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A short history of entrepreneurial evolution during the 20th Century: Trends for the new millennium A short history of entrepreneurial evolution during the 20th Century: Trends for the new millennium
by Murray Hunter
2014-03-25 10:24:25
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A short history of entrepreneurial evolution during the 20th Century:
Trends for the new millennium

1. Introduction

Looking at entrepreneurship from the economic-history context allows us to look at the flow of events in time and space such as inventions and innovations, the context in which they occurred and the impacts upon society these actions and events had. Looking directly at the biographies of historical figures can assist us in seeing the historical contexts of their efforts, innovations, or inventions. This may help us to understand how their insights occurred and opportunities were identified and exploited, showing us the reasons behind the trajectories these historical figures took with their inventions and innovations which impacted upon society’s future development path.1 Take for example the biography of Thomas Edison we can see the importance of systematic development work, self promotion, and having a workable and viable business model in mind to exploit any subsequent invention. These were paramount elements of his success. Many of the failing entrepreneurs of the dot.com bust of 2000 failed to see the necessity of having a workable and viable business model to exploit their ideas and could have well learnt from the lessons Edison gave us.

Many inventions, subsequent commercialization and acceptance by society have dramatically changed our way of life over the centuries. Electricity and the electric light, the aircraft and jet engine, the automobile and combustion engine, microchips, computers and mobile phones have all in different ways drastically changed society. These changes have led to further opportunities which entrepreneurs have been able to exploit. The transmission of electricity to homes allowed a host of other electrical devices to be invented, air travel led to air freight, travel agents, air terminal services, interstate, inter-regional and international business travel, and the building of hotels around the world, the automobile has led to automobile service stations, the invention of seat beats and other safety equipment, microchips have led to the invention of many items like digital watches, calculators, hand held GPS devices, and a host of other products.  Computers and mobile phones have led to opportunities in software development and peripheral products and services. We owe the progression of our social existence to the invention of new technologies and ways of doing things, the creation of so many concepts and tangible things like alphabets, language, the wheel, farming techniques, cooking, social institutions, and the legal system, etc.

From the historical context it can be argued that innovation is governed by the period and place an entrepreneur resides.2 Thus innovation is a period and regional phenomenon3 and the great inventors through history were products of their environment spotting, and exploiting opportunities, rather than people with brilliance in isolation.4 The inventors and entrepreneurs only knew what their time and place allowed them to know.5 Innovation is thus a situational phenomenon and therefore the time and space aspect of understanding opportunity is important.

Following on from the above argument, novelty becomes a relative concept to time and space. Something that is new to one location may have long time been accepted product or service in another location. McDonalds was accepted in the United States market before it was introduced into foreign markets, were it was novel in each new market at the time of its introduction. Pizza was long accepted in Italy and Greece before it was introduced into the United States in the early 20th century and rest of the world after the Second World War. This has been an advantage for many students from developing countries studying in developed countries, where they have been able to identify novel business concepts in countries that they studied in, and went home to apply these concepts in their home countries upon their return. For example, many new manufacturing, retailing or service business concepts were started in South-East Asia by returning students. The Econsave supermarket group in Malaysia was inspired and foundered by Malaysian students observing independent Foodtown supermarkets in Melbourne, Australia.6

The nature of opportunity is such that it is ephemeral and transitory7 through time and space. Opportunity can be equated to periodically opening and closing doors along a corridor. True opportunities may not exist because a piece of technology is missing. For example, the idea of tourists visiting orbital hotels for holidays will remain only a concept until low cost transportation from the Earth to orbit has been developed. Thus space holidays may be an opportunity for another time, although it is an idea today. Many ideas have to wait for technology to catch up. An opportunity may exist in one place but not in another. Opportunities may exist for high end cafes and coffee shops in densely populated urban areas and high volume passenger transport terminals like railway stations and airports but there may be no opportunity for the same concept in much less populous rural areas where incomes may be much lower and the “urban café culture” does not exist. This shows the importance of time and space.

2. Legacies from the 18th and 19th Centuries

The inventors of the 18th and 19th Centuries made great contribution to the development of Britain, Europe, and America, laying the foundation for these regions to grow at unprecedented rates over the next century. The American South was developed through the steam boats and the cotton industry established with the aid of inventions by Kay, Hargreaves, Arkwright, and Crompton. The American West was settled through the assistance of the railroads and innovation with refrigeration which allowed the cattle industries to supply the East with meat. Some of the most well known American brand names were created during this time from entrepreneurial start-ups aimed at exploiting an opportunity, with similar stories to those outlined in the last section (see Table 1). Mercantilism declined in at the end of the 18th Century and the whale industry around the middle of the 19th Century when petroleum became a substitute for whale oil, showing that opportunity is characterized with a limited lifespan.

Table 1 Some major companies founded during the 19th century

Year Founded



Major Products/Activities


Bethlehem Steel Corporation

First organized by Augustus Wolle. Charles M. Schwab and Joseph Wharton assumed name in 1904

Iron mining, coal mining, steel production, ship building, and railroad car production. Suffered from more competitive foreign competition, domestic mini mill production and change to lighter construction materials and went into bankruptcy in 2001.


The Coca Cola Company

Asa Griggs Candler purchased exclusive rights to John Pemberton’s formula.

Originally developed as a non-alcoholic drink during prohibition in Atlanta in 1886. Became Americas No. 1 selling soft drink by the early 1990s. Coca Cola followed the American war effort around the world and established franchising operations in numerous countries. The Coca Cola company has acquired many brands and is now a leading beverage brands company around the world.


E.I. du Pont de Nemours and Company

Eleuthère Irénée du Pont

Originated as a gunpowder manufacturer, expended into dynamite, divested some assets due to Sherman Antitrust Act in 1912. Invested in Ford Motor Company in 1914, focused on materials science making a number of discoveries and commercializations. 1981 acquired Conoco and expanded into fiber and plastic manufacture. Now a major science based R&D company.


Gillette Safety Razor Company

King Camp Gillette

Developed a safety razor in an era where people had to go to the barber or use a blade prior to this invention. The company developed a brand synonymous with shaving and personal care. The company was purchased by Proctor & gamble in 2007.



