Is the world no longer flat?
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Sean Murphy over at Supply Chain Management Review asks if we’re experiencing the “un-flattening of the world?” He cites a Globe and Mail article that says that skyrocketing fuel prices will see a reversal of the globalization movement.
I posted a comment on the SCMR site and have pasted it below as well.
** My Comment **
It’s a valid question and one that is sure to get lot’s of attention. We work with a lot of companies that outsource heavily. I certainly think this is shifting people’s attention to the “full” cost of outsourcing and making some rethink their strategy. But I don’t see a wholesale shift and/or reversal of the globalization trend.
The main reason I say that is because Friedman was very correct in stating that the world is now flat from a global competition and global markets perspective. Strategically, companies outsource/globalize for many reasons. One of them is certainly cost and we’re seeing a realignment of the cost equation right now. Nobody knows where that will end. But another strategic reason for globalization is the ability to reach new markets and be able to have local presence (this actually argues for more globalization since you don’t want to be shipping in at exhorbitant costs when you’re entering in new markets either).
So, while I certainly think that some things will slow and ROI calculations will be redone, I think there’s still a fundamental shift underway and companies will require global scale to compete, will need to enter global markets and will increasingly want to tap a global talent pool, so globalization is not going away.
