THE GLOBALLY INTEGRATED ENTERPRISES
Written on 15.21 by Dimas Sugeng Rachmadi
JOURNAL F.PALMISANO
THE GLOBALLY INTEGRATED ENTERPRISES
(REF : GLOBALLY AFFAIR : VOLUME 85 NUBER 3, MAY/JUNE 2006 BY F.PALMISANO)
Corporate Evolution
In its early forms, the corporation was a creature of the state. Governments chartered and sanctioned corporations to perform specific duties on behalf of the nation and its rulers. This changed somewhat during the nineteenth century, when the United Kingdom, the United States, and other countries granted company owners limited liability, and corporations gained a more liberated status as independent “legal persons.” The mid-nineteenth century saw the emergence of what can be called the international corporation. In some industries, corporations used these routes to import raw materials (diamonds, rubber, tea, and oil) and export finished products (chocolate, soap, margarine, and other manufactured consumer goods). A second phase in the corporation’s life began in 1914, with the conflagration of World War I and the subsequent collapse of economies in the United States and Europe. International corporations found their trade-based networks blocked. The spread of protectionism in the 1920s and 1930s led to the rise of tariªs, exchange controls, and other trade barriers. In response, businesses began to evolve into what is today recognized as the mnc. The mnc was a hybrid. On the one hand, it adapted to trade barriers by building local production. American mncs such as General Motors and Ford, for instance, built auto plants in Europe and Asia, thus allowing them to sell to important local markets without incurring tariª penalties. On the other hand, the mnc performed some tasks on a global basis, such as research and development (R & D) and product design. Emerging globally integrated enterprise is a company that fashions its strategy, its management, and its operations in pursuit of a new goal: the integration of production and value delivery worldwide. State borders define less and less the boundaries of corporate thinking or practice.
Global Integration
The shift from multinational corporation to globally integrated enterprise has assumed two distinct forms. The first has involved changes in where companies produce things; the second, changes in who produces them. Until recently, companies generally chose to produce goods close to where they sold them. As a consequence, most foreign investments targeted specific foreign markets.Today, overseas The most visible signs of this change can be seen in China and India. By one estimate, between 2000 and 2003 alone, foreign firms built 60,000 manufacturing plants in China. Some of these factories target the local Chinese market, but others target the global market. European chemical companies, Japanese carmakers, and U.S. industrial conglomerates are all building (or have declared their intention to build) factories in China to supply export markets around the world. Similarly, banks, insurance companies, professional-service firms, and it companies are building R & D and service centers in
India to support employees, customers, and production worldwide. As shared business practices spread, along with shared modes of connecting business activity, companies can hand over more and more of the work they had previously performed in-house (from back-o⁄ce support work, such as invoicing and employee-benefits administration, to R & D, sales, and customer support) to outside specialists.
Systemic Changes
The globally integrated enterprise will require fundamentally different approaches to production, distribution, and work-force deployment. Sustainable competitive advantage has never come only from productivity or inventiveness. Real innovation is about more than the simple creation and launching of new products. It is also about how services are delivered, how business processes are integrated, how companies and institutions are managed, how knowledge is transferred, how public policies are formulated—and how enterprises, communities, and societies participate in and benefit from it all. opportunities and challenges The globally integrated enterprise can deliver enormous economic benefits to both developed and developing nations. The integration of the work force in developing countries into global systems of production is already raising living standards, improving working conditions, and creating more jobs in those countries. Small and medium-sized businesses everywhere, particularly, are benefiting. The shift from mncs to globally integrated enterprises provides an opportunity to advance both business growth and societal progress. But it raises issues that are too big and too interconnected for business alone or government alone to solve. The globally integrated enterprise is a promising new actor on the world stage. Now leaders in business, government, education, and all of civil society must learn about its emerging dynamics and help it mature in ways that will contribute to social, economic, and human progress around the planet.
