The TransAtlantic Partnership’s Implications for U.S., E.U. Economies summarizes coverage of the EEC International Conference—Talking with the Ambassadors of the World’s Largest Trading Relationship and the CEOs of Four Global Enterprises.
 Three eminent diplomatic leaders and CEOs from Baxter, Financial Dynamics, ITW and Philips briefed Midwest executives on the current status and future directions of the world’s largest trading relationship at the Executives’ Club of Chicago’s International Conference November 15. The half-day program featured several presentations, a CEO panel and a media round table. All speakers sought to impress upon the audience the pivotal importance of the transatlantic alliance for the United States and Europe, and most warned chief executives neither to take it for granted nor to be passive in the face of rising protectionism.
The fact that the importance of the E.U.—U.S. alliance had to be emphasized brought into sharp relief the relatively sudden rise of Asia as well as the shift from the Industrial Economy to the Knowledge Economy. Both megatrends pose opportunities and threats for the world’s largest economies and enterprises, and […]
Part of the IDC Outsourcing Forum Midwest Report
 The Williams Companies is a Fortune 200 energy company that currently distributes 12% of all the natural gas consumed in the United States and is a major employer in Tulsa, Oklahoma. Marcia MacLeod, Vice President of Business Process Outsourcing, and Karen Caldwell, Director for Energy & Utilities at IBM, explained how the company pulled a Houdini in the early 2000s, using outsourcing to survive a near-death experience in which its stock dropped from $48 to less than one dollar. This case reflected outsourcing’s potential in dramatic turnaround situations while confronting some outmoded stereotypes about its impact on local employment.
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The Silver Lining in India’s Infrastructure Gap posits that India’s poor infrastructure face force it to develop more lucrative Knowledge Economy assets.
India is often described as a mixed proposition with respect to its future promise. Although few would question its brilliance as a “burgeoning technology economy,” most people temper this with somber remarks about its lack of “infrastructure.” However, I will argue that India’s limitations with physical infrastructure will actually help India get further ahead than if it didn’t have such problems.
In the popular view (see Indian Raj and its quote of The Houston Chronicle), India’s technology expertise, language skills and legal sensibilities are its trump cards, but this is compromised by its lack of roads, transportation of all kinds, network infrastructure, electricity, and so on. High tech companies have to build their own generators and network infrastructure, and leading providers have created islands of world class capability to assure their global clients that they don’t depend on the country’s infrastructure. China, on the other hand, is generally seen as a paragon of world-class infrastructure, especially physical infrastructure. Woe is India.
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Insight about Human Resources in China featured speakers with decades of experience on the ground in China and offered surprising experiences. The GSB (Booth) International Round Table hosted two Asia and cross-cultural experts 16 February 2006 at Gleacher Center, “Human Resource Challenges for Multinational Corporations in China.” As is my custom, I will summarize the salient facts of the session first, which will be followed by my analysis.
This discussion was led by Deborah Lauer, former VP Global Talent Supply at Motorola who spent six years in China, and Jeffrey Reed, a 20 year veteran of Asia who headed up Unilever-Best Foods joint ventures in Pakistan and China. The talk focused on MNCs’ (multinational corporations) human resource challenges in China, both from expatriate and local talent perspectives. Many of the ideas presented corresponded to the ITA Round Table led by Dr. Wolfgang Fürniß (see China: The New Economy).
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The End of Corporate Imperialism, by C.K. Prahalad and Kenneth Lieberthal, encapsulates the obvious elegantly and factually, and its thesis is far more true today than in 1998, when it was written: “Too often, companies try to impose Western models of commerce on developing countries. They’d do better—and learn more—if they tailored their operations to the unique conditions of emerging markets.” Western MNCs (multinational corporations) perceive the primitive state of consumption in emerging markets, and they too often develop a strategy in which they: 1) focus on the extreme minority of wealthy consumers and/or 2) address the order of magnitude larger middle tier of the market by offering their past-mature products with minor cosmetic changes.
This is another symptom of MNCs’ being stuck between industrial and knowledge economies. As I stated in my Transourcing Point of View, “Enterprises are ambivalent about innovation and product creation because they represent an inherent conflict: the drive to amortize past investments (including process-oriented constraints of marketing, distribution, service, etc.) conflicts with companies’ need to satisfy customers’ wishes for novelty. In practice, this too often leads to vapid product extensions.” The industrial-era enterprise derived its competitiveness largely through production and distribution efficiency, and it marketed […]
At the MIT Enterprise Forum’s Innovation and Technology Forecast in Chicago Tuesday, there was significant discussion about China’s growth and what that would mean for innovation in Illinois. Many speakers also made references to the importance of catering to knowledge workers. Chunka Mui, Dan Ratner, Geoffrey Kasselman and Jerry Mitchell were panelists, and Jerry spends significant time in China. His admiration for what is happening in China was contagious and triggered the train of thought here.
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Rare Legal and Business Insight into Offshore Countries and Regions describes Baker & McKenzie’s excellent webcasts focused on offshore business.
Depending on your business strategy, it may make sense to explore offshoring to several regions of the world to mitigate the risk that your partner might be affected by natural disasters or political upheaval. In fact, many offshore experts recommend a portfolio strategy for risk mitigation or operational effectiveness (follow the sun operations can reduce time to market) while meeting cost objectives.
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The United States is a unique country in many ways, notably in its collective, pervasive idea of the “immigrant” experience. As everyone learns in Civics class, the majority of Americans immigrated to the U.S. within a relatively compressed time frame in order to gain economic, religious or other freedoms that they did not have at “home.” Moreover, the land was new, with only emerging cultural ideas and structures to impose themselves on the new arrivals. The immigrant experience was pervasive because the number of immigrants compared to the number of U.S.-born citizens was high during the 18th and 19th centuries. The immigration experience was therefore formative in the U.S. culture itself.
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The Emerging Global Labor Market: Don’t Panic! calls out leading research from McKinsey Global Institute on global development of many industries.
When the U.S. saw manufacturing companies move significant operations offshore during the 80s and 90s, most people were unhappy, but many understood that certain industries were maturing, facing global competition and price pressures. Consequently, they were forced to remain competitive through lower labor costs. However, as awareness of IT offshoring spread in the context of the Tech Bust in the early 2000s, it sent a chill of fear up and down the collective spine: “How could the high tech juggernaut be outsourced and offshored? Would this development prevent its recovery?” Noisy gnashing of teeth, protectionist legislation and demonstrations. The longer term question was:
As “the world” graduates many more engineers, MBAs and scientists than does the U.S., will they threaten the employment of U.S. high value professionals?
That’s an excellent (and important) question. The McKinsey Global Institute (MGI)published a significant study in June 2005, The Emerging Global Labor Market, in which they reported results of an in-depth analysis of the supply and demand of offshore outsourcing. In short, they found that:
Offshoring will create a “relatively small” global labor […]
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