William Harley and Arthur Davidson

Started experimenting and making small motorcycles. First offered engines to do-it-yourself trade, then began selling motorcycles. Supplied motorcycles for US war effort, survived the depression. Motorcycles developed outlaw image during 1950s, almost went bankrupt. Revived in the 1980s with a retro-image and Harley motorcycles became sought after, in the “heavy bike” bracket.


I.M. Singer & Co. (The Singer Company).

Isaac Merrit Singer & Edward Clark

Started as a manufacturer of sewing machines. In the 1960s diversified into navigation equipment through acquisition, but sold off in 1990. Sold off sewing machine division in 1989. Singer now produces a wide range of consumer products, including electronic sewing machines. Now owned by SVP Worldwide that also owns Pfaff and Husqvarna Viking Brands.


Levi Strauss & Co.

Levi Strauss and Jacob Davis

Started a work pants manufacturing business with patented copper rivets, which grew to become an internationally fashionable denim leisurewear brand.


New York Condensed Milk Company (Now known as Borden)

Gail Borden

Initially a publisher Gail Borden invented and patented a method of producing condensed milk. The business grew during the American Civil War. Still a dairy based company that diversified into fruit juices, flavored milk, cultured milk, and organic products.


Proctor & Gamble

William Proctor and James Gamble

Started as a candle and soap maker, expanded into cleaning and personal care. Now the holding company of numerous household and personal care consumer brands.

By the end of the 19th century and beginning of the 20th century governments had begun creating regulations and laws governing the railways, roads, banking, and business, establishing a stable business environment. Governments also began to realize their own fiscal and monetary abilities and began to manage their economies from a macro viewpoint. However the continued use of tariffs and protection was to hinder trade in the early 20th Century partly contributing to war and depression. Many entrepreneurs of the 19th Century set the tone of how invention and innovation would occur later in the 20th Century as individuals and corporations, i.e., industrial laboratories, skunk works, etc. Many of the industries started at the turn of the 20th Century were going to grow within massive industries as the century progressed, i.e., automobiles, aviation, steel, petroleum, electric power, communications, media entertainment, and processed products, etc. Entrepreneurship and innovation along the lines of the Schumpeter concept of creative destruction is what made society progress and this was best achieved when encouraged. Figure 1 shows a timeline for the second half of the 20th Century.



Figure 1 Timeline for the second half of the 20th century

The first part of the 20th Century was chaotic for growth and development due to protectionism and national self interest. There were two world wars within a space of less than thirty years. Britain was still a colonial power; Japan was rapidly becoming the power of the East, South-East Asia still underdeveloped and entrepreneurship in America stifled by Roosevelt’s quasi-socialist new deal programs.8 Although the Second World War had a positive influence on new technology development, it was only in the post war years that entrepreneurs began to reemerge in perhaps the fastest thirty years of growth the world had ever experienced. A barrage of new industries based upon newly developed technologies was created and grew, rapidly changing society.

The United States played a major role in victories in both the European and Pacific theatres of war. Most countries within Europe were devastated along with Germany and Japan. China was still locked in civil war and was then to undergo more than 30 years of isolation under Mao’s communist rule. The United States was intact and still had occupation troops in both Germany and Japan. The United States under the Marshall Plan took some responsibility for the restoration of Europe and focused on preventing loss of what had been gained in the battlefield to the communist movement. The US war effort had mobilized the steel/shipbuilding, aviation, automobile, and created a host of new technologies with post war civilian applications, where no other country was in this favored position.

After the Second World War, peace and the likelihood of better times ahead, birthrates dramatically increased across the United States, Europe, and Australia. This lead to a boom in housing with millions of new homes built in the United States alone within the first decade after the war. Automobile sales soared giving Americans the mobility they had never had before. Great demographic changes were occurring in the United States where people in the north were migrating to the south and west. Cities like Phoenix, Los Angeles, Tampa, Orlando, Dallas, and Houston grew dramatically. Women who worked in the factories during the war to support the war effort now had their own incomes and drastically increased purchases of clothes, ladies fashion items, cosmetics, and other consumer items leading to a great growth in consumption that led to many new opportunities in the personal consumption and household products sectors. This drove an emerging banking and financial sector which grew on mortgage and business borrowings.

These changed conditions gave way to many creative opportunities for those who could see them. For example, after the Second World War there were plenty of experienced women that had idle time after their children had grown up. Many mothers wanted part time work and many businesses wanted temporary skilled workers. Russell Kelly saw this connection in 1946 and started finding temporary jobs for part-time workers on a temporary basis. In his first year of business Kelly had 3 employees, 12 customers, and USD $848 in sales (Eaton 1998). Today Kelly Services has more than USD 5.3 Billion sales9 and operates across 30 countries. It can be claimed that Russell Kelly created the temporary employee industry that is worth more than USD 40 Billion worldwide covering engineering, education, nursing, and other industries with many 1000s of large and small businesses following the Kelly business model.

The example of Amway also shows how innovation can also come from a new business model that is constructed to take advantage of the increasing affluence and spending power of a growing American middle class and recognition that personal relationships have a great influence upon consumer buying decisions. Jay Van Andel and Richard DeVos were close friends and participated in a number of ventures together as partners in the 1940s that included a hamburger stall, air charter service, and sailing business. In 1949 they were introduced to Nutrilite Products, a direct selling company founded by Dr. Carl Rhenborg. Nutrilite had the first multivitamin tablet ever sold in the United States and Van Andel and DeVos seeing the potential of this product signed up as distributors. After attending a Nutrilite conference in Chicago a few months later Van Andel and DeVos decided to go into distributing Nutrilife on a full time basis.10 Later that year Van Andel and DeVos set up Ja-Ri Corporation in an attempt to add more products to the Nutrilite range they were selling by importing wooden products from South America.11 They introduced what is called the multi level concept of marketing where distributors would be given an extra commission on sales made by people they recruit in addition to the margins they make from their own sales, plus another commission based on the sales volume they and their recruited sellers achieve.12 By 1958 they had over 5,000 distributors.

