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The Borderless World, rev ed: Power and Strategy in the Interlinked Economy Paperback – May 19, 1999
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"Full of insights into the new reality of interlinked economies and international companies. A compelling case for governments to align themselves with the interests of their people--as customers, consumers, and citizens."-- Senator Bill Bradley (D--NJ)"Ohmae has few peers. . . . [His] latest is actually a lucid, compelling . . . highly enjoyable race through a business world which is itself doing just that--racing along in a mostly enjoyable and certainly compelling manner." -- Robert Heller, "Management Today""A true global corporation, [Ohmae] says, serves the interests of consumers, not governments, and wealth comes from the marketplace, not from natural resources. Like an enthusiastic college professor, Ohmae challenges business's status quo with provocative statements."-- Donna Hawley, "San Francisco Chronicle"
From the Publisher
One of today's leading business thinkers shows companies how to win in the new global marketplace. --This text refers to an out of print or unavailable edition of this title.
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At the business level, most of Ohmae's reasoning seem sound, and is based on basic economic principles such as economies of scale and the bargaining power a global corporation might realize etc. What may be most controversial in his book are Ohmae's views on globalization. In most ways Ohmae's view is utopian.
Ultimately Ohmae left me unconvinced in regard to his view on the speed, the benefits, and even the best methods of dealing with the ILE/globalization.
Two other good books dealing with these topics in interesting ways are Lindblom's "The Market System", and also to some degree Huntington's "Clash of Civilizations".
Anderson Analytics, LLC
The concept of the interlinked economy is obviously now more apparent than it was in the 1990s. At the height of globalization, developed countries in the west were able to export their products thereby increasing their consumer base and business influences. It seems to me that this book was an accurate prediction of the shifting paradigms in global businesses. Today, countries are confronted with the borderless nature of business transactions. Instead of fighting this reality, those that embrace the shift are more likely to benefit in global competitiveness.
This great book will help you understand the development of globalization from the 1990s to the impact it is having on business today. You will understand how the interlinked economy works and how you can leverage this to make profits from the economy of scale as you begin to carter to a larger audience. I recommend this book to anyone who may be wondering whether they are ready to take their business global and how globalization will continue to influence global competitiveness.
2. Partnerships: Nothing stays propriety for long and no player can master everything. Partnerships are key to spreading of technology.
3. Reducing fixed costs: To compete in global markets, companies have to incur and show find a way to defray - immense fixed costs. Automation has drive the cost of labor out of production and manufacturing has become a fixed cost activity. R&D has become a fixed cost. With globalization all major players in an industry are or may become direct competitors. You need your own people and your own labels too. That's fixed cost.
4. Brand: Brand name is a fixed cost. For many product, a brand name has no value if brand recognition falls below certain levels. You must spend enough money on brand promotion to realize "pull" benefits. With some products you can better use the same money to enhance commissions so that the sales force will push them.
5. Is IBM Japan an American or Japanese company? Its workforce is 20,000 Japanese, but its equity holders are American. IBM Japan has provided 3 times more tax revenue to the Japanese government than Fujitsu.
6. The Government's role. "People have become more informed and clever, as a real consequence of living in a truly global information era. And now governments have become the major obstacle for people to have the best and the cheapest from anywhere in the world." "What the energy crisis has taught us is that for a short term the `have' nations can create a supply shortage if they gang up. However, over a longer period of time, alternative supplies develop and the economic principles of supply and demand prevail." "Having an abundance of resources has truly slowed down a country's development, because bureaucrats there still think that money could solve all problems". "The key to success is shifting the focus from resources to marketplace." "The government's role, then, is to ensure that its people have a good life by ensuring stable access to the best and cheapest goods and services from anywhere in the world, not to protect certain industries and certain clusters of people." "Every time governments try to protect resources, markets, industries, and jobs, they cost the taxpayers dearly." "Government officials exercise power by regulating and deregulating the market, but their new role is to assume a backseat, not the driver's position, and to make sure that their country is benefiting fully from the best-performing corporation corporations and producers in the world, at the lowest possible cost to their people on a long-term basis"
7. Service Sector. In the US the service sector represents 70 percent of the work force; the cost of manufacturing is about 25 percent of the end user cost; the leading edge producers have all but eliminated simple labor from production and use robots; value chain produces high quality and cheap products in a globally interlinked economies; the most value added is in the marketplace; governmental preoccupation with production forces them to hang onto old and incompatible industries, disserving the customer and the taxpayer.
8. Equidistance: Japanese engineers working for different companies in Kyushu, a small island only 100 km away from South Korea would cat a late flight on Friday evenings to South Korea, work privately for S Korean semiconductor companies; this was illegal and violated employment agreements; the exchange of knowledge made semiconductor design methods and software similar through out the world. The Japanese learned to tailor products to local market interest, needs, and preferences rather than create a global product. Companies that are globally successful in white goods focus on close interactions with individual users; where as those that prosper with equipment installation focus on interactions with designers, engineers, and trade unions.
9. Customer oriented Strategies: Japanese auto companies are caught between a low cost producer, Hyundai and a high-end producer, Mercedes or BMW. Korea's Hyundai, Samsung, and Lucky Goldstar produces high volume products, half of what it costs the Japanese. The Japanese are caught in the middle. If you're a Japanese leader, what do you do? First, dramatically reduce the content of labor in production and push towards full automation. Examples are Nikon Seiko, Mazak Machinery, and Fujitsu Fanuc. The second way out of the squeeze is to move upmarketet toward higher margin products. Corporate culture and price cutting instincts will work against the move, as low-cost marketing games feel comfortable and predictable. Sometimes getting back to strategy means getting back to a deep understanding of what a product is about. Basics of sound management means looking closely at the customer needs, thinking deeply about a product.
10. Demand: Do more better. Create a second demand boosting market is the key. "If your goal is to beat the competition, you win by narrowing your field of vision and doing more better". "But why do companies stick with such devotion to a course that is obviously self-destructive?": Subborness, intensive rivalry, companyism, inescapable defeat or retreat phobias, nationalism, correction action did not occur because the situation did not become painful enough, and consensus from the group they were doing the right thing. "Companyism get much of its strength from this consensus-building mechanism". All must suffer visible before corrective action will occur. "Maintaining the customer relationship through good service is now the key to success". Measurement counts. Measure the powerful and often invisible influences on what you think and do.