• Marketing Manager
• Sales Manager Australia -...
• Technical Consultant / Analyst
• IT Manager / Systems Administrator
• BUSINESS ANALYST / IT PROJECT...

What is Australia's place in a borderless world?

Sheryle Moon, Information Age

17/06/2007 20:30:22

When IBM chief executive Sam Palmisano called on major corporations to become "globally integrated enterprises" last year, some companies believed it sounded the death knell of the 20th century multinational.

While some historians trace the multinational back to the days of banking under the Knights Templar in 1135, the structure we know today emerged when nineteenth century firms set up sales offices abroad to gain access to local markets and resources, with big business establishing mini versions of itself across the globe.

And for decades, it was a very successful model.

However, what looked like efficiency has become redundant. Multinationals simply replicated or duplicated their businesses in every country. Each multinational outpost developed its own models for distribution and supply chain optimisation, procurement and marketing.

And while these corporates traditionally built factories overseas, they tended to base high-end functions such as research and development in their home countries.

With technology dismantling geographical borders, the goal of world-class and sustainable competitive advantage can no longer be achieved in isolation. Everything is connected, the barriers that once blocked the flow of work, capital and ideas are diminishing and work can move to the place where it is done best.

New model corporations, built on collaborative innovation, integrated production and outsourcing to specialists, are beginning to reshape geopolitics, trade, leadership, workforces and education. Big business has realised that a more integrated approach to organising business activity is inherently more profitable and benefits both developed and developing worlds.

Today, the globally integrated enterprise can locate functions anywhere in the world, based on the right cost, skills and environment. IBM now has more than 50,000 employees in India and plans for further expansion there. And while India is now IBM's second largest operation outside America, head of procurement has moved from New York to Shenzen in China.

China and India are already moving up the value-added chain. One study suggests that between 2000 and 2003 foreign firms built 60,000 manufacturing plants in China. While some of these factories are directed at the local Chinese market, others target the global market.

The shift from multinational corporation to globally integrated enterprise has meant the "where" and "who" of production have changed. In the past, companies usually produced goods close to the market that purchased them. Today, enterprises are spreading strategies, production capacity and management around the world in order to be close to markets and customers.

Dutch banks open savings accounts for customers in New Zealand. American radiologists send x-rays to Australia for interpretation. Customer service centres in India handle telephone billing enquiries for English customers. Around the globe, economic activity is embracing shared business and technology standards and plugging into a truly global system of production.

The next generation marketplace - with the convergence of applied artificial intelligence, super fast networks, wireless systems, supply chain engineering, business process change and real-time communications - will require organisations to ask the hard questions to determine their core competencies, strategic positioning and corporate identity.

They will also need to ask questions about what they outsource to other enterprises to capitalise on the connected network of organisations all working in their core competency and delivering accelerated innovation and delivery execution for the marketplace.

The enterprise will come to think of itself not as an organisation but as a network, and not just a network of technology but also a network of people.

Of course, it is the Internet that has given rise to a marketplace without borders. In the not-too-distant future, supply chains will possess the super efficiencies of knowledge management and customer data mining, and will be linked to marketplace-to-marketplace commerce. AI enabled decision support systems will be deeply personalised, connecting vendors, suppliers and producers to an elegant network of commercial efficiency for customers.

Real-time anywhere wireless communications will explode competition and open markets worldwide. New marketplaces will revolve around one minute product offers, predicative demographics, Internet product development polls and other Net-economy innovations. Prices will become highly elastic, moving targets based on the conditions of the moment.

It will be an exciting time for those businesses agile enough to capitalise on fluid flexible markets and a dynamic and digitally cash-ready customer base.

But are Australian companies ready to navigate the changes the borderless world will have on business?

Australian business leaders across the spectrum of industry - from technology to tourism and from mining to manufacturing - need to decide on our nation's value proposition. Is Australia just about beer, prawns and sunny beaches or do we need a more sophisticated value proposition to compete on the world stage?

We must remember that "globalisation" is a new term for a very old process that began when our human ancestors, with aspirations that were worldwide in scope and application, moved out of Africa to the four corners of the globe.

With any such journey there is a risk and we are just beginning to understand how to reap the benefits and manage the risks that are inherent when we undertake these journeys.

Australia's business leaders must be ready to face a complex set of unknowns never faced before. AIIA is gathering innovative thought leaders from around the world to explore the emerging corporate identity and provide solutions for Australian companies negotiating a new global business model.

The shift from MNCs to globally integrated enterprises provides opportunities to advance the interests of both business and society. But it raises many complicated and interconnected issues that we must resolve together.

Sheryle Moon is CEO, Australian Information Industry Association