Globality - History

History

Yergin’s chief distinction between globality and globalization is conceptual – he says that former is a “condition” while the latter is a “process.” He describes globality as the end-state of the process of globalization:

The borders that constrained commerce―but also protected companies from the full brunt of competition―are eroding. Governments are retreating from control of the commanding heights of their economies: they are privatizing and deregulating. Barriers to trade and investment are coming down rapidly. Ever-cheaper communications and ever-faster computers, along with the Internet, are facilitating the flow of goods and services, as well as knowledge and information. Increasingly, companies are integrating their global strategies with global capital markets.

In their book, Sirkin et al. (2008) focus on the business conditions that emerge – and the challenges for management – once the state of globality is established. They distinguish globality from globalization based on the emergence of a new set of competitive dynamics between established leaders from developed economies and challenger companies from developing economies. With respect to global business, they argue that the three fundamental characteristics of globalization were these:

1. Established industry leaders―known as “incumbents”―from the developed economies of the United States, Europe, and Japan – relocated their manufacturing activities to developing countries in order to lower the cost of production and, accordingly, reduce the price of their goods offered in their home markets.
2. The incumbents also began to sell their offerings―usually with few if any modifications for local consumers―into the low-cost markets and enjoyed incremental sales gains, as the consumer economies began to grow in these countries.
3. Local companies in developing economies acted primarily as suppliers, jobbers, and local distribution partners, to these established industry leaders.

In this traditional model of globalization, the flow of commerce was predominantly from West to East and followed established Western business practices.

According to Sirkin et al., globality is a totally different kind of environment – one in which the competitive landscape has changed dramatically. In today’s new phase of worldwide trade and economic development, companies are “competing with everyone from everywhere for everything.” And while there is no ultimate model for success, no surefire strategy for innovation and growth, emerging-market challengers have evolved new management and governance structures that are ideally suited to this new competitive reality.