Issues Management in the Global Economy: Moving beyond Being Just Multinational

By Evans, John C. | Defense Counsel Journal, October 1998 | Go to article overview

Issues Management in the Global Economy: Moving beyond Being Just Multinational


Evans, John C., Defense Counsel Journal


The development of use of knowledge throughout a corporate enterprise is the way of the future and the route to its becoming a good world citizen

"GLOBALIZATION is where the market is going. They've seen the trend, and they've gone along with it." So said Mark Lynch of SBC Warburg Dillon Read in commenting on the activities of the United Kingdom household products company Reckitt & Colman. This is not an isolated observation. It applies across the board, from pharmaceuticals and biotechnology to household goods, from utilities to oil and gas and mining, from chemicals to engineering, from banking to insurance and from telecommunications to transport.

In common with many U.K. companies, Reckitt & Colman evolved by expanding first into the countries of the old British Commonwealth, recruiting locally and permitting local management a great deal of autonomy. A similar path was followed by the likes of Imperial Chemical Industries. These businesses were international, but not global. They did not pursue a coherent global strategy.

U.K. companies were not alone in evolving in this way. That pattern of evolution was inevitable in the early part of this century. The most significant factors influencing the ending of local or regional hegemonies have been the advances made in transport and telecommunications, making possible what was previously impossible. It is no longer necessary for locally based subsidiaries to be empowered and for the corporate headquarters to be nothing more than a financial holding company. The old system has given way to a global structure controlled from the U.K., the United States, Germany or Japan in such a way as to ensure continuity of supplies, consistency of product formulation, sharing of knowledge and global branding.

KNOWLEDGE IS POWER

We are beginning to see just how wide-ranging are the issues that require managing, ranging from product safety through protection of intellectual property rights to environmental, health and safety issues. Influences range from the political to the economic, and from the regulatory to the social to the technological. They are complex issues made all the more difficult in a world where enhanced communications not only enable a business to become global rather than international but also empower and enfranchise those who claim to have suffered harm.

Documents disclosed in U.S. litigation, more often than not without the benefit of any protective order, are now posted on the Internet, and so are accessible by or on behalf of potential claimants world-wide. There is no implied undertaking, as there is in the U.K., to use documents only for the purpose of the litigation in which they were disclosed. Failure to comply with regulatory standards, inconsistent submissions to regulatory authorities, failure to act in a manner advocated by interest and pressure groups--all these can result in the rapid dissemination of information, sometimes justifiably, sometimes not. There are examples of "scare stories" that have depicted global businesses as pariahs. If that happens, can lost ground be retaken?

While the Internet is anarchic, it does empower the individual. The same is sometimes said of the U.S. tort system. Just as one has been exported, so will be the other. In a globalized economy, to be frank, the ultimate globalization will be that of American law--or, perhaps more accurately stated, of the common law that fathered the U.S. tort system. Some commentators even go so far as to label "globalization" as "Americanization." Since the end of the Cold War, a tidal wave of energy, once concentrated in the national defense and government sectors, has been redirected into commercial life.

An individual in Malaysia exposed to some toxicological agent is more likely than ever before to seek a remedy. A judge in Guatemala, Peru or Zimbabwe is more likely than ever before to be offended by inconsistencies in the giving of warnings or in compliance with regulatory requirements as between, say, their countries and the United States. …

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