Van Andel and DeVos with some other top distributors looked into how they could get more products to sell through their multi level marketing networks in addition to Nutrilite and formed the The American Way Association to represent distributors.13 Van Andel and DeVos bought the rights to manufacture and market a product called Liquid Organic Cleaner (LOC) and subsequently formed Amway Sales Corporation. In 1960 they purchased a 50% interest in the manufacturer of LOC, ATCO Manufacturing Company in Detroit and renamed it Amway manufacturing Company. In 1964 all the companies under the AMWAY banner were consolidated into Amway Corporation. Amway expanded into Canada (1962), Australia (1971), United Kingdom (1973), Hong Kong (1974), Germany (1975), Malaysia (1976), Netherlands (1978), Japan (1979), and to another 45 countries over the last 30 years. Amway is one of the largest privatively owned companies in the world today with sales of USD 8.9 Billion in 2009.14

3. The Post World War II Period

Within the first decade of the Second World War more than half American households owned cars, where Ford, General Motors, and Chrysler dominated the market. The automobile very quickly became a concentrated industry based at Detroit. This promoted the growth of specialist manufacturers like A.O. Smith, Bendix, Bosch, Electric Autolite, American Axle & Manufacturing Holdings, and Johnson Controls, etc. which carved out extremely narrow specialist niches. The automobile manufacturers also developed networks of dealers and service centers. The future role of the automobile as a means of travel was greatly enhanced when the US Congress passed the National Highway Act in 1956 to build four lane interstate highways across the United States. Just what the railroads did in the 19th Century, the automobile was going to do in the 20th century opening up the way for passenger and freight travel by road.

As the highways opened up travel between towns and cities, restaurants were needed for people to eat while traveling. Ray Kroc just quit his job at 53 as a paper cup salesman to sell a multiple milkshake mixer to restaurants around the United States. One of the restaurants he called upon was the McDonald’s brothers’ store in San Bernardino California in 1954. Mac and Dick McDonald’s drive-in store had an assembly line arrangement that handled fries, hamburgers, and beverages on a mass production basis which was very efficient and allowed the brothers to monitor quality. Kroc also saw that the restaurant was much cleaner than others around America at the time and had a family, rather than ‘hang-out’ type atmosphere that burger joints were notorious for. Kroc envisaged that this model could work successfully all over the United States and negotiated a franchise agreement with the McDonald brothers.15 Within a year Kroc opened a test store in Des Plaines, Illinois developing procedures and checklists right down to how and when to clean rubbish in the car park. From the first store in 1955, Kroc opened more than 200 stores in the first five years and by the mid 1960s was opening more than 100 stores per year. Kroc opened the Hamburger University to train employees to the procedures of making burgers to operating a store. Today McDonalds Corporation is the World’s largest chain of fast food restaurants.

The automobile also changed the way cities developed, now families could live further away from their place of work in newly sprawling suburbs which drove the home construction industry. New suburbs would also create new opportunities for local businesses that supplied groceries and other staples and services to residents, greatly decentralizing retailing in the United States. The new suburbs encouraged the establishment of hardware, furnishing, plumbing, kitchen, white and electrical goods industries to grow. This saw the rise of General Electric consumer products, RCA radios, and Zenith televisions that rapidly expanded to supply increasing consumer demand. Utility companies supplying telephone and electricity became large corporations during this period with rapid increases in demand for basic services.

By the 1950s ordinary people in the United States could afford to travel and the emerging airlines around the world were picking up increased business. Aircraft could fly further in much less time. Aircraft navigation and safety had greatly improved. The Douglas DC 4 and later the much faster Lockheed Constellation were both capable of traveling across the American continent and across the Atlantic directly from New York to London. The development of tracking and weather radar allowed airports to control traffic much more efficiently. Flight was now becoming a common occurrence. This not only led to a growing aviation industry but also led to opportunities to create new tourist industries where locations had suitable vistas and spurred the growth of the hotel industry in major cities.

One entrepreneur at that time Kemmons Wilson saw that hotels around America tended to be dirty, had few conveniences and facilities and didn’t have enough space for children who they charged at the same rate as adults.16 Wilson traveled around the United States with his wife and children staying in many hotels to see what they had to offer. He concluded that people should expect familiar surroundings in the different cities that they stay in, thus a Holiday Inn should be standardized but at the same time have a local theme, clean, predictable, family friendly, and readily accessible to road travelers. He designed what he believed should be a good hotel, opening the first Holiday Inn in Memphis, Tennessee in 1952. By 1968 there were over 1,000 Holiday inns around the United States alone. The Holiday Inn chain set the benchmark and standards for hotels linking them with an international reservation system that later rivals Best Western, Quality Inns, and Ramada Inns had to match.

By the 1950s radio and television was becoming an important part of American culture. Radio during the war had kept everybody up to date with what was happening and radio took the mantle from newspapers as the most important source of news. Radio broadcast stations increased from 900 in 1945 to over 3,000 by 1948. The National broadcasting Company (NBC) and Columbia Broadcasting System (CBS) dominated the airwaves through their own and affiliate stations. Both networks fought to get the best personalities for their various children’s, drama, comedy, mystery, and news programs. Radio advertising became a powerful means to promote products and both networks competed strongly for the advertising dollars. Although experimental television broadcasts began in 1928, regular broadcasting only commenced in 1946 with DuMont Television Network, with NBC following in 1947, and CBS and ABC in 1948. By 1948 more than one million households owned television sets with about 30 broadcasting stations operating in 20 cities around the United States. NBC dominated the early television programming producing similar types of programs to what had been popular on radio. Ownership of television sets grew as they got larger, programming improved and color came in 1954. By the mid 1950s about half of American households owned television sets. Advertisers flocked to this new medium and television was to show Americans that their country was the most advanced technically in the world.

American industry supported by research and development during the war was set to provide a peace dividend to society. Technology affected all aspects of life. Homes ran almost completely on electricity with new inventions like electric garbage disposals in the sink, automatic garage doors and curtains, and a large range of new electrical appliances. Nuclear energy was going to be the power of the future where Lewis Strauss, Chairman of the United States Atomic Energy Commission stated that electricity in the future “would be too cheap to meter.17 The USSR launched the first satellite Sputnik 1 in 1957 beginning the space race and new medicines and medical procedures were being developed that gave people confidence about the future. Within agriculture too, there were leaps and bounds in technology. Until the green revolution took place in the late 1940s, agriculture relied primarily on traditional methods of production, based on preventative measures and local inputs. Through technology advances during the Second World War, farm productivity improved dramatically. This was achieved through chemical based fertilizers, pesticides, and herbicides, based on petroleum by-products, ironically spin-offs from the chemical warfare programs. This lead to the growth the American chemical companies like Monsanto and Dow Chemical. In addition a number of labor saving and automation inventions and innovations such as the tractor and plough arrays and automated harvesters enabled the development of extensive farming on a much larger scale than ever before, making people believe that the World had food security.

