The evolving global challenge

Chief Executive, The, April-May, 2008 by J.P. Donlon

Most business leaders are aware that the markets in which they operate are no longer national. But what does it mean when we say we live in an increasingly global world? Anil Gupta, Vijay Govindarajan and Haiyan Wang, authors of The Quest for Global Dominance, pose an answer.

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"If you are a Silicon Valley entrepreneur, it means that unless your business plan includes doing R & D in a low-cost, high-talent location, such as India, China or Eastern Europe, you have almost no chance of being taken seriously by any venture capitalist. If you are the CEO of Black & Decker, it means that you track the strategies of not only your long-established competitors such as Makita and Bosch but also new and aggressive entrepreneurial firms such as Hong Kong-based Techtronic Industries. If you are the chairman of Nippon Steel, it means you wake up mornings conscious of the possibility that your company may be an acquisition target for the global steel giant ArcelorMittal headquartered in Luxembourg but with steel operations on every continent."

In this issue we explore several elements of the new global challenge, one that grows more and more complex as the world becomes more interdependent. On p. 38, Steve Bergsman looks at shocks to the global supply chain. "Part of the problem is that supply chains are longer and more convoluted: for any given product raw materials can be sourced in Africa, refined in India, produced in China, assembled in Mexico and finally distributed in the U.S." Manufacturing costs can be outsourced to any low-cost location, but rises in transportation costs now make supply chains more brittle.

On p. 46, Sheridan Prasso examines the paradox that is India, a country that remains intensely poor while producing massive wealth. In 2003, a Goldman Sachs report predicted that India's GDP growth rate between 2015 and 2050 would exceed that of all other major countries in the world including China. Think of this another way. In 1990, India had 5 million telephone lines; it is currently adding 5 million a month. After years of expansion, the country is facing slowed GDP growth amid rising inflation, but it is still growing at rates other countries can only dream of. Our report looks at the opportunities, the dominant personalities and the forces driving this emerging giant.

Finally, in our cover story we look at a cross-section of young people around the world who are building the future. Among the dozen we profile are Carlos Antonio Salas, who started an ethanol company in Peru; and Italy's Beatrice Trussardi, who is leading a century-old icon into the 21st century. Good ideas and folks with entrepreneurial energy are everywhere.