There, they get the work done their way, with their tools and in their own space, but with much lower costs that in their native country.
Friedman is a firm believer in offshoring and states that such a process is a strong stimulant for fair and international competition. He criticizes the countries that did not yet adopt it saying that all countries should be members of the international market, regardless of their social or economical background.
To explain this idea, the author makes an exaggerated comparison. He says: "Every morning in Africa, a gazelle wakes up. It knows it must run faster than the fastest lion or it will be killed. Every morning a lion wakes up. It knows it must run faster than the slowest gazelle or it will starve to death. It doesn't matter whether you are a lion or a gazelle. When the sun comes up, you better start running." (the World Is Flat, Chapter 2, "The Ten Forces That Flattened the World," p.113). In other words, it does not matter if you are a highly developed country or a less developed one, your duty is to participate to the world competition and promote your country's best products.
Flattener 7: Supply-Chaining
Eating Sushi in Arkansas
Supply-chaining is the seventh element that contributes to the flattening of the world. Friedman defines it as "a method of collaborating horizontally -- among suppliers, retailers, and customers -- to create value" (the World Is Flat, Chapter 2, "The Ten Forces That Flattened the World," p. 128).
The horizontal collaboration technique implies the removal of old fashion vertical structure, in other words, elimination of hierarchy. Members of a horizontal structure have more confidence in their work and capabilities as they are not faced with hierarchical superiors, but rather work together with equal colleagues. The author believes that "The more these supply chains grow and proliferate, the more they force the adaptation of common standards between companies (so that every link of every supply chain can interface with the next), the more they eliminate points of friction at borders, the more the efficiencies of one company get adopted by the others, and the more they encourage global collaboration." (the World Is Flat, Chapter 2, "The Ten Forces That Flattened the World," p. 129)
The most relevant example in support of this theory is the success registered by Wal-Mart. By applying this particular strategy, Wal-Mart became the biggest retail business in the world.
Flattener 8: In-sourcing
What the Guys in Funny Brown Shorts Are Really Doing
In the eighth subchapter of his second chapter, Friedman discusses the issue of insourcing and defines it as a collaboration and horizontal creation of value. The actual process of insourcing implies "the delegation of operations or jobs from production within a business to an internal (but 'stand-alone') entity (such as a subcontractor) that specializes in that operation. Insourcing is a business decision that is often made to maintain control of certain critical production or competencies." (Wikipedia, Insourcing)
To prove that insourcing is not only a flattening element, but also a highly beneficial one, Friedman gives readers numerous examples. Among these examples are FedEx or UPS. He states that these companies are not just carriers, but much more. Around the late 1990s, UPS began operating in the business of "synchronized commerce solutions and is now able to service virtually any supply chain from one corner of the flat earth to another." (James Berry, Review on the book "The World is Flat")
To give a clear explanation of the phenomenon, Friedman goes even further and helps the reader understand the logics behind the relationship of Nike and UPS. He takes the case of a customer who places an online order on the official website of Nike. Further on, the request is being directed to UPS who prepares and realizes the...
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