International trade was growing but shipping was inefficient as every package had to be unloaded from a truck or railroad car and lifted by a crane into the hold of a ship and unloaded at the destination in the same way. Malcolm McLean had built up a trucking company from a single truck to a fleet of over 1,770 trucks making his company the second largest in the United States. He saw that the way goods were shipped was totally inefficient and saw great advantages if the whole load could just be lifted on and off a ship, truck and trailer. As trucks on a ship would waste space, McLean refined his idea to just lifting on and off standardized boxes or containers. At the time in the United States the owner of a trucking company could not purchase a shipping line due to antitrust laws. Mclean sold his trucking interests and purchased two shipping lines with the idea of converting the vessels to containerization. Mclean at first converted two old Second World War ships and commenced a container service between New York, Florida, and Texas in 1957. McLean’s company was renamed Sea-Land Service Inc. in 1960. Although the idea was initially resisted by the unions at the beginning, containerization gradually became accepted around the world by the end of the 1970s. Although the idea was not completely new,18 Mclean had refined the concept and put it into practice, which eventually revolutionized the shipping logistics of world trade.

The 1950s came to a conclusion with a decade of continual growth. The American corporation brought a blissful existence to the middle class by employing and providing them with affordable television, entertainment, cars, fast food, and new urban lifestyle in carefully planned suburban situations around a nuclear family that brought conformity.19 The McCarthyism movement of the decade was allowed to grow out of this conformity and organizations became centers of belongingness and subservience to the greater corporate good, rather than individualism and non-conformism where creativity was a group pursuit. Thus during the 1950s the majority pursued a career rather than self employment and entrepreneurship. American business by 1960 dominated the world in so many fields automobiles, aviation, steel, entertainment, broadcasting, shipping, pharmaceuticals, and petroleum, where corporate American was unchecked by government, foreign competition, consumer movements, or class actions.

4. The 1960s

Whereas the 1950s had been an age of conformity, the sixties took on much more complex social and political trends. The sixties was a time when counter cultures developed which created a diverse mixture of views. This period saw modern feminism emerge, the American civil rights movement, and the aboriginal people of Australia finally granted the right to citizenship. However the sixties also saw retrograde events such as the building of the Berlin wall, the Arab-Israeli War, and a continuation of a long dragged out war in Indo-China. Many governments, particularly in Europe and Canada adopted the welfare state model, some becoming mildly socialist in their outlooks. Science moved ahead in leaps and bounds symbolized by the flight into earth orbit by Yuri Gagarin of the Soviet Union at the beginning of the decade and the landing on the moon by Neil Armstrong and Edwin Buzz Aldrin in July 1969. The world heard about the first working laser, watched television transmitted through the first Atlantic satellite, played the first computer video game, and used the first automated teller machine (ATM). Back on the ground US car makers continued to manufacture high horse-powered motor vehicles up until the end of the decade, dominated by the three major manufacturers Ford, general Motors, and Chrysler. The 1960s also saw the end of colonialism in over 30 countries and was a period of under developed and developing economies in Africa and South-East Asia. The 1960s was also the beginning of the era of mass marketing.

Post war America was an age when products were marketed with some promotional support to assist them to sell. This was more as an afterthought rather than being any central tenant to the firm’s marketing strategy. But the 1960s saw a great increase in competition which gave consumers much more choice. In 1958 Ford created a new division to launch a new model called the Edsel. After much fanfare the motorcar failed to live up to sales expectations and sold miserably and was taken out of production by 1960 providing a loss of more than USD 359 Million.20 There have been many reasons given for the failure of the Edsel in marketing postmortems over the years,21 but essentially the car missed the opportunity it was designed and developed for. The market that the car had been developed for changed dramatically before it could be launched. By the time the Edsel came onto the market, the middle price segment was a shrinking market with companies serving this segment battling against becoming insolvent. Studebaker abandoned producing the Packard, American Motors discontinued producing the Nash and Hudson, and Chrysler discontinued the brand DeSoto. Sales in this segment were down as consumers were slowly shifting to smaller cars like the more efficient Volkswagen Beetle. In contrast the Edsel had a powerful engine requiring premium fuel, with very poor fuel economy. The Edsel was just the wrong car at the wrong time.22 It was just too expensive to buy and own.

Although branding was nothing new to America,23 brand management was still in its infancy. Proctor & Gamble in Cincinnati found in the 1930’s that it had a number of successful brands in the same category like Camay and Ivory soaps that needed a new way to manage so that due focus could be given to each brand. The company gave responsibility for total brand management to a single person (product manager) under a brand management system, which took over all decision making in regards to the brand in the company.24 By the 1960s, brand management spread throughout most consumer goods companies and is still a widely practiced functional structuring of a marketing organization today.

Thomas Watson Senior, the founder of IBM realized that for an organization to be profitable, focus must be orientated towards the customer rather than the product. The objective of a company is to serve the customer, rather than become immersed in the product and technology it has developed. Watson developed this concept and embedded it within the core values of IBM which was based on the belief competing vigorously and providing first class customer service was the key to success. This philosophy is successfully used as a strategy in a number of companies around the world today as a source of their competitive advantage, including FedEx, Thomas Cook.

In 1960, E Jerome McCarthy conceptualized the four P’s of the marketing mix; product, price, place and promotion,25 as the most important ingredients in setting marketing strategy. It was not a great breakthrough in marketing thought, rather a convenient way to view strategy. It was developed at a time when mass industrial marketing was growing rapidly and in recent times the marketing orientation of strategy has dramatically changed as the 4 P’s have become much more integrated and other factors from a customer point of view like customer needs and wants, cost, convenience, communication, distribution and relationships are seen as being more important. However, the concept until today is taught in marketing courses around the world and used by management in their marketing strategy development.

