The Lexus and the Olive Tree

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The Lexus and the Olive Tree

• Understanding Globalization

Book by Thomas L. Friedman Report by Baron Stout
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Overview

• Thesis
• Explain how a new generation of globalization
  became dominant and how it effects everything
• Globalization
• The inexorable integration of markets,
  nation-states, and technologies
• Based on free market Capitalism

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Two Times of Globalization

• End of World War I until 1989
• Cold War Period
• USA vs. USSR
• 1989 to present
• Since the fall of the Berlin Wall (Communism)

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Globalization

• Characteristics
• Own dominant Culture
• People Movement
• Structure Power

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Comparing the Cultures

• Cold War (Old)
• Division The Wall
• Frozen
• Regional homogenization
• Weapons
• Einstein
• Friends and Enemies

• Globalization (New)
• Integration The Web
• Dynamic Growing
• Americanization
• Bandwidth
• Moores Law
• Competitors

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Comparing the Cultures

• Jacob Frenkel
• Beforewe started by looking at the local
  markets, local financial systems and the
  interrelationship between them, and then, as an
  afterthought, we looked at the international
  economyNow we reverse the perspective. Lets not
  ask what markets we should export to, after
  having decided what to produce rather lets
  first study the global framework within which we
  operate and then decide what to produce.

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People Movement

• Demographic Pattern
• People moved from agriculture and rural areas to
  urban areas with urban lifestyles

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Structure Power

• Old System
• Nation-states dominated and balanced each other
  from within
• Globalization
• Between nation-states
• Nation-states global markets
• Nation-states individuals

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Structure Power

• Between nation-states
• USA sole superpower
• Nation-states global markets
• Global investors finance markets
• Nation-states individuals
• Terrorists

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Information Arbitrage

• Arbitrage
• Having a lot information, from many different
  sources, and then knowing how to sort it out
• in Globalization
• Knowing as much about the complete makeup of a
  country and how each one depends on the others

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Information Arbitrage

• Six areas of knowledge
• Politics
• Culture
• National Security
• Finance
• Technology
• Environment

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The Lexus the Olive Tree

• The Olive Tree
• All that is old and traditional
• What roots us to a place, culture or family
• The Lexus
• All that is new and innovative
• Drive for sustenance and improvement
• Global markets

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Lexus vs. Olive Tree

• Cold War
• Olive tree vs. Olive tree
• Globalization
• Norway vs. European Union
• St. Pierre-de-Trivisy vs. Coca-Cola
• India tests nuclear weapons

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And the Walls Came Tumbling Down

• Changes from Cold War system to Globalization
• The way we communicate
• The way we invest
• The way we learn about the world

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The way we communicate

• The Democratization of Technology
• Computerization
• Telecommunication
• Miniaturization
• Compression
• Digitization

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The way we invest

• The Democratization of Finance
• Commercial Paper
• Junk Bonds
• Secruitization
• Online Trading

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The way we learn

• The Democratization of Information
• Cable Television
• Compression
• Internet

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Microchip Immune Deficiency

• MIDSyndrome
• Countries or companies who fail to take steps to
  keep up in the global economy

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MIDS

• Stage 1 Pre-microchip (WWI 1980s)
• Less efficient work
• Top down management style
• Stage 2 Information Revolution (1980s late
  1990s)
• Lower barriers of entry
• Increased competition speed
• More customer feedback

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MIDS

• Stage 3 Present and near future
• Companies and Countries restructuring to take
  advantage of global situation
• Democratization of decision-making
• Decentralization of power and information

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Conclusion

• Globalization revolves around embracing and
  exploiting the Internet and E-business.
• Keeping up with, or ahead of, technological
  advances of others will make or break a country
  or company.
• Remember your Olive Trees and buy a Lexus.