A new spin on the globe

The world will be dominated not by corporations but networks of alliances

IF THERE is a central theme to modern business, it must be "globalisation". As Cyrus Friedman, vice-chairman of the management consultancy Booz.Allen & Hamilton, points out: "The word 'global' has become an integral part of the business vocabulary. In recent years, if a strategy or organisation or human resource plan didn't have a global perspective, it just wouldn't fly. Try to find an annual report that doesn't have the word 'global' in it or doesn't extol the company's global outlook."

We assume that the natural corollary of "international" or "multinational" being replaced by this grander term is that a huge range of organisations will be transformed - with the aid of the internet and wonderful strategic visions - into global corporations.

But although the continuing popularity of cross-border mergers suggests otherwise, Mr Friedman believes this is not necessarily the route to success. In his book The Trillion-Dollar Enterprise (Capstone, pounds 19.99), he acknowledges that globalisation is an unstoppable force. But he says we might be "a little too quick in declaring victory for a corporate form that we don't yet understand, that might not be the best, and that certainly is not the only solution for meeting the challenge of an integrating world economy".

His vision of the next two decades sees the world dominated not by a bunch of corporations as we currently understand them, but by networks of alliances. Membership of these groupings would be fluid, with new organisations joining as they came up with something the others needed.

Mr Friedman stresses that while he envisages a different kind of environment, he is largely extrapolating from what is already happening. Since alliances do not attract as much attention as mergers and acquisitions, they are not so well known. But he claims there has been a "quiet revolution".

In the 1970s, according to figures collated by his firm, there were about 100 to 200 alliances a year around the world. By 1990, that figure had risen to 2,000 and by 1995 it was up to 10,000. He and his colleagues are projecting that the number will be 20,000 a year by 2000.

The link-ups between Motorola, its rival mobile phone companies Ericsson and Nokia and the personal organiser maker Psion, and more recently between BT and Microsoft, are evidence that alliances are increasingly seen as the way ahead, Mr Friedman says. Indeed, he credits Motorola's chairman, Bob Calvin, as coining the phrase that forms the book's title.

But logical as such arrangements are, the arguments advanced by Mr Friedman for why they're the way ahead seem greatly flawed. He believes global corporations face four big constraints: a shortage of capital; the reluctance of the competition authorities to let a select few companies own more and more of the world's businesses; a need for bureaucracy to manage spraw- ling organisations; and the aversion of all companies to being run by foreigners.

The number of deals in recent months gives little credence to the capital argument, while the bureaucracy point is weakened by the fact that joint ventures can be just as prone to losing money as wholly owned subsidiaries. The idea that companies do not appoint foreign nationals to senior positions goes against all the "international manager" talk.

But where Mr Friedman appears most misguided is in the idea that competition authorities are only interested in who owns an enterprise, so that if it is a nebulous entity involving a variety of organisations, they will be unworried by its impact. That will be news to competition lawyers who often have greater difficulties persuading the authorities to allow strategic alliances than they do with straight mergers.

Mr Friedman is on much stronger ground in pointing out that such arrangements will require a different type of manager - one who will be able to build relationships, deal with all sorts of people and be more conciliatory than the typical command-and-control boss.

Arts and Entertainment
The cast of The Big Bang Theory in a still from the show
tvBig Bang Theory filming delayed by contract dispute over actors' pay
England celebrate a wicket for Moeen Ali
sportMoeen Ali stars with five wickets as Cook's men level India series
Morrissey pictured in 2013
peopleGuitarist, who played with Aerosmith, Lou Reed and Alice Cooper among others, was 71
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
High-flyer: Chris Pratt in 'Guardians of the Galaxy'
filmThe film is surprisingly witty, but could do with taking itself more seriously, says Geoffrey Macnab
Life and Style
food + drinkVegetarians enjoy food as much as anyone else, writes Susan Elkin
Life and Style
lifeDon't get caught up on climaxing
Life and Style
Arts and Entertainment
Harry Potter (Daniel Radcliffe), Hermione Granger (Emma Watson) and Ron Weasley (Rupert Grint)
newsBloomsbury unveils new covers for JK Rowling's wizarding series
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

1st Line Support Technician / Application Support

£20000 - £24000 per annum: Harrington Starr: A leading provider of web based m...

Team Secretary - (Client Development/Sales Team) - Wimbledon

£28000 - £32000 per annum: Ashdown Group: Secretary (Sales Team Support) - Mat...

Accountant / Assistant Management Accountant

Competitive (DOE): Guru Careers: We are looking for an Assistant Management Ac...

Senior Investment Accounting Change Manager

£600 - £700 per day + competitive: Orgtel: Senior Investment Accounting Change...

Day In a Page

Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

The day America’s love of backyard tigers led to a horrific bloodbath

With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable
Samuel Beckett's biographer reveals secrets of the writer's time as a French Resistance spy

How Samuel Beckett became a French Resistance spy

As this year's Samuel Beckett festival opens in Enniskillen, James Knowlson, recalls how the Irish writer risked his life for liberty and narrowly escaped capture by the Gestapo
We will remember them: relatives still honour those who fought in the Great War

We will remember them

Relatives still honour those who fought in the Great War
Star Wars Episode VII is being shot on film - and now Kodak is launching a last-ditch bid to keep celluloid alive

Kodak's last-ditch bid to keep celluloid alive

Director J J Abrams and a few digital refuseniks shoot movies on film. Simon Usborne wonders what the fuss is about
Once stilted and melodramatic, Hollywood is giving acting in video games a makeover

Acting in video games gets a makeover

David Crookes meets two of the genre's most popular voices
Could our smartphones soon be diagnosing diseases via Health Kit and Google Fit?

Could smartphones soon be diagnosing diseases?

Health Kit and Google Fit have been described as "the beginning of a health revolution"
Ryanair has turned on the 'charm offensive' but can we learn to love the cut-price carrier again?

Can we learn to love Ryanair again?

Four recent travellers give their verdicts on the carrier's improved customer service
Billionaire founder of Spanx launches range of jeans that offers

Spanx launches range of jeans

The jeans come in two styles, multiple cuts and three washes and will go on sale in the UK in October
10 best over-ear headphones

Aural pleasure: 10 best over-ear headphones

Listen to your favourite tracks with this selection, offering everything from lambskin earmuffs to stainless steel
Commonwealth Games 2014: David Millar ready to serve up gold for his beloved Scotland in the end

Commonwealth Games

David Millar ready to serve up gold for his beloved Scotland in the end
UCI Mountain Bike World Cup 2014: Downhill all the way to the top for the Atherton siblings

UCI Mountain Bike World Cup

Downhill all the way to the top for the Atherton siblings
Save the tiger: The animals bred for bones on China’s tiger farms

The animals bred for bones on China’s tiger farms

The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

A former custard factory, a Midlands bog and a Leeds cemetery

Introducing the top 50 hidden spots in Britain
Ebola epidemic: Plagued by fear

Ebola epidemic: Plagued by fear

How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
Chris Pratt: From 'Parks and Recreation' to 'Guardians of the Galaxy'

From 'Parks and Recreation' to 'Guardians of the Galaxy'

He was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star