Right into the 1960’s most companies in America were production orientated, seeing the market as the means to dispose of their production. This went well until ‘slow downs’ in consumer purchases create stock build ups in warehouses and interfered with production. Theodore Levitt argued that companies should become much more customer orientated in their approach to the market.26 Levitt’s ideas were inspired by Ford providing customers with what he thought they wanted and the rise of General Motors in gaining market share by providing customers with variations of the basic product by providing new colors, more choice and new models. Although Levitt’s ideas were accepted by corporate America in the 1960’s, it was not until the 1980’s that the marketing revolution came to fruition. Marketing departments began growing and the marketing manager became a powerful driver of the company.

Although multinational corporations were not the invention of America, as the early pioneer companies were mostly European, i.e., Bayer (German 1863), Nestlé (Switzerland 1867), Michelin (France 1893), and Lever Bros. (UK 1890), it was now the American companies that were at the forefront of technology that had developed through intensive local competition. The American domestic market aided US firms to become innovative, develop technologies and business methods, plan and execute strategies effectively.27 The major pull to US firms to develop foreign operations was primarily because of high transport costs and the high tariff regimes that many national governments built around their industries to attract local manufacturing. During this decade many leading American firms expanded to Europe, Australia, Latin America, and Asia. One of the side effects of the growth of US corporations abroad was the influence they had on local cultures and societies. There social impact was mainly through the advertising and products they made available and through the new working conditions they offered to local employees.28 Multinational companies also developed linkages that helped to develop local suppliers, sub-contracting, and generally encouraged new entrepreneurial ventures.29

Sam Walton had been in the retail trade most of his life starting his career at a J.C. Penny store in Iowa. He eventually ran a store called Ben Franklin in Newport, Arkansas, going on to open his own store under the Ben Franklin group in Bentonville called Walton’s Five and Dime,30 where he found great success through discounting. Walton first opened a Wal-Mart Discount City Store in Rogers, Arkansas in 1962, and within five years expanded to 24 stores across Arkansas. By 1968 Walton expanded beyond Arkansas and the following year opened a head office and centralized distribution centre in Bentonville, operating with 38 stores, 1,500 employees and sales of USD 45 Million. Wal-Mart had by 1988 upon Sam Walton’s retirement opened up more than 1,600 stores and created jobs for more than 212,000 people.31 By 2010 Wal-Mart has over 8,500 stores in 15 countries under various banners and is considered the world’s largest retailer and public company by revenue.

Sam Walton saw opportunity by cutting costs and lowering prices to consumers as a formula for success. He focused on continuous improvement of efficiency and cost control in a similar manner to John D. Rockefeller did almost a century before him. The high inflation era of the 1970s worked to his advantage as consumers became much more price conscious and willing to go without service, travel long distances, and buy in bulk to save.

Wal-Mart stores had adverse affects on the small retail sector in the area when a new store was opened, demonstrating Schumpeter’s concept of creative destruction.32 Wal-Mart saved American families money on everyday expenditures and created jobs.33 Walton created a new business model now emulated by almost all retail chains in the world that redistributes costs from products they buy and transport to new logistic profit centers. Sam Walton was the richest man in the United States according to Forbes from 1982 to 1988, when his income was partially distributed to members of his family. Today Wal-Mart operates under various banners in Argentina, Brazil, Chile, China, Costa Rica, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Puerto Rico, South Korea, and the United States.

Mary Kay Ash was a divorced woman with three children and went to work for Stanley Home Products, a direct marketing company based in Houston. She obtained a respectable salary within the firm but resigned when someone she had trained got a promotion above her, which she believed she was entitled to.34 Having left Stanley, she began to write a book which turned into a business plan of what she believed to be the perfect company and decided to start up the company. In 1963 with her son Richard Rogers, Mark Kay Cosmetics was formed with USD $5,000 investment.

Ash focused on skin care which was a market segment ignored by other companies at the time. She believed that simple door to door selling had its day and that the party-plan concept with a beauty demonstration in the homes of housewives that agreed to be hostesses would be the best sales strategy. Ash recruited representatives from suburban housewives who gave clinics on beauty and skin care and performed personalized make-up lessons to participants. As Ash believed that the caliber of the representatives was the key to sales, she put in lots of training, monetary rewards, and special prizes of pink Buicks and Cadillacs, which became a trademark of the company. By 2008, Mary Kay Cosmetics had 1.7 Million representatives worldwide and more than USD $2.0 Billion revenue. Mary Kay Cosmetics now operate in the United States, Australia, Canada, Argentina, Pakistan, Germany, Malaysia, Mexico, Thailand, New Zealand, Guatemala, Taiwan, Spain, Sweden, Bermuda, Brunei, Norway, Singapore, Russia, UK, Brazil, Japan, China, Portugal, Finland, Czech Republic, Ukraine, El Salvador, Hong Kong, Slovakia, Korea, India, Poland, and a number of other countries, with plants in the United States and China.

The 1960s saw a steady company growth within an environment of economic prosperity. There were large investments in research and development during the decade. Research and development since the Second World War started laying the foundation of a new industry that was to have immense influence upon the world. Computer development was currently restricted because of their massive size and limited computing capacity. William Shockley had been heavily involved in research for the war effort and went to work at the Solid State Physics Laboratories at Bell Laboratories with John Bardeen, Walter Brattain, Gerald Pearson, Robert Gibney, Hilbert Moore, and many other scientists working on solid state electronics at the time. They were attempting to improve upon vacuum tube amplifiers and in 1947 Bardeen and Brattain succeeded in creating a point-contact transistor that achieved amplification without Shockley. Bell’s attorneys started the process of patenting the discovery, along with a number of others, all without Shockley’s name as a co-inventor. This angered Shockley who believed his name should also be included as the work was based on his field effect data. He continued his own research secretly to build a different form of transistor based on junctions instead of point contacts, believing this to be more commercially viable. Shockley developed proof of his principals in 1949, resulting in the junction transistor and found a method to manufacture it a couple of years later. The junction transistor became dominant in the marketplace.

Shockley eventually left Bell laboratories and spent some time as a visiting professor at the California Institute of Technology (Caltech). He formed the Shockley Semiconductor laboratories with the backing of Beckman Instruments and recruited some of the best graduates in America. In 1957, a number of researchers left Shockley Semiconductors to join Sherman Fairchild and form Fairchild Semiconductors. Some of them later left to form Intel Corporation, with some leaving again to form National Semiconductor and Advanced Micro Devices.35 Over the course of two decades, a number of Shockley’s employees had founded 65 companies forming the foundation of what is to become known as Silicon Valley.

