Organization Behavior Case: How Far-Reaching Are Globalization and Technology, (54)
1. Bob's assessment of globalization
Even though Bob has no plans to expand his grocery store outside the city, he is erring in assuming that he does not have to consider the potential impact of globalization in his business. He is looking at globalization from the point of view of what he wants to achieve with his own business plan and model. To him, he sees the Internet as an "outreach" model, a method for selling worldwide to customers using Electronic Commerce. Undoubtedly, this approach was emphasized at the management seminar he attended. And since he has no plans to seek customers outside his local environment, he senses that his business has little need to understand globalization.
There are two sides to the Internet, however. One is the outreach ability, and the second, and more important to companies like Bob's is "input." The competitive industry that Bob is working in is one that relies on the selling of many low-margin items in volume. Companies that might "seem" American to Bob, but probably are, in fact, owned by multinational food processors manufacture these items, primarily food. Bob would probably be upset to learn that the American staple, Mrs. Butterworth's Syrup, for example, is owned by the Dutch, or that Sanka, Nescafe, and all of the Nestle's candy he sells are all products of a Swiss company.
These companies are concerned with profit variabilities, since they deal basically in commodities (thereby generating volatile supply prices) and they sell goods using a number of foreign currencies, and thereby have derivatives exposure. If Bob's wholesale price of Mrs. Butterworth goes up, it could well be because of incidents as varied as a drought in South America or a labor strike in Botswana.
Venktraman (1994) discussed that the changes that the Internet was ca