The practice of management will have to base itself on the new assumption that its scope is not legal but the entire economic chain.
Business growth and business expansion in different parts of the world will increasingly not be based on mergers and acquisitions or even on starting new, wholly owned businesses there. They will increasingly have to be based on alliances, partnerships, joint ventures, and all kinds of relations with organizations located in other political jurisdictions. They will increasingly have to be based on structures that are economic units and not legal—and therefore not political—units.
There are many reasons growth henceforth will be based on partnerships of all sorts rather than on outright ownership and command-and-control. One of the more compelling will be the need to operate in both a global world economy and splintered world polity. A partnership is by no means a perfect solution to this problem. But at least the conflict between economic reality and legal reality is greatly lessened if the economic unit is not also a legal unit, but is a partnership, an alliance, a joint venture, that is a relationship in which political and legal appearance can be separated from economic reality.
ACTION POINT: A very successful U.S. company constructed a number of plants in South America. A less prominent U.S. company decided to form alliances with existing companies in South America. The first company failed miserably, whereas the second succeeded. What insights are provided by this reading as to why the second was successful and the first a failure?
Management Challenges for the 21st Century
* Source: The Daily Drucker by Peter F. Drucker