William Shockley failed to get his three-state device to work, became a controversial philosopher, acclaimed rock climber, in later life became reserved and isolated from his friends and finally died in 1989. Both Fairchild and Texas Instruments working independently succeeded in putting micro-processors onto a single chip and the computer industry could begin to develop in earnest.

At the end of the 1960s the United States was still led by the manufacturing sector, with the steel industry at the pinnacle. However the nature of the market was slowly shifting unnoticed by most US firms. The first signs of trouble were emerging within the steel industry. Wages were spiraling, demand shifting away from steel products, new economies of scale being introduced through mini-mills, profits plunging downwards, and poor management vision was hindering appropriate responses. The US industry took a knee-jerk reaction blaming cheaper imports as the source of their problems. These complaints resulted in the stop-gap measure of having a Voluntary Restraint Agreement to limit imports in the industry, in effect putting blinkers on the stewards of the industry, blinding them to the structural industry changes that were occurring.36 In fact Japanese steel was being produced at 70% of the cost of US steel due to better efficiencies, leading American producers to cry that dumping was occurring, which had little resemblance to fact.37

Finally, American business saw the emergence of the consumer advocacy movement which was going to win some large cases against corporate America in the coming decades. In 1962 Rachel Carson wrote a book called Silent Spring warning of the dangers of pesticides, especially DDT within the food chain, resulting in the banning of DDT. In 1964 a young graduate of Harvard law school Ralph Nader wrote a book Unsafe at any Speed which raised concerns about the safety of General Motors Corvair. American corporations saw a rise in claims for any mishap however remotely associated with their products, supported by industry ‘experts’ in the lawsuits, most often creating bad media publicity. Corporations at first responded by attacking the personal backgrounds of these claimants, which in the GM case led to Ralph Nader filing for damages and winning on appeal USD $425,000 from General Motors. The next decade was to be very challenging for American corporations as the rest of the world began to catch up with them, where all sorts of new constraints and problems were to emerge.

5. The 1970s

The social progression that began in the 1960s continued during the 1970s with people becoming much more politically aware. The author Tom Wolfe coined the 1970s as the “Me Decade”, suggesting that post war wealth has led to self-absorption and people believing in their own immortality.38 This resulted in a new attitude of individualism in stark contrast to the communitarianism of the 1960s. Women became much more economically independent. The hippy movement centered on the United States continued until the end of the Vietnam War and waned, being replaced by groups that advocated world peace, opposed to nuclear weapons, and became hostile to governments and big business. The environmental movement was just beginning with organizations like Greenpeace and Friends of the Earth becoming popular with fringe, alternative and counterculture groups across Europe and the United States.

During the 1970s the Organization of Petroleum Exporting Countries (OPEC) restricted oil production, resulting in radical increases of the oil price in 1973 and again in 1979, which brought petrol rationing in some Western countries. The 1970s saw the phenomena of stagflation, where both inflation and unemployment occurred at the same time, presenting many policy dilemmas to governments around the world. This eventually lead to neo-liberal economic policies in the 1980s which promoted monetary policy, trade liberalization, floating exchange rates, deregulation, and privatization, strongly advocated by the incoming prime minister of Britain, Margaret Thatcher in 1979.

The 1970s was also a time where China began coming out into the world, taking its seat in the United Nations and opening up dialogue and diplomatic relations with many Western countries. Japan early in the 1970s sunk into deep recession due to the oil embargo, but the economy later boomed when corporate Japan took their place in the international arena in the textile, automobile, motorcycle, camera, watch, consumer electronics, fine chemical, and steel industries.39 The 1970s saw a rise in Middle East tensions which were to continue into the new Millennium culminating with the Munich Olympic massacre, a Middle East war, and finally in 1979 a peace agreement between Egypt and Israel brokered by the then United States President Jimmy Carter. America seemed to be held for ransom during the US Embassy hostage crisis, shortly after the Iranian revolution disposing the Shah, who was an American ally. Along with the earlier fall of the Saigon Government in 1975; this portrayed the United States as being weak. The Soviet Union invaded Afghanistan, which was going to greatly weaken the USSR and finally lead to the fall of communist regimes across Europe within the decade.

America was about to pioneer the personal computer. Microprocessor manufacturers became locked in fierce competition developing more powerful and faster processors that created the platform for ever better personal computers. Personal computers would within the space of a couple of decades erode the dominance of companies like IBM that had almost completely dominated the computer industry during the 1960s. What was ironic is that a group of entrepreneurs who in the main did not finish college or university were able to spot the emerging opportunities and exploit them in the 1970s, so much better than IBM.

Two college dropouts, Steve Jobs and Steve Wozniak had assembled a small computer which they called the Apple in Job’s family garage. The original Apple contained an assembly board with about 60 chips, a read-only memory (ROM), a power transformer and a keyboard packed in a case that could be connected to a small television for a monitor. Other machines at the time used either LED lights or teletype machines for readout, which made the Apple 1 the first interactive personal computer around. Jobs and Wozniak sold about 200 units and went on with the help of Ronald Wayne and funding from A.C. “Mike” Markkula to form Apple Computer, Inc. Soon after, they launched the Apple II, hired Mike Scott from national Semiconductor as CEO. By 1980 Apple achieved sales of over USD $120 Million, elevating both Jobs and Wozniak to celebrity status. Apple had joined the ranks of the Fortune 500 faster than any other company in history by making computers easy to use.40 Apple went on to launch a computer that had a mouse and utilized desktop icons as the menu to make computers even easier for people to use. Apple Computer was quickly joined by other companies, including Commodore which launched the Commodore PET in 1977, Atari with the Atari 400 and 800 in 1979, and Tandy with the TRS-80 soon after. By the end of the Millennium there were 2.6 people for every computer on the Earth.

William Henry “Bill” Gates was born to a well to do family, his father an attorney and his mother a company director. During his early years at school, Bill Gates was very interested in the application of computers and continually played around with the Schools General Electric computer, where he learned to program in BASIC. Taking any opportunities to work with a computer, Gates learned FORTRAN, LISP, and COBOL becoming a very competent programmer. At age 17 Gates and his school friend Paul Allen made traffic counters based on an Intel 8008 processor, forming a company called Traf-O-Data.41 In 1973 Gates enrolled at Harvard University and continued pursuing his interest in computing. This is where his work habit of working up to 36 hours straight, then taking a short nap before recommencing work started showing, indicating his dedication.

