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1. Geographic globaloney?

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Globalization of Business Enterprise

IESE Business School

4.4 (19 calificaciones) | 2.4K estudiantes inscritos

The majority of businesses say they want to become more global. And business leaders say that the lack of people with global intelligence is the key constraint holding them back. This course will address both gaps — at the business and the personal level, it will focus on practical strategies for dealing with the real consequences of globalization.

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De la lección

Week 5 - Geographic Distance

This session will focus on the third dimension of the CAGE Distance Framework, namely Geographic Distance. This session will look at how trade and cross-border interactions in general are influenced by physical distance, whether two countries share a common border and other geographic factors. We will also look at the significant regionalization of most cross-border interactions and discuss what underlies the strength of that effect.

1. Geographic globaloney?10:19

2. Geographic distances and international interactions14:10

3. Regionalization7:08

4. Issues with regionalization as globalization7:18

5. Geography and the rest of CAGE10:02

Impartido por:

Pankaj Ghemawat
Professor of Strategic Management Anselmo Rubiralta Chair of Strategy and Globalization

Transcripción

[MUSIC]

Welcome to section five of We're going to continue our role through

the cage framework by talking about the G in cage today, the geographic factor.

And specifically, we're going to start out by looking at some of

the globaloney that has surrounded the world of geography.

Then we're going to move on to talk about how geographic distances and

other kinds of geographic factors actually affect international interactions.

Third, we'll zoom in on regionalization.

geo, a phenomenon that has attracted a great deal of

interest that has some clear geographic roots but

that also is related to some of the other elements of the cage framework.

And that will supply a segue way into the last segment of this discussion,

where we talk about geography inter, interrelates with the cultural,

administrative, and economic differences also highlighted by the CAGE framework.

So, let's start off by talking about geographic Globaloney.

Because in some sense,

while all the elements of the cage framework are supposed to become

progressively more irrelevant, if we were in fact moving towards a flat world,

geography in some sense is the factor that has attracted the most attention.

And this has been going on for a while.

So, as one observer wrote, when you read a whole bunch of

books that focus on technology, or what I refered to earlier as techno-trances,

it's amazing how quickly people simply go on to assert, that distance is dead,

or that borders no longer matter.

What's really striking about this quote though is that it's not

an observation about recent writings.

The quote is from George Orwell, writing in 1944,

expressing his grave dissatisfaction with the amount of geographic

globaloney he found in the writings of the first half of the 20th century.

Since then, if anything, the pace of such globaloney seems only to have accelerated.

So, since 1990 we've had Kenichi Ohmae's, The Borderless World.

We've had Frances Cairncross's, Distance is Dead, and of course,

we've had Tom Friedman's, The World is Flat.

So, how do we counter this kind of geographic globaloney?

One way is to sort of look at existing cities,

existing locations of economic activity, and point out how important

the role geographic factors have played in conditioning those locations.

[MUSIC]

>> I'm standing on the water front in Cape Town, South Africa.

And this is a good place to be, because in some sense.

This city wouldn't exist if it weren't for the waterfront and in particular, for

it's geographic situation right at the Southern tip of South Africa.

Cape Town, of course, got it's start back in the 17th century,

when Jan van Riebeeck founded it as a waystation for

ships traveling from Europe to East Africa, India, Southeast Asia, et cetera.

And has continued to be used in that capacity, and

while the importance of those shipping lanes has

diminished somewhat as a result of the opening of the Suez Canal, et cetera.

But the lasting impact of these trans

oceanic connections on Cape Town is not to be over stated.

The city continues to show the lasting imprint of its

history as the stop over point between Europe and Asia.

So, when we look at just the economics of this city,

it's the second-largest economic hub in South Africa,

it's the third-largest economic hub on the African continent.

And it's home to the biggest concentration of information technology companies on

the African continent.

Some of this has to do with the mentality and

the mindset which one can once again associate with it being a port city.

So, for instance, local entrepreneurship rates are almost three

times the South African average, and almost five times as

high as the average in Johannesburg, South Africa's leading city.

Unemployment rates are relatively low.

The population very youthful.

The population very mixed.

42% of the people who live in Cape Town are considered under

South African classification system colored, as opposed to 9% on average.

In the rest of the country.

And this young, vibrant, mixed community has,

enjoys some of the better standards of living, some of the better

public administration, and some of the lower unemployment rates in South Africa.

So, even though the old shipping lanes aren't quite what they used to be.

The lasting impact of Cape Town's location at the very southern tip of Africa,

continues to affect the lives of those who live here on

a day-to-day basis every single day.

[MUSIC]

>> So, think back to the example of Cape Town,

which owes it's existence to its privileged position close to

the Cape of Good Hope in front of a relatively sheltered bay.

Even though the importance of that shipping route around Africa has decreased

in the last few decades, particularly with the opening up of the Suez Canal to

the point where Capetown is no longer even South Africa's largest commercial port.

The basic point is that geography is the very reason why we have this very vibrant,

very entrepreneurial metropolis right at the southern cone of Africa.

So, when we look at cities like Cape Town or many other cities which for

instance happen to be located at the junction of two rivers.

That's a good example of the enduring influence of geographic factors.

But we can also look forward and or

we can also look at current data on what some of the new technologies that

are supposed to be weakening the influence of geography are actually doing.

So, on this slide I've taken some data assembled by Barry Wellman and

his lab at MIT, where they did an analysis of Twitter.

And basically quantified the density of ties on Twitter.

Plotted those ties against the distance between somebody whose tweeting and

the person following those tweets.

So, when we look at this particular chart,

which literally tries to summarize the intensity of ties on twitter.

What stands out for us?

Couple of things, actually come out of this very interesting slide.

First of all, geography clearly isn't dead, or

else we would expect this line to be flat across this entire chart.

Second there does seem to be a strong influence,

even on Twitter which is supposed to be a very, very globalized medium.

There does seem to be a very, very strong influence of geographic distance.

And third, this graph also somewhat, controverts this notion

of a very spiky world in which there are just a few global cities that primarily

interact with each other, but that don't have much to do with their hinterlands.

So when we look at this particular chart, we see that there is in

fact a spike in ties on Twitter at roughly the distance between New York and

Los Angeles, which are two of the five most important concentrations of Twitter

users in Barry Wellman's sample.

So clearly, there is some element of spikiness when we

look within the US at Twitter ties.

New York, Los Angeles does have a noticeably more

intense set of relationships than what happens at other distances.

But what's interesting, is that those, that spikiness is

not replicated when you look across national borders at New York-London,

New York-Sao Paolo, Tokyo-New York, or Tokyo-Sao Paolo.

So, the basic idea that this chart suggests is not only is

the world not flat, nor is it primarily spiky.

The big influence that we see on this particular chart,

is how quickly ties on Twitter.

Actually decay with geographic distance which should,

again remind us that the potential for technological connectivity is

not the same as actual levels of connectedness, and actual levels of

connectedness are actually very subject still to geographic distance.

[MUSIC]

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