Globalisation will bring opportunities

Dubai: For the first time in history, five billion or 80 per cent of the world's population will become part of the global supply chain. And about three billion, or half of mankind will become connected to the internet, creating a tremendous opportunity for global businesses.

"The good news is that this creates a tremendous amount of opportunity, however, the bad news is that we are navigating almost through fog without any rules," C.K. Prahalad, strategy guru, told delegates at the Leaders in Dubai conference on Tuesday.

"The question is, how do you manage this without proper rules in a globalised world where the opportunities are gradually opening up in emerging markets like China and India?"

He said the key for managers was to find out how to change strategies to match changing realities. Business is no longer about products and supplies, it's more about experience and value addition, he said.

"From vertical integration to supply chain integration, today's business world is moving towards an experience integration," he said.

"For example, take iPod and Google - these are experiences. Google doesn't have much on the page or its website. But it allows the user to find out whatever he wants. Similarly, iPod is a successful experience in storing, listening to and managing music according to one's taste.

"In the coming years, innovation in experience and value addition will determine the success level of any product and service," he said.

He said the fact that the products in the past used to influence. Now it's the other way round. Through experience, customers either accept or reject the products and in turn dictate their tastes.

"Starbucks is negotiating with the Ethiopian government which insisted that the company will have to use its products in Starbucks outlets, a fact that demonstrates that customers are now calling the shots," he said.

"It all boils down to an innovative value chain that will take the competition to a new level. This is how the future of competition will shape up.

Prahalad, an award-winning strategist, said future opportunities lie in the developing world which are emerging markets with lots of possibilities.

"China's growth has largely been based on exports while India's growth has been dictated by the internal consumption," he pointed out.

"The challenge for China is to turn the workers into consumers while in India this is already happening."

He said capacity building is the key.

"The poor countries can widen the scope of the opportunity by empowering their people, a task the NGOs have already begun," he said.

"For example, a Jaipur foot (a locally made artificial limb for those who lost legs in war or terror attacks) costs $25 to make, but in the US it costs $1,200."

Cataract surgery costs $30 in an Indian hospital, but it costs $3,000 in the US. One of the many Indian healthcare institutes recorded 2,500 surgeries a year.

"The key here is capacity building in the rural areas and maintaining the high price performance level of products and services. Where would one get this surgery done so cheap?" he asked.

"Nearly five million new subscribers register for cellphone services in rural India, opening up opportunities for many. In Bangladesh, Professor Mohammad Yunus has experimented the same through his Grameen Bank model."