After reading an issue of Popular Electronics in 1975 that reviewed the Altair 8800 stating that the programming language had a series of bugs in it, Gates and Allen contacted Micro Instrumentation and Telemetry Systems (MITS) to see if the company was interested in their help developing the language and interpreter. Gates and Allen’s demonstration of their BASIC language and interpreter was a success and they formed a company Micro-Soft with MITS and moved to Albuquerque in November 1975. After Gates found out that his BASIC program had gone out to hobbyists before its release, he wrote in the MITS newsletter that MITS could not continue to release free software without payment from the users. This was at a time where the ‘hacker’s ethic’ encouraged the free flow of information to fellow hackers.42 This letter made Gates very unpopular with hobbyists. In 1976 Micro-Soft became independent of MITS, dropping the hyphen in its name, moving back to Washington State, and continued to produce programming language software. During these early years Gates oversaw all business details and personally wrote much of the software, reviewing every line before it went out into the market place.

IBM was preparing to launch its own personal computer using off the shelf components as there was no time to develop their own due to the rapid growth of the personal computer market and their need to get into the market quickly. IBM approached Microsoft to write the BASIC interpreter for the PC. However IBM needed an operating system and negotiations with Digital Research for the CP/M system failed to conclude any licensing agreement. Gates was asked again about the operating system and he recommended to IBM to use 86-DOS, similar to CP/M, which was written for some machinery. After adapting the system to the IBM-PC, Microsoft sold the operating system for a one up fee of USD $50,000 without transferring the copyright. Gates felt that a number of companies would be interested in cloning the IBM-PC and he was right. The sales of MS-DOS made Microsoft a major company within the computer industry.

Gates and Microsoft went on to develop windows that pushed the company’s sales over the USD $1 Billion mark and ruthlessly guarded his market share. Gates had a reputation for being a fiery boss, often going into outbursts and berating his managers. The company also faced a number of antitrust actions, which they often lost. In some ways Gates had a similar ruthless disposition as John D. Rockefeller and by 1987 he was declared the youngest Billionaire by Forbes in history.

Meanwhile within the aviation industry new business models and deregulation were going to change the nature of civil aviation and the airline industry. Frederick Alfred Laker had been involved in aviation since leaving school, working for British European Airways (BEA) and London Aero Motor Services (LASM). Laker later left to develop his business selling surplus WWII aircraft. The advent of the Berlin blockade by the Soviet Union during 1948-49 advantaged Laker as every available aircraft was needed to carry freight to West Berlin. In 1954 Laker commenced transporting cars and their owners in Bristol Freighters from Rochford in Britain to Calais in France. Laker was made an offer by the Airwork group and sold off all his businesses, joining the group. After a merger with another company in 1960, the group became known as British United Airways and Laker became the managing director. Laker built British United Airways into Britain’s largest privately owned independent airline with an all jet fleet.

After a disagreement with the British United Chairman Myles Wyatt in 1965,43 Laker left to form Laker Airways and began operating charter flights with two Bristol Britannia 102 series turboprops. In 1967 he acquired five BAC One-Eleven 300 short haul jet aircraft partly self financed with the balance financed by a consortium of banks. Laker offered a 30% discount to travel agents to encourage them to utilize charter flights which helped create traffic to popular Mediterranean resorts. He carried out a number of cost cutting measures like using reduced thrust for takeoff, faster climbs to optimal altitudes, and limiting baggage to 15Kg rather than the usual 20Kg and passenger numbers to reduce weight and fuel consumption. Laker also set up a hub in what was then West Berlin that focused on taking holiday makers to resorts in the Canary Islands and Mediterranean. In 1992, Laker bought two wide-bodied McDonnell Douglas DC-10s into commercial service.

In 1971 Laker submitted a proposal to the UK’s then Air Transport Licensing Boars (ATLB) to operate a low cost Trans-Atlantic route between London and New York. It was to operate like a walk-on, walk-off service without prior booking. The application was rejected and Laker appealed the ruling and he was eventually granted a license in 1972. However under pressure from the other airlines suffering from the OPEC oil embargo, the British Government revoked the license in 1975. Laker finally got the license reinstated in 1977 and commenced the Skytrain service to New York. Skytrain was an immediate financial success in the first year of operation,44 leading to expansion of new routes. Laker became very popular with the public through undertaking a series of publicity stunts (Eglin & Ritchie 1980). Skytrain continued to expand its fleet with another five DC-10s delivered from December 1979 onwards to cater for the growing number of destinations. A further ten Airbus A300s were ordered for a planned intra-European Skytrain.

However Laker’s expansion had been too rapid and become very difficult to fund, as the firm did not have any significant assets and was facing growing interest repayments, and declining traffic due to the 1980-81 recession. Laker also suffered from the grounding of his DC-10s due to an American Airways crash at Chicago’s O’Hare airport in 1979.45 Laker was also the victim of price cutting by the major airlines resulting in an out of court settlement for a suit for antitrust breach. After going bankrupt, Laker tried to reestablish the airline with a public float,46 but after a short restart the airline closed for good in 2005.

Sir Freddie Laker saw the opportunity for low cost travel but had to battle policy, bureaucracy and even bullying by existing competition to create the first low cost, no frills airline in the world. His competitive strategy was based on developing high aircraft and staff productivity, low costs by reducing aircraft turnaround times,47 and seeking niche customer markets. Sir Freddie Laker was a pioneer showing up the complacency of the established industry protected by regulation and benefiting the customer greatly. Laker was followed promptly by Southwest Airlines with a modified business model, which has been emulated by so many other low cost airlines since including Easy Jet, Ryanair, Westjet, Air Asia, Virgin Atlantic, Virgin Blue, Jetstar, Cebu Pacific, Nok Air, Freedom Air, Volaris, and Pegasus Airlines.

