The Lexus and the Olive Tree

1. Understanding Globalization The Lexus and the Olive Tree Book by Thomas L. Friedman Report by Baron Stout

2. 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

3. 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)

4. Globalization • Characteristics: • Own dominant Culture • People Movement • Structure & Power

5. Cold War (Old) Division – The Wall Frozen Regional homogenization Weapons Einstein Friends and Enemies Globalization (New) Integration – The Web Dynamic & Growing “Americanization” Bandwidth Moore’s Law Competitors Comparing the Cultures

6. Comparing the Cultures • Jacob Frenkel: “Before…we 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 economy…Now we reverse the perspective. Let’s not ask what markets we should export to, after having decided what to produce; rather let’s first study the global framework within which we operate and then decide what to produce.”

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

8. Structure & Power • Old System • Nation-states dominated and balanced each other from within • Globalization • Between nation-states • Nation-states & global markets • Nation-states & individuals

9. Structure & Power • Between nation-states • USA sole superpower • Nation-states & global markets • Global investors & finance markets • Nation-states & individuals • Terrorists

10. 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

11. Information Arbitrage • Six areas of knowledge • Politics • Culture • National Security • Finance • Technology • Environment

12. 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

13. 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

14. …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

15. The way we communicate • The Democratization of Technology • Computerization • Telecommunication • Miniaturization • Compression • Digitization

16. The way we invest • The Democratization of Finance • Commercial Paper • Junk Bonds • Secruitization • Online Trading

17. The way we learn • The Democratization of Information • Cable Television • Compression • Internet

18. Microchip Immune Deficiency • MIDSyndrome • Countries or companies who fail to take steps to keep up in the global economy

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

20. 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

21. 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 Tree’s and buy a Lexus.