2 management - School of International Business and ...

Hans H. Steinbeck
ment (PDM). There are several applications available, which can do the job, but the complexity to
implement such an integrated system should not be underestimated and a significant supporting
consulting effort is required as well. At the end, all data and application software is linked, from
the order entry, to the design data, to the Manufacturing Execution System (MES) and the guiding
Enterprise Resource Planning (ERP) such as the one from SAP, all the way to the customer order
fulfillment. Figure 4 shows such a schematic block diagram, which needs to be customized for
each company individually, based on the already installed software.
4 THE IMPACT OF GLOBALIZATION
Mankind did international trade as long as it exists, however Globalization is different and is just
changing the way we do business for the past 40-50 years. There are 3 main factors which sup-
port the impact of globalization on the business as we see it today:
1. Communication – Today real time communication is possible around the world at basi-
cally no cost, as it is used by most private people as well. As it has been discussed in the
previous chapter, today computers are linked globally and communicate with each other
directly, without any people involvement.
2. Transportation – Shipment from one geography to another can be done within a day via
plane, or by ship in a container within weeks at very low cost. Shipping a 42 feet contain-
er from Europe to China cost just around 2000€.
3. Cross Border Trade – While in the past there exists high trade barriers between countries,
making it attractive to produce locally in every country, these are significantly reduced today.
In the past mainly raw material was imported from the developing countries and finished products
sold there, today that has changed significantly. Now finished good are produced and exported
from these countries as well. So production is moving from the developed countries, to countries
which have a cost benefit and/or a large local market. China being the best example for that
change. Producing products in high cost countries and selling them in low cost countries works
for premium and unique products only, as it can been seen for the export success of Germany, es-
pecially for premium cars and special machinery. However the more products become commod-
itized, the more the production process will to be moved to low cost countries. But just moving a
factory to another country to benefit from the low labor rates there, will not be successful. As Sam
Palmisano, former CEO from IBM said:
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