Globalization Forum: Looking at the Market’s Successes and Failures

The Wharton Global Alumni Forum 2005, held in London earlier this month, brought together participants from all over the world to debate the impact of “250 Years of Globalization,” the Forum’s theme. While globalization has indeed changed how we allocate resources, settle disputes and sell products abroad, there are ways in which globalization has failed sizeable constituencies within the worldwide community, as Forum speakers pointed out. They also discussed the uncertainty swirling around global financial markets, the inability of many companies to derive real value from investments in technology, and the potential fall-out from protectionist trade policies, such as those currently advocated by the U.S. and European Union. Below, Knowledge at Wharton offers coverage of the conference.

From Trade Inequities to the ‘Do-It-Myself’ Customer: Globalization’s Uneven Impact

In kicking off the Wharton Global Alumni Forum 2005 in London earlier this month, Stephane Garelli, professor at the International Institute for Management Development, and Paul Judge, chairman of the Royal Society of Arts, Manufactures and Commerce, discussed globalization’s impact on such areas as economic growth, labor markets, wealth transfer, cost efficiency, customer service and the emergence of new “brand providers.” Both speakers noted that globalization has brought increased complexity and uncertainty, and in some ways has failed to benefit whole segments of the global marketplace. “North America and Europe have benefited the most,” Judge noted at one point. Most of “the other five billion people are still living” in close to pre-Industrial Age poverty.

Euros, Dollars, Sukuks and Yuans: Uncertainty Reigns in Global Financial Markets

At the start of the Wharton Global Alumni Forum’s panel on regional financial markets, moderator Richard J. Herring noted that discussing this topic from a regional perspective — vis-a-vis Europe, Africa and the Middle East — may appear to be “an anomaly since financial markets are probably more thoroughly globalized than any other sector of the economy. But recent events are having a particularly strong impact on regional financial markets.” Herring was joined on his panel by Robert E. Diamond, chairman of Barclays Global Investors, Peter Garber, chief strategist of Deutsche Bank Global Market Research, Richard Moore, head of global rates and currencies in the global fixed income division of Citigroup, and Abdulrazzak Mohammed Elkhraijy, head of Islamic banking at the National Commercial Bank of Saudi Arabia.

Cosmetics and Steel: How Two Companies Defied Conventional Wisdom by Going Global

Estee Lauder Companies and Mittal Steel grew up in different industries, at different times, but their success in the global marketplace stems from their willingness to look beyond the business trends of their day. For Leonard Lauder, the strategy included premium pricing, selected distribution and a single international image. For Aditya Mittal, building a strong global customer base, instituting a unique manager integration program and achieving global purchasing power were key elements on the path to becoming the world’s largest steelmaker. Both men were part of a strategy panel at the Wharton Global Alumni Forum 2005 held earlier this month in London. A third panelist, David Li, chairman of UBS China, discussed China’s emergence as a major global player.

Why So Many Big IT Investments Do So Little for Shareholder Value

At the start of his talk on “Management Challenges of Technology,” James Blyth, chairman of Diageo — the world’s leading premium drinks company — asked members of the audience to raise their hands if they were carrying a cell phone. All hands went up. “Now keep your hands up if the phone is more than five years old,” he said. All hands went down. His own cell phone, which was bought in 2000, “does the same job as yours,” Blyth said. Mobile technology has not “substantially changed in the last five years yet most people will have upgraded their phones two or three times during this period.” His intent, he said, is not to dump on technology, but rather to look at why businesses “waste enormous amounts of money and effort” on IT investments.

The WTO: A “Fragile” Body under Attack by Protectionist Policies in the U.S. and EU

If anyone is qualified to speak about world trade, it’s Peter Sutherland, chairman of BP and Goldman Sachs International. Sutherland was founding director general of the World Trade Organization and director general of GATT (The General Agreement on Tariffs and Trade). In his opinion, the WTO is in danger of being subverted by the protectionist policies of developed countries toward their domestic industries, specifically textiles and agriculture. And yet undermining the WTO, which he described at one point as “the most noble political and economic ideal” that Europe has ever helped to create, would “be a fatal and terrible mistake.”