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IBM CEO talks to Financial Times

atbell

TRIBE Member
Not really sure what to think of this article. It brings up some good things and some bad things.

Like are big companies "multi nationals" or are the becomeing "supra nationals", being above and out of reach of national interests.

Reading things like this is one of the reasons I still like the idea of federal governments as some kind of counter balance.

(From Financial Times)
IBM chief calls for end to colonial companies
By Francesco Guerrera in New York and Richard Waters in San Francisco
Published: June 11 2006 22:02 | Last updated: June 11 2006 22:02

Sam Palmisano, head of IBM, on Monday called on multinationals to evolve into a new type of corporation if they are to avoid an anti-globalisation backlash that leads to the election of governments hostile to the interests of big business.

In a rare public intervention, Big Blue’s chairman and chief executive writes in today’s Financial Times that traditional multinational companies need to abandon their almost colonial approach to operations outside their home country. He cites as examples of this old-style method the way GM, Ford and his own company built factories in Europe and Asia but kept all the research and development in the US.

Instead, he argues they need to move towards full global integration of their operations so as to stop the current unease about the forces of globalisation turning into an all-out assault on big business. The danger for multi-nationals that fail to change their thinking is that countries will elect political leaders who impose draconian labour regulations or try to constrain free trade.

“The alternative to global integration is not appealing: left unaddressed, the issues surrounding globalisation will only grow...People may ultimately choose to elect governments that impose strict regulations on trade or labour, perhaps of a highly protectionist sort,” he writes.

His views could upset many US anti-globalisation campaigners who see offshoring as a threat to US jobs. But to them, Mr Palmisano replies: “These decisions are not simply a matter of offloading non-core activities, nor are they mere labour arbitrage – that is, shifting work to low-wage regions.”

The IBM chief’s decision to go on the offensive comes less than a week after he announced plans to invest $6bn in India, highlighting the latest step in Big Blue’s efforts to shed its multinational structure.

IBM’s bid to become more global marks an attempt to revive its flagging growth rate while unlocking a new source of productivity growth. Last year, it overhauled its European operations to reduce its strict focus on country-level operations, and executives said last week that the move to a global management approach could produce productivity improvements of 3 per cent a year.

He says traditional multi-national companies were designed to deal with the “protection and nationalism” that held sway in the 20th century. The modern company, Mr Palmisano writes, is a “globally integrated enterprise”, which spreads its strategies, production capacity and management around the world in order to be close to markets and customers.

“The globally integrated enterprise is an inherently better and more profitable way to organise business activities – and it can deliver enormous economic benefits to both developed and developing nations,” he writes.
 

Deep_Groove

TRIBE Member
It's a little light on the specifics...

"he argues they need to move towards full global integration of their operations"

Its not clear what's meant by "full global integration" or what it would look like. Would every department and level of hierarchy be geographically situated wherever they had the best comparative advantage?"

Assuming that's what it is - sure, a company with multinational operations and multinational working capital ownership is efficiently integrated in the managerial sense, but we also have to look at the international distribution of the equity ownership - if its a public company, as many multinationals are. The decisions of the managers can often be ultimately pulled in the direction the owners want - and thus geopolitical considerations can come to bear.

It could be argued that these may be more important and influential in stimulating popular sentiment than the mere multinatinal distribution of operations

- Deep_Groove
 

SellyCat

TRIBE Member
When the pilots of NMCs refer to things like total global integration, they are usually referring to the barriers in place to protect the economies and nations in which they operate. These barriers are, of course, anathema to the corporate ethos and prevent them from more efficiently exploiting the resources within those economies. Since those resources include labor, it is only natural for the host nations to want to protect them. Some have more integrity and power than others and those are the ones that interfere with NMCs' ability to fully integrate their operations across the international system.

Integration involves a single set of standards, but the standards fluctuate from state to state, which means departmental interoperability more difficult. That type of inefficiency costs money for the corporation.

If IBM could just make up its OWN laws and apply them to every country in which it operates, then it would truly be supra-national. And that would be unacceptable. Corporations are driven by the bottom: lower costs, increase revenue. Taxes, wages, environmental protection, pensions, job security, community give-back and social responsibility are all costs. NMCs seek to lower and/or eliminate these costs to the maximum extent. If IBM could apply its own standards--i.e. not bother with these things at all--then it would make even more profit.

Governments exist, first and foremost, to protect the safety and wellfare of their citizens. I find it absurd that governments have lost so much power over these companies, and all because they provide this magical "Foreign Direct Investment", which in almost every case has weakened state sovereignty. I'm not a big fan of governments, but they are far better for the people than corporations are.

In "Rise and Decline of The State" by Martin Van Creveld, there is a chapter about how the attack on welfare systems around the world is the beginning of the end for the State. As governments are pressured by the corporate sector to be less involved in the provision of social serivices, MNCs are going to step in and pretend to provide those services. Being as obsessed with costs and profits as they are, these corporations will--in fact, they MUST--end up providing the lowest possible quality of service. This means that people will be dependent on their employers for all the social services previously provided by governments, which were not interested in raking in massive profits.

Bad news.
 

Vincent Vega

TRIBE Member
SellyCat said:
Being as obsessed with costs and profits as they are, these corporations will--in fact, they MUST--end up providing the lowest possible quality of service. Bad news.
Well, they are also obsessed with growth. An alternate take on your opinion above would be: they MUST end up providing the highest quality of (social) services at the lowest cost. Significant deviation from that approach may accelerate their demise.
 

man_slut

TRIBE Member
Vincent Vega said:
they MUST end up providing the highest quality of (social) services at the lowest cost. Significant deviation from that approach may accelerate their demise.
There have been some studies that state companies with social responsibility practices can attract and retain some of the best employees. A lot of people are willing to take a significant pay cut to work for a well established company with good social responsibily practices.
 
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SellyCat

TRIBE Member
Vincent Vega said:
Well, they are also obsessed with growth. An alternate take on your opinion above would be: they MUST end up providing the highest quality of (social) services at the lowest cost. Significant deviation from that approach may accelerate their demise.
In the United States, insurance companies ask doctors what the MINIMUM amount of care is for any particular case. The IC then writes that up in their policy as the MAXIMUM allowable treatment. That's an industry-wide practice.

Profit-making means you have to lower costs (service) and increase revenue (price). Public goods are very price ineslastic. People HAVE to consume them. With things like development, the notion that you can get the most for the least really ends up translating into getting the least for the least.
 

Vincent Vega

TRIBE Member
SellyCat said:
Profit-making means you have to lower costs (service) and increase revenue (price).
Yeah but you're assuming that minimizing cost is the sole determinant of profit and growth (or "success"). There are other intangible factors that lead to corporate growth (and healthier profits) such as man_slut's point made above yours. Socially responsible companies can end up attracting a higher calibre work-force thus allowing them to outperform their peers. Companies that grind away at costs with their eye solely on the bottom line lack innovation, become stagnant, and lose any competitive edge they may have temporarily gained. Many of the best corporations provide a pretty healthy scope of services while still remaining very profitable (and keeping the almighty shareholder happy)

So it is incumbent on XYZ Corporation in our scenario here to ensure they are providing levels of services sufficient to attracting and retaining the best workforce at the best, most manageable cost.

Now I see what you're saying and there is ample evidence to refute my argument but bear in mind that I was initially reacting to your assertion that they must provide the lowest possible quality of service.

(Oh and I also don't see this precipitous decline of the state as happening any time soon)
 

man_slut

TRIBE Member
VV- (Oh and I also don't see this precipitous decline of the state as happening any time soon)

I will do every thing in my power to make sure this never becomes a reality in my lifetime! Proletariats of the World Unite! Funny enough most labour in North America actually believe they have a chance to become rich one day and resent the NDP or any lefy pro-labour party! Most Labour suffers from the "my ‘masta’ will be good to me if I shows him what I'm capable of Maybell!" syndrome.

You should see the warehouse manager were I work. A complete scab and extremely racist. He plays golf, is extremely stupid and doens't recognize the fact that he will never make it past the glass cieling.
 

SellyCat

TRIBE Member
ANy time soon is a relative concept. I can't remember what time-frame Van Creveld was talking about--I think he was studying the stages in the process more than applying a temporal assessment to it.

But anyway, there are examples of companies that have proper corporate ethics. However, the most successful and profitable ones most certainly do not fall within this category.
 

SellyCat

TRIBE Member
man_slut said:
VV- (Oh and I also don't see this precipitous decline of the state as happening any time soon)

I will do every thing in my power to make sure this never becomes a reality in my lifetime! Proletariats of the World Unite! Funny enough most labour in North America actually believe they have a chance to become rich one day and resent the NDP or any lefy pro-labour party! Most Labour suffers from the "my ‘masta’ will be good to me if I shows him what I'm capable of Maybell!" syndrome.

You should see the warehouse manager were I work. A complete scab and extremely racist. He plays golf, is extremely stupid and doens't recognize the fact that he will never make it past the glass cieling.
3% of the US population owns 50% of its capital. 18% of the population thinks it's in the top 3%

Source: A speech by Canada's ambassador to the EU last year at UofT.
 
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atbell

TRIBE Member
man_slut said:
Funny enough most labour in North America actually believe they have a chance to become rich one day and resent the NDP or any lefy pro-labour party! Most Labour suffers from the "my ‘masta’ will be good to me if I shows him what I'm capable of Maybell!" syndrome.

You should see the warehouse manager were I work. A complete scab and extremely racist. He plays golf, is extremely stupid and doens't recognize the fact that he will never make it past the glass cieling.
I've seen this all over. And it's not just labour that is being driven by the promise of riches. Professionals are under the same type of delusions from what I have seen. Lots of promises about future gains but nothing is gurenteed. It looks an awful lot like companies hire young, expecting grads (lawyers are the worst) and work them until they burn out in two or three years, then hire a new batch of grads. (can you see the bitter?)

Companies have really got a strangle hold on thier workers and managers seem to think that thier employees should be "grateful" to even have a job.

I better stop before I write an essay on this.
 

SellyCat

TRIBE Member
atbell said:
I've seen this all over. And it's not just labour that is being driven by the promise of riches. Professionals are under the same type of delusions from what I have seen. Lots of promises about future gains but nothing is gurenteed. It looks an awful lot like companies hire young, expecting grads (lawyers are the worst) and work them until they burn out in two or three years, then hire a new batch of grads. (can you see the bitter?)

Companies have really got a strangle hold on thier workers and managers seem to think that thier employees should be "grateful" to even have a job.

I better stop before I write an essay on this.
ANd you know what, honestly this depresses the shit out of me. this is exactly the barrel that I'm looking down. School has done this to me under the false pretense that getting an education is gonna help me get a "good job". And the more I observe around me, the more full of shit I realise they have been. The people I know who are making good money work in the business world. Sure, they don't like their jobs, feel isolated and don't know what the fuck happened with their plans and ambitions...

Anyways. This sucks. I'd like to hear some examples of things that worked out okay. I realy don't want to grind away my life knowing that all there is to look forward to is work, isolation and bitterness.

But hey, at least I'm keeping a positive outlook! :D :D :D <screws on the silencer>
 
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