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Analysts Say Technology Offers Businesses an Edge in the Global Market


Analysts say changing global markets require a new approach to business that makes innovative use of technology. Mike O'Sullivan has more from Los Angeles, where economists and executives are learning to cope with unpredictability in the world of business.

Global trade and instant communications are changing the nature of business, says Mohan Sawhney, who teaches technology at Northwestern University's Kellogg business school. He says the companies that are thriving are those that are agile enough to respond to changing markets.

Once, he says, the automaker Ford set the standard for efficiency, when it mass-produced its early Model-T cars. They were cheap and reliable, but buyers had the choice of just one color - black. Today, he says, consumers drive the market and businesses must respond to customer preferences. He says technology lets them do that.

"The new business model is something like the Toyota Scion, where you can have it configured to your taste 40 different ways, assembled right there, made to order and delivered to you through an Internet-based ordering system," Mr. Sawhney says. "We are not there yet, but that would be the vision for how industry is evolving."

David Moschella of the research organization Leading Edge Forum says consumers can do their banking and buy airline tickets online, and the value of the technology they are using goes far beyond the cost of the computers and networks.

He says global technology is getting a boost in some unexpected places. The coffee giant Starbucks lets patrons in some outlets surf the Internet through wireless connections.

"Starbucks is a great example," Mr. Moschella says. "I mean, five, six, seven years ago, who would have thought that the leader in wireless marketing and promotion in the world, arguably, would be a coffee shop? It is quite remarkable, yet that is what has happened."

The two analysts shared their thoughts at a recent forum at the Anderson School of Management of the University of California, Los Angeles.

Mr. Sawhney said old business concepts need to be revised. The idea of "supply chains," he says, does not describe the complexity of the modern business world. He adds that the metaphor of a business organization as a "machine" is also outdated.

"And the new metaphors and the richer metaphors, I believe, are coming out of biology and ecology, where you start to think about the organization as a living, sensing, responding organism that exists within a larger ecosystem," Mr. Sawhney says.

He says today's businesses are linked in complex webs to suppliers and customers, and must sense and respond to markets by instantly altering products to meet the demand.

He says companies that are doing this include the U.S. retail giant Wal-Mart, which tracks inventory and adjusts orders from suppliers every few hours, and the Spanish retailer Zara, which changes its clothing designs every other week to produce more of the styles that customers are buying.

He says that even a leading cement firm, the Mexico-based Cemex, uses technology to cope with a difficult market. Cement, once mixed, has a short shelf life, and building contractors usually pay a stiff penalty if they must cancel an order on short notice. But builders are at the mercy of the weather, so Cemex has created a network of roving trucks, and uses computers and a global positioning satellite to get cement where it is needed on short notice.

The analysts say other companies that hope to compete in the global marketplace must make strategic use of the new technology.

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