What Globalization Really Means

In his latest online column for Time magazine, Drucker Institute Executive Director Rick Wartzman writes about the evolving nature of international business by looking at OAO AvtoVAZ, Russia’s biggest car maker.

Last week, Wartzman notes, Bo Andersson, “a Swede who served as a top executive at the American auto giant General Motors,” was nominated to become the first foreign president of AvtoVAZ, “in anticipation of its takeover next year by a French-Japanese alliance of Renault and Nissan. . . .

“It is hardly news that the world is now tightly stitched together,” Wartzman adds. “But it is easy to lose sight of just how quickly and thoroughly globalization is taking place, and just how much it is changing the way businesses are being managed.”

Among the trends that Wartzman highlights—and that Andersson’s rise illustrates—are several that Peter Drucker anticipated: the growing use of “alliances, joint ventures, minority stakes, know-how agreements and contracts” by multinational companies; an embrace of “the developed West’s values” by much of the world; the imperative to manage an increasingly complex global supply chain; the need to understand both the global economy and local politics and culture; and a recognition that only first-class standards will cut it.

“No institution can hope to survive, let alone succeed, unless it measures up to the standards set by the leaders in its field, anyplace in the world,” Drucker wrote. “This is true particularly in manufacturing. . . . Performance below the world’s highest standards stunts, even if the costs are very low and even if government subsidies are very high.”