Skip to content

Calls For Increased Controls As Globalization Falters

August 4, 2008

Several months ago, I commented on a survey of CEOs in which 89% regarded globalization as ‘√≠nevitable’. I questioned the quality of risk management in companies where this view prevailed (see https://tcummins.wordpress.com/2008/05/27/is-globalization-the-next-mismanaged-risk/).

Now the questioning has reached mainstream media, wih the New York Times being the latest to weigh in.¬† Yesterday it featured an article ‘Shipping Costs Start To Crimp Globalization’, highlighting the impacts of higher costs on many of today’s sourcing decisions. But the article also pointed to deeper stresses in the world economic order, with the collapse of the Doha trade talks illustrating fundamental disagreement on issues ranging from environment to protective trade practices.

So are we headed for a collapse in world trade, for the reversal of many outsource decisions, perhaps for a period of increased international tension and conflict? There are certainly dangers, especially if unscrupulous politicians start to blame recession on external forces, or suggest that economic health could be restored through the repatriation of jobs. And indeed, within corporations, there will be the pessimists who look to retrench and take this period of doubt as an opportunity for increased controls.

But overall, we must hope that the world economy is simply far too integrated to allow a significant reversal. Indeed, I take a counter-view. The human mind – and humanity as a whole- flourishes at times of uncertainty, because this uncertainty challenges us to find new ways and new solutions. We may take wrong turns, but in the end all progress depends on our ingenuity and creativity. That is why the pessimists are never in the ascendant for long; humanity responds to optimists, to those who create a positive vision.

It is my bet that within weeks we will be reading about leading companies that have developed a new business model to take advantage of the shift in global conditions. They will have invented ways to circumvent rising prices and to manage some of the risks that globalization has generated. Indeed, from research that has recently been commissioned from IACCM, I know that some are already progressing fast down this path.

Shipping costs may have crimped globalization; I do not believe they will crimp humanity.

Leave a Comment

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: