The Hindu Business Line : Does globalisation remind you of Indian cricket or a butterfly flapping its wings?

GIVEN a choice between French fries and an economics book, most would choose the former. To make it easier, though, here is Barbara Parker's "Introduction to Globalisation & Business," from Response Books (www.indiasage.com) that begins with the tale of the crispy snack going global.

In what reminds one of Pietra Rivoli who went on a T-shirt trail in `The Travels of a T-shirt in the Global Economy' (Business Line, March 19), Parker chases the potatoes from farms to restaurant tables. And some interesting facts emerge from the intro chapter: that the product sold for more than $3 billion in 2003; 5,000 tonnes of potatoes are enough to make 14 million servings of fries; the Netherlands is the world's largest exporter of frozen fries; and the tuber costs 5 cents per pound, processing adds 25 cents, and when cooked, they sell at outlets for $3.65 per pound.

She finds that, even as a world relishes the snack and waits for more, despite what the doctors say, "water pressure of 35 mph shoots the potatoes to laser-guided brass blades that yield perfect quarter inch slices", and a conveyor belt ferries the consignment through partial cooking, drying, and flash freezing, before packaging it into fry-dom, all in 45 minutes.

A box of fries that Parker shadows travels in a refrigerated truck bound for the Port of Tacoma, from whereon it sails in a ship built in South Korea, captained by a German who is assisted by a crew drawn from the Pacific Islands, the vessel flying under the Danish flag, and headed to Asia. There's an emergency halt; "an Australian engineer climbs on board... and then the fries are back on their way"! How I wish someone did a similar exercise to narrate the geography that lies flat on a thali!

Parker cites a simple definition that globalisation is "a process whereby worldwide interconnections in virtually every sphere of activity are growing," and lists the four main characteristics of globalisation, viz. growing worldwide interconnections; rapid, discontinuous change; increased number and diversity of participants; and growing complexity. However, the word, variously referred to as "mondialisation in French, globalisierung in German, or Quan qui hua in Chinese", means different things — as many as there are disciplines

To understand the complexity in globalisation, you'd need a systems view, such as biological theory, rational theory and chaos theory. While the first can explain why the fittest survive, the other two may be thought of as having domino and butterfly effects, explains Parker. "In rational systems, dominoes are lined up one next to another. The first domino to fall leans into the next and the next until all have fallen one by one." That's how Sidhu describes the way Indian wickets fall — reminding him of "the cycle stand at Rajendra Talkies in Patiala...one falls and everything else falls!" In contrast, "the butterfly effect is the propensity of a system to be sensitive to initial conditions in an iterative pattern." Thus, in a chaotic system, a butterfly flapping its wings in one area of the world can cause a tornado elsewhere.

In `The Argumentative Indian', Nobel laureate Amartya Sen would argue that we have a rich argumentative tradition, which is important for the success of our democracy, sustaining of secular politics, removal of inequalities, and the pursuit of sub-continental peace. It is distressing, therefore, that the book on hand has a reference to India in a discussion on the `hypergloblist thesis of globalisation' where Parker voices the fear of some that business activities can supplant the power of nation-states. An example that she highlights in this context is about how Grey Global Group and Leo Burnett helped articulate opposing views for the BJP and the Congress during the 2004 election ad campaign. Are these helpful interconnections between global advertising agencies and politics, asks the author. I'd say no, they aren't, because a voting public can then be reduced to toeing the line of surrogate arguers. The book focuses on six spheres of activity where worldwide interconnections are happening: business and industry, natural environment, culture, politics, economics and technologies. But first check if you are curious about the world, exposed to different experiences and to diversity, and make "a disciplined effort weave together diverse strands of knowledge about others into a cohesive and integrated framework," because all these make up the `global mindset'.

A global enterprise faces at least four challenges. One, there are paradoxes that can't be solved but must be managed. An example for this is that of Mattel; the company laid down `global manufacturing principles' to govern its factories and those of vendors worldwide when consumer activists were protesting against wages and working condition problems, but this forces Mattel to be involved in the activities of its suppliers.

Two, "organisational success is increasingly derived from intangibles that organisations cannot own"; for instance, the core values of IKEA codified in Ingvar Kamprad's 1976 `Furniture Dealer's Testament' are taught to all the company staff. The third challenge is of diversity; Parker's example of Honda Motor Company in this regard reads thus: "The philosophy of Honda is that diversity begins with respect for the individual", but those in Gurgaon may hold a different view on this. The last challenge is that business managers and organisations assume new roles for which the past hasn't prepared them; but that needs better information.

Sara Lee, for example, handled the challenge by instituting `open book' management, and made available financial results to all employees. What was the impact? "Managers observed employees were just as adept as they were in recognising gains and losses, and perhaps more adept in finding ways to balance them." A chapter on `the landscape of global business' notes that organisations of every size populate the global terrain. There are the biggies like Saint-Gobain that provides insulation of half of Europe's homes, produces 30 billion bottles a year, "enough to stretch to the moon 15 times", and supplies quartz filaments for NASA's space shuttle.

Apart from the giants whose names are widely familiar, there are many obscure and hidden ones too. Do you know that Cemex, based in Mexico, was the number three supplier of cement worldwide in 2003 with sales exceeding $7 billion? Or that the 17-year old Haier Group in China is the number two refrigerator manufacturer in the world that "threatens US markets of Maytag, Electrolux, and GE on goods such as wine chillers, air conditioners, and mini-freezers"?

Examples cited from Hermann Simon's `Hidden Champions' include Carl Jager ranking No.1 in its niche of incense cones and sticks, employing only 10; and Brahler that rents conference translation systems.

While dwelling on `natural environment' the author informs us how companies are taking up leadership. For instance, 35 Sony plants reached `zero landfill' status by 2001, recycling waste by 95 per cent. Another case is of "forestry giant Weyerhaeuser that gives employees free, unlimited bus or car-pool passes, promotes telecommuting, guaranteed rides home... and even $1 a day to any employee who car pools, rides a bicycle, or walks to work". Worth emulating instead of giving a hefty car allowance.

A good read for the weekend, even if you're on the go.

Economics@TheHindu.co.in

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Does globalisation remind you of Indian cricket or a butterfly flapping its wings?

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