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Peter F. Drucker symposium on contract employees, mergers and acquisitions, and globalization. Drucker begins the symposium discussing the dangers involved in organizations which have formed relationships to people who are not actual employees, but contract employees. He predicts that such relationships will be far more common and far more pervasive in the future. Drucker emphasizes that organizations now have to operate in terms of a global economy even if the business is purely local or regional because of information exchange. Fundamentally in money, furthermore, there really is a global economy. In the past exporting and multinationals were the primary ways that “globalized” finance was occurring. Today, corporations are more inclined to pursuit ongoing mergers, therefore linking them with other firms and building continual global alliances. There are three reasons why this phenomenon is not just a fad, namely, technology, the absence of subsidiaries, and the traditional multinational becoming too expensive. Only the Japanese, explains Drucker, can financially justify acquisitions--neither Americans nor Europeans can. Additionally, the average rate of return on acquisitions is below four percent. Alliances, joint ventures, and partnerships will consequently be the way of the future, as an alternative to buying, for globalized--and globalizing--organizations. For these corporate endeavors, there are several rules. The first rule is to make sure your organization understands its long-term objectives, as the most dangerous thing in these kinds of situations is success. Second, one has to think through and be public about basic policy and make it clear. Last, one must build right into the last agreement a provision for the arbitration of differences. Understandings of the world economy are going to be different, partly because “global economy” is a difficult concept to grasp--it is actually becoming more local. To repeat, having clarity in objectives, clarity in basic policies, and, third, incorporating someone who can remove conflict before it becomes debilitating, comprise the changes necessary for organizations to continue in the world economy.
Drucker, Peter F. (Peter Ferdinand), 1909-2005 New York University New York University. Graduate School of Business Administration Mergers and Acquisitions Contract labor Global economy and development Globalization Information Information revolution International economic integration International economic relations International finance International trade Exports Multinational corporations Money Technology Subsidiary corporations Japanese Japan--Economic policy Japan Rate of return Alliances Joint ventures Partnership Policy Arbitration Arbitration (Administrative law) Conflict management Conflict Resolution Conflicts Mergers and acquisitions of corporations Objectives Symposia
Original recording, April 25, 1990; Drucker Archives; Box 68