Our October meeting covered a topic which affects all of us: the globalisation of business.  Fortunately, there was no rioting, but instead two very interesting talks followed by some wide-ranging questions from the audience.

Michael Kitson, director of the National Competitiveness Network at the Cambridge-MIT Institute, gave a masterly overview of what globalisation means and what implications it has.  He talked about the myths and realities, emphasising that different perspectives give rise to different reactions: at the extremes, people want either to rejoice or riot.

Globalisation is not a new phenomenon.  The “modern” phase is considered to have lasted from 1800 to 1950, and we are now in the “post colonial” phase.  The term itself covers internationalisation of a range of factors, including production and technology, but the process has been accelerated in recent decades by the liberalisation of capital markets.  The result can be seen in a major increase in international trade, which in the last century has consistently grown faster than economic output, except during wartime and the Depression of the 1930s.  The fact that capital markets are now deregulated and that funds can be moved electronically gives nation states little influence over their exchange rates.

This is one reason why some people see multinational corporations as having gained power at the expense of national governments.  In fact, most multinationals are heavily home-based, and most national economies vastly overshadow even the largest individual companies.  Although globalisation is important, its overall effects can be exaggerated.  It is neither a panacea for economic growth nor a plot to increase exploitation.  Global economic growth is boosted, but there are winners and losers among countries and individuals.  The debate between the optimists and pessimists is far from over.

With the broader scene thus set, Nigel Judd, General Manager of Parker Hannifin’s UK sales company, explained how globalisation trends affect the way his own organisation does business.  While increasing internationalisation can lead to unwanted standardisation of products (for example, wine), for a business it provides opportunities to build new markets on a base of consistent brand values.  In the Parker group, for example, there is a very clear organisation and process roadmap.  Things are done in a certain way but, importantly, customers deal with local people.  The company has remarkably few ex-pats, and believes that customers are happier with suppliers who share their cultural outlook.

Although Parker customers see just a local sales company, production takes place at specialised sites, irrespective of where products are marketed.  That said, production facilities are set up close to major markets.  The philosophy is to minimise both lead-time and inventory.  Factories are also kept deliberately small: an ideal maximum of 250 people, to minimise the need for local support infrastructure and ensure that senior managers know all employees personally.

The company certainly seems to have made the most of the opportunities afforded by globalisation.  Parker’s has grown by 260% in the last ten years.  This has been partly by acquisition, but there have now been two consecutive years where organic growth has been higher than 8%.

The Club is very fortunate in benefiting from the sponsorship of the following organisations:-

There are also other companies who give us generous help with specific meetings and services.

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