Friedman uses the metaphor 'The World is Flat' to explain globalization and its effects. This tries to explain the technological and political forces that converge and create a level playing ground for all countries in the world to develop. Friedman explains the effects of globalization on companies, organizations and even whole economies. According to him, institutions that do not embrace the changes that are taking place will be 'flattened' or phased out. On the other hand, the institutions that embrace the changes and adapt will become more successful. Friedman goes on to explain that there are ten forces that contributed to the flattening of the world.
The first force that led to the flattening of the world is the fall of the Berlin wall. This event signified the end of the cold war and enabled people to open their minds to free-market capitalism. This released up pent up energies of millions of people from India, Brazil, China and the former Soviet Union. The people from these countries were introduced to the concept of capitalism. The falling of the Berlin wall further enhanced and changed people's mindset about the world. It allowed for the concept of a single world market with global policies.
The second major flattener occurred on 8/9/95 when Netscape went public. Netscape and the web improved people's means of communication. The digitization that took place meant that everyday occurrences could be shared to other people throughout the world through file sharing, music sharing etc. the development of internet email browser technology enabled quick and cost-effective communication throughout the world.
The third flattener was the development of work flow software. This was a quiet revolution that almost nobody noticed until it had completely taken place. Work flow software refers to the emergence of universal software protocols like SMTP, HTML and XML and HTTP. These softwares enabled machines world-wide to be able to speak and understand each other. Information and work could, therefore, be easily transferred within and between continents at a faster rate than ever before. HTML is a language that enabled anyone to develop and publish any document from anywhere in the world.
The other six forces that flattened the world mainly affected how business is carried out all over the world. These forces are directly attributable to the first three flatteners. The fourth flattening force is the ability to upload. This is a technology that enables communities or individuals to put up information on the web. Ability to upload has enabled communities to participate in development of complex things with much less hierarchy, more freedom and flexibility. An example is the development of open-source software. This is software that is developed on the open and free platform and is accessible by all people to improve. This also relates to websites such as Wikipedia, blogging and YouTube. Uploading satisfies the need for people to be heard and to participate in projects.
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The next flattener is outsourcing. This is a process whereby businesses transfer their non-core business activities to other companies or individuals who are willing to effectively do them. These non-core activities include book-keeping, customer service etc. for instance, the United States benefits from outsourcing its non core business activities to India. In India, there are many unemployed but educated individuals. Due to advancements in technology and communication, jobs can be outsourced to India and done at lower cost than would be done in the United States.
Off shoring, is another force that facilitated the flattening of the world. This is the process by which businesses transfer one or more of their factories to another country. This could be due to factors such as cheaper labor, easy trade laws, low cost of business etc.
The other major flattener is supply-chaining. This is a method of collaborating horizontally-among suppliers, retailers and customers-to create value. Friedman continues to cite Wal-mart as an example of a chain store that doesn't produce any products and is only involved in retailing. The company embraces the use of technology to streamline its customer service, shipping, sales and distribution.
In-sourcing, the eighth flattener refers to the process through which a company performs services on behalf of another company which may be far or not easily accessible. For instance, UPS repairs broken laptops on behalf of Toshiba which doesn't have enough manpower to do the repairs.
In-forming is the ninth flattener of the world markets. This refers to the ability of individuals to search for knowledge and carry out research on their own regarding various issues. This search for knowledge has been facilitated by search engines like Google, Yahoo, Bing etc. these search engines also provide millions of links to the information that we are interested in. knowledge is, therefore, more accessible, and people are more empowered. "Never before in the history of the planet have so many people - on their own - had the ability to find so much information about so many things and about so many other people," (Friedman 313).
The final flattener is referred to as steroids. These refer to the technologies that augment and strengthen the other flatteners. These include services like voice over internet protocol (VOIP), to make cheap long distance calls through the internet. This technology has revolutionized the telecommunications industry, and individuals can make long distance calls at very low rates.
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Friedman goes on to explain the triple convergence which is basically the way the ten flatteners converged to create a level playing ground. He goes on to bring a very clear point: institutions that do not embrace change will not survive. This begs the very fundamental question 'How do companies cope with these prevalent changes?'
The first thing for companies aiming at being relevant and staying afloat amid changes is to be unique. Companies should be unique and creative in order to be noticeable from millions of other competitors. Companies should strive to develop a package that is different and thoroughly satisfies the needs of the customers.
The second way to cope with the rapid changes in the global markets is by acting big. Small companies are encouraged to use the tools of collaboration to penetrate the markets and stand out. Friedman emphasizes that small companies must use the flatteners e.g. uploading, in-forming, outsourcing, off-shoring, steroids etc in order to beat the competition and remain relevant. To illustrate this point, Friedman tells the story of Aramex, the only Arabian company listed in NASDAQ. Aramex, a home-grown package delivery service, created a web-based global network that enabled it to compete efficiently and conquer bigger markets.
The big companies shall also be forced by the invading forces of globalization to act small. These companies are required to enhance customer service. This means that they should create a platform whereby the customers can serve themselves at their own pace, in their own time and according to their individual tastes. An illustration of Starbucks is given whereby it learned to use soy milk in the coffee. This illustrates greater levels of attention to customer needs.
Companies are further advised to be collaborative in sharing of knowledge and information. They should take advantage of the triple convergence and collaborate with the smartest and brightest minds from all over the world. The other survival skills include frequent upheavals of the company style to incorporate new ideas that result from changing environments. Companies should constantly identify and strengthen their market niches in order to survive.
Outsourcing of non-core business processes has been lauded as one of the greatest achievements facilitated by the triple convergence. Companies should use it to cut back on their costs and have more time to concentrate on their profit-generating activities. Corporate social responsibility is the final survival tactic for companies in the rapidly flattening world. Companies are expected to better the lives of people living in the nearby communities, since they draw manpower from the community. This will improve the company's public image and make it more attractive to customers.
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Friedman emphasizes that the United States will benefit more by upholding the principles of free trade rather than trying to build up walls around it to inhibit the effects of flattening. In addition to implementation of the free-trade policy, the government is also expected to set up a focused domestic strategy aimed at upgrading the education standards and enabling Americans to compete effectively in a flat world. The leaders of the United States are thus called upon to educate and explain to the people facts about the world they are living in, and what should be done to thrive. Government and companies should equip citizens with the right muscle and information to make them competitive and able to quickly adapt to the changes that come up. The workforce should be cushioned.
This refers to a wage insurance concept whereby an individual who is changing jobs is compensated for a given period while they search for another job or learn new skills. Global corporations are given the role of cultivating and inculcating a moral conscience since they command a lot of power. Parents are also encouraged to practice tough love on their children if they want them to grow up into competitive individuals in the flattening world.