Sunday, May 29, 2016

Globalization and Rebalancing

I am in complete agreement with the article that “What Happens Next? Five crucibles of Innovation That Will Shape the Coming Decade”.  This article illustrated five crucibles of changes and challenging that many companies will face over the next decade. For instance, the firs crucible - Great Rebalancing is reshaping the global economy and is changing the way an organization conduct itself.  During the past years, the emerging of internet and social network have shaped traditional version of business operation.  For example, globalization results in more and more companies to move business outside to in order to reduce cost and gain more revenue.  The next decade will be one of enormous transformation in which global economy will be the crucibles where innovation is generated. Running a company now is more complex than ever before because companies have to pay attention to more regulation, risk and customer behavior in different cultural environments. However many companies can now figure out how to capture wining position in this global economy.

A few innovative companies are starting to get it right.  For example, in the pharmaceutical industry that I work on, this field is facing many crucibles but it may prove the most profound.  Crucible 1, the Great Rebalancing, reflects what pharmaceutical is considering, especially with emerging of China and India. For example, Pfizer, the biggest pharmaceutical company in the world, established emerging market division by increasing employee to 16,000 across more than 70 countries and serves for 5 billion people outside of US to meet the diverse medical needs of patients in Emerging Markets around the work in an innovative, social responsible and commercially viable manner [1].  Since establishment, the revenue from the Emerging Marketing is increased dramatically and almost is one third of the entire yearly revenue today.
Even some high-tech companies are being touched by the allure of emerging-market consumers. Yahoo held Alibaba, a Chinese business, almost 40% shares [2], from which Yahoo wants to gain from emerging-market consumers that are the fastest-growing segment for the social medial network.  Yahoo reaped a huge return for investors.
 
Furthermore, Crucible 3, the global grid, is another example that is timely considering the makeup of many companies.  During last two decade, global communication, and information grid have enabled real-time interactions at scale.  Wherever you live, the communication network such as email, tel meeting, face-to-face video like Sykpe have shorten people distance.   But I have a mixed feeling for the global grid. On the one hand, because of more convenient communication, more and more companies started to move their business to outside.   For instance, pharmaceutical companies like Pfier and Merk now employee contractors from Wuxi, a Chinese vendor that provides trained chemists and biologist.  They paid lower wage than local employees, which is good for companies since they can save tons of money.  On the other hand the expense of this outsources is that those companies reduce the number of employee at local market, which might not be good for US workers. But if those companies can develop new business areas in Us after they gain more revenue from emerging market, for instance, they can establish new research centers, it will benefit local workers.

Ref. [1] Halfon, J., Pfizer Emerging Markets: 
[2]: http://finance.yahoo.com/news/yahoo-closes-7-6-billion-deal-alibaba-group-161614948--finance.html

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