The new global economy: Bracing for the wave
WHAT DO U.S. biotech star PE, Hong Kong construction company Shui On Holdings, and Italian family-run gourmet product business Jada Selezione have in common? These and other companies surveyed in this special report are using information technology to grapple with and profit from a world made smaller and more competitive by globalization.
Anyone in business who is not considering the impact of globalization or the increasing integration of the world's economies will have to deal with the inevitable soon enough. A global economy clearly creates the potential for business outside of the United States, but globalization also affects domestic strategy. World economic organizations have monitored global business for decades and the results are in: A host of indicators point to a surge in the internationalization of business, and IT is integral to this trend and the relative opportunities.
Exports of goods and service are increasing, especially relative to gross domestic production. Cross-border investment flows and foreign ownership of countries' manufacturing bases are growing, and political barriers to trade, although the subject of bitter international debate, are slowly crumbling.
"Recent trends on strategic alliances and cross-border mergers and acquisitions in fact look very similar, an indication of common trends in firms' responses to globalization and technological change," according to the Measuring Globalization report from the Paris-based Organization of Economic Cooperation and Development (OECD), comprising 29 industrialized countries worldwide.
The value of cross-border mergers and acquisitions, for example, grew sixfold from 1991 to 1998 from $85 billion to $558 billion. From 1990 to 1999 the number of international alliances (including sales, marketing, and development agreements) rose from just over 3,000 to almost 60,000, jumping 40 percent in 1999 alone, the OECD reports.
"A regional or local business may find that they suddenly have a whole world out there that can be a direct competitor," says Andrew Muir, managing director at Cyveillance International, in Horley, England, which tracks Web sites for the purpose of competitive analysis for businesses.
A local U.S. building-materials company, for example, may suddenly face a new Asian competitor -- consider Shui On of Hong Kong. Eighteen months ago, construction material manufacturer and real estate developer Shui On had operations in China and, in a stab at international business, was building a residential complex in New York. Since then it has recognized the potential of the Internet, and has started selling its construction materials to companies worldwide over the Net. "Without the Internet there is no way we could start up a business like that," says Shui On Chairman Vincent Lo. "It's the best tool available to market to the world."
The revenue the company generates from its new international business also helps bolster
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