The "flattening" of the world
The "flattening" of the world
"Flat World", a term that is first related to Thomas L. Friedman's book "The world is flat: a brief history of the twenty-first century" refers to the changes economy, commerce and society as a result of technology developments that have manifested in the elimination of time and space differences and therefore enable better reach and cooperation on a global level. These changes resulted in the increased ability to exchange knowledge and resources without the geographical limitation, enabling players located in different corners of the world to effectively communicate and interact with each other. Fast reaction, low cost reach and the elimination of physical barriers resulted in the ability to form and benefit from cross border relationships. This found expression, among others, in an increased interchange of information and an ability to track and exploit resources and talents that were until recently out of reach or too costly.
On a sociological level the "flat world" enables better exposure to, and a as a result –infusion of, different cultures, opinions and knowledge. On an economic level it allows countries and companies to increase their efficiency and capabilities by cooperating with, or competing against, parties from other and distant parts of the world. As markets become global, they are affected by forces that were until recently out of play and while it opens new opportunities it also increases the level of competition by the introduction of new entries which enjoy an equal opportunity.
One of the major implications of the "flat world" is the introduction of emerging markets to the western and more developed playfield. Thus, for example, players from lower cost economies (such as East Asia) can take part in the market and influence the cost of production or operation, a phenomenon that resulted in the ability to outsource procedures from western and more costly regions to cheaper ones, increasing the efficiency and competitive advantage of outsourcing and off shoring companies.
Enablers
- Increased platforms of communication, travel and exchange (both of tangible and intangible assets)
- The internet – increased penetration and use (possible due to vast network infrastructures and a reduced cost of computers), increased speed (due to broadband and processing technologies) and increased usability (web 2.0)
- Shifts in cultural beliefs and openness, enabling diffusion of different knowledge, opinions and skills
- Governmental regulations – enabling channels of communication, collaboration and trade
Inhibitors
- Political and international forces (such as grouping of countries and regions)
- The 2008 economic crisis, that may result in changes of monitory policies and disciplines, such as a possible restriction on funds flows
Paradigms
As a result of the flat world horizons have broadened. Companies are no longer constrained to a geographical limited market but are able to reach and enjoy multi markets and multi opportunities. New possibilities have risen, related to every part of the supply chain, such the ability to find the most cost efficient resources on the globe and use them to their advantage. On the other hand, the level of competition has risen as entities from every corner of the globes have an access and can operate in every market. A "flat world" implies that companies can look for the most suitable resources possible on Earth, increase the scope (and size)of their target markets and even increase their productivity (as work can be performed continuously, regardless of the time zone).
Timing
1973 Invention of the mobile phone 1992 the internet is open to the general public and starts being used for commercial purposes 2004 The term Web 2.0 is coined