Tuesday, May 18, 2004

Globalization & Challenges of Project Management

“Globalization refers to all those processes by which people of the world are incorporated into a single world society, global society” [Albrow, Martin. 1990. Introduction: Globalization, Knowledge And Society. London: Sage].

Globalization, according to Robertson is “ the crystallization of the entire world as a single place. Globalization is the compression of the world as well as the intensification of consciousness of the world as a whole” [Robertson, Ronald. 1990. mapping The Global Condition: Globalization As The Central Concept. Theory, Culture And Society 7].

During the period between the 1980’s and the 1990’s, the pace of business in Malaysia and other East Asian countries were fast and furious. The rate of growth that companies could achieve was astonishing and seems “ miraculous”. During these boom times (1989 – 1997), many middle size Malaysian companies have grown into large conglomerates because the owners have seized every opportunities available simply because the opportunities were available and they were tempted to bullishly inflate their business size, even thought the business opportunities may not match their fields of expertise. Many entrepreneurs simply jump into business every each way as opportunities comes abegging and not much thought was placed on the overall synergies of the business. Many of these conglomerates have grown exceptionally big, grossly diversified and unfocused, and as a result, they were too poorly managed, lack structure, lack transparency, and are devoid of internal checks and accountability. The structures of these conglomerates are at best, chaotic.

In those good times, we often read of those companies expanding at an accelerated and uncontrolled pace. These companies took excessive risks but they were justified by excessive returns during those period. Poor utilization of resources is camouflaged with high rates of turnover. When business is booming, companies focus on sales volumes of trade. In those frenzy mood, management were no longer sensitive to increased operating costs, expenses and wastages. Productivity and efficiency drops drastically, but this weaknesses are obscured by higher sales volume. In such times of boom, CEO’s and senior management often develop a euphoria regarding their business success and they get carried away and were obsessed with issues regarding corporate images, and personal images. They start by opening more branches; elaborated renovations and many even purchase or build new buildings for their headquarters. They make commitments in fixed assets, which tie the company in great financial obligations for which they would have to service the huge debts in the next few decades. Their overhead expenses are growing faster than their sales performance and profits. Suddenly in 1997, there was the sound of crash landing, the East Asian economic crisis, which caught every enterpreneur by surprise. By then it was too late to back track as they had jump into the deep pit, an abyss.

What really contributed to the financial crisis in the East Asian economies was indeed due to the bubble economy, extremely high growth rate caused by the Governments push for greater privatisation through external borrowings which was unsustainable, and it was further aggravated by the liberalization and globalization of economies.

No century in human history has experienced so much social transformations and such radical changes as the 20th. Century. CHANGE is threatening. There is no right way and there is no learning without mistakes. There are stages to transformation. Although an organization may skip over one, inevitably it realizes it must retrace its steps to cover the missing ground. Everyone must accept the premise that fundamental change is necessary.

"In a rapidly changing business world, nothing stays constant even a short while. The worlds around us have changed fundamentally and that attitudes to the cost as well as the benefits of business activities and economic growth had undergone a profound transformation. The underlying causes which reflect turbulence in the economic, technological, political and social environments, ‘Triggers For Change’"(Peter Drucker). There are so many external factors that can suddenly present themselves and make a company less competitive or drive a firm out of business if they do not adapt and respond to the changes. Companies that are merely focusing on cost cutting without doing anything new or innovative to win new business will achieve their self-fulfilling prophecy of reduction and diminishing themselve into extinction. According to Abraham Lincoln, “the dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty, and we must think anew and act anew. We must disenthrall ourselves”.

From the crisis, we have learned that the old way of doing business is no longer an alternative. Everyone must be aware of the situation everyone is trying to do something – often anything – for survival. No society in history has faced these challenges. But equally new are the opportunities of the knowledge society. Access to the acquisition of knowledge is by learning, which will become the tool available to acquire the skills, technologies and knowledge. The knowledge society will inevitably become far more competitive. Knowledge has become the key resources – for a nation’s economic strength as well as its military strength. Knowledge is not tied to any country and it is portable. It can be created everywhere, fast and cheap. But knowledge is constantly changing. Knowledge always makes itself obsolete within a short period of time. For this reason, the acquisition of knowledge through learning can no longer stop at any age. “Life-long learning” will increasingly be a requirement for any knowledge worker.

Every country, every individual and every business have to take into serious consideration its competitive standing in the world economy and the competitiveness of its knowledge competencies.

Project management is ideally positioned to meet many of the challenges confronting global business enterprises. The compression of the product life cycle and the project life cycle is perhaps the most prodigious force driving changes in the process of managing projects. Due to the intensified global competitiveness, there is a need for sustained innovation and process improvement of which these activities are being represented in a projects environment. As projects become the focal point of business, organizations will naturally adapt and change to support more effective project management.

Project management philosophy and techniques are based on the ideas of performing to maximum potential within the constraints of limited resources. Thus, it is obvious that project management will offer the logical and attractive method for increasing profitability in the business. At such, the rise of project management as a profession is likely to be a key element to the continued development and industrial expansion in Malaysia and around the world.

According to Clifford Gray (Project Management – The Managerial Process, McGraw Hill, 2000), "the organizational culture of most successful firms of the future will be one that support flexibility, places a high importance on projects, and maintains a sustained effort to learn and improve processes." The challenge is to adopt and commit a culture that supports continuous improvement, renewal, and organizational learning.

1 comment:

Anonymous said...

We are not prepared to face globalization. Its a challenge and Malaysians are still sleeping soundly.
Till we get swallowed up by the big sharks of the global empires, we are having a good nap.