapse of the American financial structure has led to collapse of the stock market worldwide and has had it’s rippling effect on the financial systems of the world. The Americans are feeling the crunch of the economic breakdown in the form of unemployment and failing economy. Many people have come to fear that no job is safe. In almost every aspect of existing industry it has been observed that jobs have moved from America to low wage countries. This has touched every sphere of economy and industry from garments to semiconductor, engineering services to call centres. The production process is now a network of well connected value chains stretching around the world.
Global production has vastly increased the efficient use of resources worldwide. Their dominance is the model of production. But this efficiency in production is overcast by the lurking shadow which questions the integrity and the stability of the company. The creation and emergence of this production system is not prudent, as it can lead to uncontrolled and haphazard results. There is great threat when globalisation and outsourcing are combined with an entire lack of regulation from the government. Lynn has confirmed in his evaluation and affirmation that the fragility of these single sourced production system should be addressed seriously, he emphasizes that any number of factors can lead to “cascading economic breakdowns, from causes that are often all but impossible to conceive until the moment they hit”(Lynn, 2005).
Bibliography
Berger, S. (2005) How We Compete: What Companies around the World are doing to Make It in Today’s Global Economy, New York: Doubleday.
Hirst, P. and Thompson, P. (1999) Globalization in Question, Cambridge: Polity.
Lynn, B. (2005) The End of the Line: The Rise and Coming Fall of the Global Corporation, New York: Doubleday.
Rugman, A. (2000) The End of Globalization, London: Random House