The Economic Globalization and The Opening of the Enterprise Systems -- GE Jian, August 3, 2002

46th Annual Meeting of the International Society for the Systems Sciences (ISSS), Shanghai, P.R. China, August 2-6, 2002.

Saturday, August 3, 2002, 3:10 p.m.

This digest was created in real-time during the meeting, based on the speaker's presentation(s) and comments from the audience. These should not be viewed as official transcripts of the meeting, but only as an interpretation by a single individual. Lapses, grammatical errors, and typing mistakes may not have been corrected. Questions about content should be directed to the originator. These notes have been contributed by David Ing (daviding@systemicbusiness.org) at the IBM Advanced Business Institute ( http://www.ibm.com/abi ).

Jian GE

Note: This talk was conducted with simultaneous translation by two interpreters (to varying degrees of success!)

Trying to analyze corporate actions

• First, the evolution of the global economic system
• Digital revolution.
• All technological innovation resulted in changes in the economic system.
  • e.g. automobile
  • e.g. supermarket
  • Computers and economic represent a digital revolution.

Economic globalization is taking place, which requires coordination between companies.

Economic systems are very complicated.

• Business systems are changing.

After the second industrial revolution, industrial products are becoming more complex

• Manufacturing of modules requires coordination of companies.
• Fastest growth is in capital flow.
• Investment portfolio has shown big changes.
• Transformation of economic productivity.
• Manufacturing and distribution activity.

China is one of major exporters of components, e.g. wings and doors for Boeing.

Service industry not only to provide services, but effects on society as a whole.

Consumers network with each other.

After the 1980s, information technologies are eliminating the boundaries in multinational production.

Management can have easy access to remote databases, without reducing efficiency.

The revolution in semiconductor chips are favoured large enterprises.

• e.g. Ford is building parts in many places in the world.

Coordinated mechanisms between branches and headquarters can be done.

• Efficiencies of companies can be proved.
• Changes in overseas investment enhance international trade.
• Optimization of resources.
• More and more trade of intermediate products.
• Growing trade in finished products -- doesn't fully reflect all trade.
• Cooperation between companies in different systems have also improved.
• Closer links between people all over the world.

Economic globalization has 2 major impacts:

• Multinational companies can use outsourcing or non-equity relationships to arrange their manufacturing and distribution.
  • e.g. franchise or new distribution means.,
• Companies can be more flexible.
  • In 1950s, 90% of raw materials came within 100 km of factories, and 90% of final products were distributed in that area.

Industrial cluster and economic system

• Internal system doesn't really change.
• Change in information, energy and materials at the boundaries.
• Input-output relationship is at the core.
• Enterprises also have relationships with universities and research institutes.
• Industrial clusters has changed the market transaction system.
  • Buying and selling transactions
  • Companies are trying to incorporate this into their processes
  • Technology transfer is now technology sharing, and it doesn't change the contracting relationships.

Businesses can break the time and space limitation

Strategic alliances are important

• In U.S., 2/3 of firms are in strategic alliances
• These alliances are challenges to many traditional management structures.

[gave many statistics]

Governments need to reform to support these changes.