|
|
In fact, information processing technology has advanced to such a degree, that FED Chairman Alan Greenspan named it among chief factors of curbed, short-lived recession in the US economy: “The massive drop in equity wealth over the past two years, the sharp decline in capital investment, and the tragic events of September 11 might reasonably have been expected to produce an immediate severe contraction in the US economy. But this did not occur. Economic imbalances in recent years apparently have been addressed more expeditiously and effectively than in the past, aided importantly by the more widespread availability and more intensive use of real-time information.” He puts it even further, saying that the use of technology brought about “reduction in the volatility of output and in the frequency and amplitude of business cycles for the macroeconomy” (Bank of International Settlements’ Review 48/2002).
The corporate world’s experience confirms this. During the bubble ‘90s General Motors invested billions in new computers and information technology, which proved vital for the corporation during the post-bubble slowdown. GM executives continually watched market and when needed, reacted immediately, adapting to the new circumstances. As the recession was unfolding, GM economists spotted downturn in weak sales reports. They immediately cut production by more than 20 %, laid off tens of thousands and launched biggest discounts campaign ever run. It helped boost sales, freeing storage lots, which were overcrowding only a few months ago. As other car producers followed GM lead, auto industry recovered and sold almost 17 million cars, which was second only to the previous year’s record. (R. Thomas, K. Naughton, “The Confused Economy: Is The Business Cycle Dying?” Newsweek, June 18, 2001).
The better, real-time, information enabled the GM executives react quickly according to the situation. Therefore, the next rule says: to reduce their exposure to volatile market, corporations should equip themselves with tools that will help better monitor day-to-day developments and react accordingly.
Permanent vigilance and quick, adequate responses to threats and challenges from outside world have become the central elements of another transnational company, Ikea’s strategy to overcome a different challenge facing business world today - a growing wave of anti-globalization and corporate-protest movement, which also has proved to elevate instability for large corporations. When the issue of poor labour conditions in developing countries, where majority of Ikea’s suppliers are located, had reached popular awareness a decade ago, the leading furniture maker became a target to numerous accusations from media and activists. However, “executives have scanned the horizon for possible threats – and stunned save-the-forest types by showing up at the door with generous offers of money and help. Not surprisingly, IKEA has rarely heard its name chanted in disgust, at least not for long”. (C.L. Miller, “The Teflon Shield”, Newsweek, March 12, 2002). According to the author, Ikea’s invulnerability to anti-corporate activists was “forged in rapid response to crises” and “hardened by strategic retreat when necessary”.
On the background of environmentally conscious society and a world divided into rich and poor, increased social responsibility of enterprises is indeed a big issue, which no company will afford to neglect. Today’s reality demands from the corporate world more than simplistic PR tricks. As founder and president of the World Economic Forum Klaus Schwab notes, the after-attacks developments along with growing resentment toward global business force us to rethink the roles of business and government in our lives. Resurrection of government as a society conductor and “de-legitimization” of business, particularly after the Wall Street scandals, are undisputable issues. Therefore, argues Schwab, the private sector, government and civil society should strike a real partnership to achieve cooperatively “a new era of growth and prosperity, accompanied by significant improvements in justice, equality and global governance” (K. Schwab, “What Business Can – and Can’t – Do”, Time, February 4, 2002).
To sum up, the environment of volatility dictates companies to pursue constant changeability instead of seeking stable havens. To succeed in this task, companies will increasingly depend on innovations and ideas. Permanently changing circumstances force companies to stay alert all the time to adjust timely. Sophisticated data processing equipment will facilitate it. Finally, business world should review its priorities on economic, environmental and social performance and work closely with government and civil society.
|
Tags
You must be logged in to add tags.
|
Writer Profile
Chingiz Maatkerimov
This user has not written anything in his panorama profile yet.
|
Comments
Too Obvious. Andrey Ryabovol | Aug 12th, 2004
I should say, that I couldn't find anything new in the essay. Aspects that the author underlined are almost the same. Moreover some of them don't say anything.
"Finally, business world should review its priorities on economic, environmental and social performance and work closely with government and civil society." This phrase says nothing... Absolutely... It has been true for last 1000 years.
All the time, in democratic society companies face ?ompetition, until there is a monopoly. Top managers job is to deal with problems that are being caused by competition. Top managers existed forever, so the fact that companies should work to struggle with other companies is old as business is.
I wanted to see some new definite examples of volatility, because most of them are extremly interesting.
I hope my comment will not be lost and forgotten.
You must be a TakingITGlobal member to post a comment. Sign up for free or login.
|
|
