Section I- Globalization Force: Technology
The force of technology has had unprecedented impact on globalization over the years is certainly technology and being protected under intellectual property rights, the developing countries like India have focussed a great deal on becoming the technical experts of the world (Matyjewicz). Though there is still a need for aligning the goals of global business strategy with the use of technology. The business today is tough and increasingly complex, thus the organizations are embracing Information technology (IT) as a tool to manage the complexity in business operations in the most effective and efficient manner to achieve sustainable competitive spot in the international market.
Globalization and technology have reinforced each other and grown together over the years. The technologies have evolved along with the process of globalization of companies and this has occurred through the following three categories of technology activities, which are ?technological exploitation?, ?technological generation? and ?technological collaboration?.
- MNCs try to enhance their profitability by exploiting technological processes and transferring them to international markets. Examples are: International trade, Intra-firm trade, technology trade, wholesale trade, extending patents to other countries.
- Often it happens that an MNC starts the innovation process in its host country by means such as FDI and setting up of R&D facilities there. Examples are: FDI in wholly owned subsidiaries, joint ventures, mergers and acquisitions, internationalization of R&D and patents generated in foreign subsidiaries.
- The most striking feature linking technology and globalization is that only few firms are capable of innovation on their own, thus they need to collaborate with other organizations. Examples are: Strategic alliances, JVs, research pacts, joint development agreements, technology exchange agreements and building strong supplier-producer relationships across geographical boundaries.
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The World Information Technology and Services Alliance in a study in 2006 estimated the global investment on IT and communications in 2006 to be approximately $3 trillion which was expected to exceed ?4 trillion by 2009 whereas the growth is primarily spurred by the software with annual growth rate of above 9.9% (WITSA, 2006). There are two distinct aspects of IT. They are IT as ?embedded factor of production? and IT as ?driver of organizational change?. The former defines IT as an inherent factor that needs to be combined with other factors of production to enhance economic growth and the latter views IT as the factor responsible for levelling of the organizations.
IT has enabled building trusted business relationships which can be digitally facilitated by the global enterprises. One of the revolutionary technologies in use is Virtual Meetings over digital platform such as video conferencing and human conferencing. The interdependence between the ability to employ IT and ability to implement corporate strategies is growing in the context of international business environment. It is helping MNEs to improve the efficiency and productivity. The multinational organizations essentially need robust telecommunication system (Elliot, 2004). There are a lot of opportunities in the technological sector, for example in the transportation sector the global market for supply chain management (SCM) software is expected to reach $8.3 billion in 2010 which was $5.5 billion and in the urban planning sector also the building management systems investment is estimated to be over $67 trillion.
The global firms must recognise the swiftness and measure of transformation as the international business landscape of this decade will be governed by new evolving global rules and uncertainty and the business leaders who will provide strategic precision by implementing IT in their operations will excel on international level.
Section II: WEF and Annual Meeting 2010 at Davos
World Economic forum in a non-profitable foundation based in Geneva, Switzerland and it is the leading global community that brings together the leaders and most erudite people from the backgrounds of business, politics and society on a common sharing platform to formulate and work on policies to improve the lives of people around the world (WEF). The founder of WEF, Klaus Martin Schwab developed the ?Stakeholder? management approach the objective of which was to draw the attention of corporate leaders on the broader aspects of the firm?s operations and their impacts on the communities in which they operate and the associated governments. WEF discusses the most challenging issues facing the world and to make the countries accountable for their contribution to the problems and propose solutions and implement them (WEF).
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The purpose of the Davos 2010 annual meeting of WEF is to improve the current situation by improving cooperation at a global level, addressing present challenges and dealing with the potential future risks. The 40th 2010 annual meeting?s theme is a call to action, ?Improve the State of the World: Rethink, Redesign and Rebuild?. The areas being most emphasised are climate, crisis and technology.
Section III: The theme of ?Technology? at Davos 2010
Technology was one of the important themes of the annual meeting of the World Economic Forum at Davos, Switzerland. The globalization is leading to the emergence of newer markets with more potential for growth and productivity. It is evident that globalization and technological innovations reinforce each other. The digital ecosystem will continue to evolve in the coming years and hence global firms must be prepared to deal with uncertainties. Technological innovations have helped reduce the operating costs while maximizing the operational efficiency.
