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Knowledge At MET

Knowledge At MET

Strategic Management in the Globalised World

“We cannot march through 21st century with the system of 19th century. Today, countries are independent and

interconnected” – opines Prime Minister Modi (August 2016). This interconnectivity is causing complexity as never before.

Globalisation is associated with conflicting notions like economic, politico-cultural systems across the Globe as a major force of human development and prosperity to ecological exploitation & conflicts (Nibojsa Makicennovic,

2008). In this complex, interconnected world, we are already witnessing “Lorenz Effect” in most spheres of life.

Sectoral approaches rely upon actor’s behaviour including resource – based models, and politico economic outcomes (Kurth 1979, Rogowski, 1989) (Gourevitch 1986) (Gilmore 1997). Their approaches explain technological

changes in Globalised world in sectoral variation, without referring to institutionalizing innovations. According to Freaman & Perez, “Technology has wide spread consequences... in that, the diffusion is accompanied by structural

crisis of adjustment” Charles Perrow & Oliver Willums have studied “degree of coupling” in the elements of

technological system and the other in the “Complexity of causal interactions among production stages”.

The authors here wish to look at impact of Globalization of technology from Evolutionary perspective as a multidisciplinary approach.

1. Why do we still maintain QWERTY sequence on our keyboard?

2. Why do we build superior smartphones and still find Samsung and Apple dominating the market?

3. Why do Snapdeal, Amazon, Flipkart achieve 60% CAGR consistently and yet downsize?

4. How do Ola and Uber give traditional fleet owners a run for their money?

5. Why did China buy Holcim Srilanka at twice its valuation?

6. Why Nokia – once leader in Mobile market – become extinct in short time span?

7. How suddenly ‘Payment Banks’ concept becomes buzzword?

These are a few questions we wish to address in this paper. As such, the business practices at any juncture drew heavily

upon the societal needs, which are in turn affected by technological and scientific developments during that phase.

At the outset let’s take a look at the advent of industrialisation: 1776 – Adam Smith wrote: “Wealth of Nations”

- U. S. Declaration of independence

- James Watt developed Steam engine

Strategic Management in its true sense got fillip, during manufacturing of Model – T by Ford, with assembly line

operations. This was the time when each factor of management was independent and men & machine were

interchangeable - a mindless system (1908). It was thought that, resources were abundant and cost reduction was the

only way to success.

During resource scarcity due to First World War (1914-1918) optimisation techniques got developed and operation

research – the first phase of systems approach started with Convoy theory. This truly found its use in management since

after Second World War (1939) and was later popularised by Ford Wizkids like Robert McNamana.

By end of World War II, people got fed up with “car of any colour, as long as it is black”, and Alfred Sloan (1930-40).

Started General Motor’s divisionalised and integrated organisational structure. By 1970, CPU were invented,

computers were developed and popularised. The need for management was control & integration of various divisions

of organisation. In 1970, Bruce Henderson developed B.C.G. Matrix, where Head office was the brain and rest of the

S.B.U.s were part of the organisation. Truly, a biological mode was developed.

This was the age of competition and integration. With the power of computing it was possible to Predict - And –

Prepare. All the techniques focussed on forecasting and planning accordingly. By 1982, Porters model came. Proter’s

Generic Strategy said, you could either have Reach or Richness or get stuck in the middle.

Later, integrated circuit was developed and personal computers become popular. This gave rise to ERP/SAP, to keep

the organisation integrated and control the resource flow within organisation as an integrated system.

By 1990 – 95, personal computers became household name. In 1990, P.C.’s become popular in west and in late 90’s,

in the developing world. By 1995, internet had grown 100 times. Berlin wall fell, USSR dis- integrated, Globalisation

started. The world became smaller, flatter. In this, tremendously interconnected world, anything happening at any part

of the Globe, would have profound impact, at any other part. A true Lorenz effect could be seen. Extreme sensitivity to

initial condition could be noticed. Linear models useful for “Predict and Prepare”, gave rise to nonlinear models, and

hence in build unpredictability. The system would now have emergent behaviour. This complexity now necessitated

Bottoms up strategic models.

- Porter said “Reach or Richness or stuck in the middle, Amazon and Flipkart allow both Reach and Richness.

- Path dependence requires URN based models; hence random movement models like Markov chain become


- As Predict and Prepare became difficulty Formula based models have to give way to Agent based models.

During industrialisation & globalisation phase – ‘Trade Blocs emerged – NAFTA, EU – more based on geographical

proximity. But 2010 saw divergence from north – north to north – south alliance. In 1990, C. K. Prahalad gave, “Core

competence.” In 1994, wrote competing from future.” In 2005, Blue ocean strategy came, incorporating a lot of

elements of path dependence, still largely ignoring the impact of social media. 1996-97, in us.

Started this boom with 57 mm registered accounts by 2002, social media hit its stride with Friendster. By 2004

Facebook was launched, and the rest is history.

Facebook today has 1.7 Tr. accounts, WhatsApp has 1.2 Tr., WeChat 806 Bn. What it mean in, social groups as

independent entities are all powerful agents, which can take their own decisions.

What it means is that power is redistributed and fragmented. Business models need redesigning. This requires

synthetic,ratherthan analytical approach to address wicked problem.

The days are not far, where to sustain, there will be:

1. More and more network organisations

2. Decision making will be Agent based, without Central control

3. Core Competence will be path dependent with Tacit knowledge

4. Research agendas would be Agent based simulation with cellular Automata

This decade, may witness dramatic changes in management theories and the way of doing business with help of

• Cloud Computing

• Big Data analytics

•Green technologies

Surge in technologies – lead to change in Social norms and practices – thereby leading to change in business

management practices – to satisfy consumer needs (emergence of e-Commerce, Malls, etc.)

As for consumers – convenience, time saving etc. have become important factors – and hence inevitable role of

technology in business.


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Modeling global change, Rethinking globalizations, edited by Berry Gills, University of Newcastle, UK

• Thayer Bradley A., (2004), Darwin and International Relations, The University Press of Kentucky

• Edited by Thompson William R.,(2001), Evolutionary interpretation of World Politics, Routledge, Great Britain

• Boschma Ron, (2009), Evolutionary Economic geography and its implications for regional innovation policy, Article,

Lund University,

• Bigelow David, (Nov.25, 2003), An Analysis of the Richardson Arms Race Model

• QinZHU,(2007),Process Innovation,Cost LeadershipandMarketPower–AnalysisbasedonElectronic InformationIndustry

• Frenken Koen, (2006), A fitness landscape approach to technological complexity, modularity and vertical

disintegration, Elsevier B.V.

• Bisilkas Marios, (2006) Adaption on Rugged Landscapes: Competitive Strategies in the Presence of a Common Objective

• Akio Tokuda,(2004), The logic of Strategic Alliances, Ritsumeikan International Affairs Vol.2, Ritsumeikan University

• Bathelt Harald and Gliickler Johannes, (2003), Towards a relational economic geography, Oxford University Press

Authored by

Prof. Rajiv Gupte

Prof. Anant Amdekar

MET, Mumbai

Tags: MET Institute of Management