Technologies such as cloud computing and semantic search which are behind social networking applications are being used for benefitting the sectors such as education and healthcare. Our own Blackboard application at Bangor University is a good example. Another example is Chile where new software supports agriculture ministry to gather and broadcast critical information about weather and climate to the farmers thus assists them in proper decision making regarding agriculture.
WEF every year selects companies for their innovations in the areas of clean technology, information technologies, etc. which are known as Technology Pioneers. The ones selected this year include: Aura Biosciences (developing a viral-like system of drug delivery for cancer patients), BioFuelBox (operates chemical less waste treatment plant. Its separation process is patented), Obopay (a low cost mobile payment service uses mobile phones for services such as banking. It is serving 6 million people in US, India and Kenya), Dithium (mobile video infrastructure solutions), Nivio (fully functional Windows desktop environment accessible via a Web browser).
Davos 2010 strengthened the importance of technology to the process of globalization. One of the discussions in WEF annual meeting emphasized on the growing importance of information technology and how new consumers use it. It described the consumers as restless and all-powerful and how they are responsible for driving the costs down and increasing quality of products and services. The consumer demand is transforming the global business backdrop.
Global enterprises will require being vigilant to the revolutionary ways in which consumer decision making and purchase behaviour is being influenced by the technological innovations. Women have become a major stakeholder in defining the business in today?s time. Women make 85% of all purchases. Technology has empowered women in major areas such as education, mobility and self-employment tools.
WEF realised the importance of developing countries like India which is a global leader in the information technology sector. International business leaders should be aware of the markets like India which are unsaturated and full of growth and development opportunities. Technological innovations such as cloud computing and mobile computing are believed to decide the ways in which firms will operate and collaborate in future while also creating opportunities for new business avenues.
IT sector is estimated to have contributed 2% of the world?s carbon emissions and Davos 2010 focussed on how the technology sector companies can grab the real business opportunity of helping the other 98% companies to go green. The Smart 2020 Report appointed by the Global e-Sustainability Initiative estimates that tech-sector can help reducing around 15% of all the global emissions and create new business lines which will be worth trillions of dollars.
Section IV: IB Recommendations to Governments & Companies
- The companies should forge ahead to embrace technological innovations for achieving growth and productivity on a global level as customers of the present time decide what to buy and how.
- MNCs must invest in the technologies that improve the logistics and distribution systems as it influences the global pricing. It may include setting up of production centers in the host countries.
- It is critical for the international businesses to recognize the role of laws and regulations of different countries and eliminate the potential trade barriers.
- Global firms must invest in developing countries through means such as Foreign Direct Investment (FDI) to develop infrastructure that will help grow all the stakeholders.
- The governments should be receptive to dynamic changes brought by interplay of technology and globalization and countries should encourage strategic alliances between domestic and foreign companies.
- The government must act as facilitators and mediators in matters related to international business so that it becomes easier to conduct business across borders more effectively and efficiently. They should also capture the opportunities of national and global investment in the businesses.
- Various global economies should strive to build better and long standing business and social relationships to foster the pace of globalization of trade.
- Governments should come together on the international level and discuss and debate the challenging issues facing them in the meetings such as World Economic Forum and collaborate to develop solutions to the pressing problems.
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Globalization and technology are inseparable as both gain and build on each other. Newer international trade connections have become possible due to improvements in transportation and communication as they help the companies to reach to areas which were earlier inaccessible. The impetus of barrier-free trade and communication has been backed by agreements such as International Telecommunications Agreement (ITA). The global technology networks and platforms will keep bringing the economies of the world together to compete on an international level. Global firms will need to keep investing in IT to leverage its full potential to minimize costs and maximize productivity and effectiveness. The digitalization of business has helped the global companies to adapt themselves to the changing needs of the customers in efficient ways. Technology has created the perfect platform for sharing knowledge within and between the companies hence providing the foundations for better collaboration between various stakeholders in the realm of internationalization of businesses across the globe. Information technology will also contribute to greater diversification, integration and standardization of global companies of the world. Technology will significantly be a major determinant in the world?s environmental issues as more and more technology will turn green to support not only digital ecosystem but biological ecosystem as well.
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