From a very young age Frederick Wallace Smith had a love of flying and also saw the lack of accountability the post office and freight companies had with letters and parcels they carried.48 At the time mail was monopolized by the post office and parcel freight by Emery Air Freight and Flying Tigers, where an effective oligopoly existed. In 1970 Smith purchased a controlling interest in Ark Aviation Sales and traded in used jets making a good profit in the first year. He still saw the deficiencies in the air freight market and used his USD $4 million inheritance to start up Federal Express with a consortium of investors and a bank providing finance. The company raised USD $91 million, the biggest single start-up in American history in 1971. Federal Express started a service to 25 American cities using 33 French Dassault Falcon 20 executive jets, as their small sized excepted Smith in the need to comply with Civil Aeronautics Board (CAB) requirements for air forwarders. Smith modeled a hub system based on the concept of a bank clearing house where all parcels would come to a central hub located in Memphis, Tennessee and then be dispatched to their destination. Federal Express took the initiative and guaranteed a 24 hour delivery service which competitors had not been able to achieve at the time.

Federal Express had a rocky beginning with Smith forced to sell his private jet and staff often being forced to leave valuables as a deposit for fuel at airports. However in 1974, a strike at UPS gave Federal Express a virtual monopoly on some routes for a short time, giving the company the opportunity to show customers its reliability and win over customers. After deregulation the company purchased much larger aircraft and expanded its routes and services, revolutionizing the parcel service and challenging the monopoly of the post office.

Later on in the decade, the airline industry began to become deregulated. At this stage many ‘flag carriers’ were actually owned by their respective national governments which had a vested interest in restrictive regulation. Some airlines also began leaving the International Air Transport Association (IATA) which had very strict regulations about what could and couldn’t be done by airlines. Leaving IATA benefited many airlines like Singapore Airlines which through enhanced services were able to grow substantially during the next decade.

Until the 1970s American business had been competing among themselves with a great deal of predictability. The rise of Japan from the ashes of World War Two was seen as one of the miracles of business in the second half of the Twentieth Century. Japan had to overcome the complete devastation the allied bombing had done to the factories, its lack of resources, language, and finally image. Japanese companies employed very precise marketing practices at a time when American manufacturers thought they knew everything about marketing.49 Japanese companies were to employ their style of market selection, market entry, market penetration, and market maintenance that made American executives ponder about this new Japanese success. Japanese companies were not frightened to buy market share through very heavy media campaigns that could not be equated to the percentage of sales like American firms practiced, and straight out buying up of their competition.50

Many reasons have been attributed to the success of Japanese business over the years. Most probably one of the important reasons behind Japanese successes in the market place was the complacency of their competitors and failure to seek and exploit new opportunities which made them vulnerable. What American business didn’t see, Japanese Business did, and they acted upon what they saw. The secret to Japanese success was seeing new opportunities that were customer based, applying new technologies to these opportunities, redefining the relationship between cost and quality at the production level, and carefully developing complex business strategies and implementing them very tightly.

The Japanese success was limited to a number of industries where they had a competitive advantage, listed in the introduction to this decade. The automobile is perhaps the best example of the Japanese rise to dominance in an industry, where Japan overtook Germany as a producer of motor vehicles in the 1960s and finally overtook the United States in 1980. In the 1960s Japanese cars were thought of as cheap and of low quality, a decade later they were considered to be fuel efficient, high quality, reliable, and trouble free. Brand names like Toyota, Datsun (Nissan), Mazda, Honda, Subaru, and Mitsubishi rose to the fore gathering high consumer loyalty. Japanese manufacturers selected the small-car segment that the American industry had ignored with fuel efficient vehicles with more standard items than the American models.

This also occurred in the motorcycle industry dominated in the 1950s in the UK by BSA, Norton, and Triumph, Moto-Guzzi in Italy, and Harley Davidson in the United States. Honda had entered the US market in the 1950s and by 1970 was the undisputed market leader in motorcycles. Honda developed an aggressive sales distribution network with a wide service support network. Later Yamaha and Suzuki also entered the market focusing on the young generation.

After the Second World War the Japanese electrical industry was technically backward and produced inferior products to their international competitors in the 1950s. They began buying up technical licenses from international companies which enabled them to learn and improve upon the new technologies. By the 1960s Japanese products began to surpass their competitors. Companies like Matsushita, Toshiba, Hitachi, Mitsubishi Electric, Sony, and Sanyo fiercely competed domestically and then internationally. This was repeated in the appliance industry with Hitachi, Toshiba, Mitsubishi, Sharp, and Sanyo and in the watch industry by Seiko, Citizen, and Orient, which had learnt to produce high precision and high quality timepieces at a low price. Japanese companies also had great success in the camera industry in the single lens, reflex cameras that took over from German camera manufacturers. Japanese companies also dominated the steel, shipbuilding, semiconductor, robotics, and copier industries.

By the end of the 1970s US industry was beginning to realize their own vulnerability and was looking for answers. The regulatory environment was going to be continually eased fostering a more competitive environment, bringing uncertainty into the next decade. Economic uncertainty also rose with growing unemployment. Society failed to learn the lessons of the two oil embargos and look for alternatives to an oil based lifestyle. The cost of homes and mortgages was at an all time home making it difficult for small entrepreneurs to start up. The era of greed was just about upon us with corporations losing great creditability as consumers grew weary and lost faith in them.

6. The 1980s

The beginning of the 1980s was characterized by low/negative growth, rising unemployment, high inflation and interest rates, where a number of countries were going through debt crises. However many corporations grew exponentially through acquisition and merger making them stronger and wealthier than they have ever been before. At the national level many underdeveloped countries attracted manufacturing industry that greatly aided in their development and economic growth, particularly in Mexico, East and South-East Asia. In Eastern Europe the new Soviet policies of perestroika and glasnost gave countries within the Soviet Block new economic freedoms where Poland, Hungary, Czechoslovak experienced uprisings, while Nicolae Ceausescu was overthrown by popular revolt in Romania. The Berlin Wall came down in 1989 symbolizing the end of communism in Eastern Europe. The United Kingdom and United States under the leadership of Margaret Thatcher and Ronald Reagan respectively moved towards a laissez-faire economy through privatization, deregulation and use of monetary policy over fiscal policy, allowing the exchange rate to float freely. The European Union continued to enlarge with the admittance of Greece in 1981 and followed by Spain and Portugal in 1986.

The age of the computer was arriving where many tasks in organizations like word processing replaced the typewriter and home ownership of personal computers was on the rise. However due to the increase in home PC ownership, video console games died out by 1983, but rose again in the late 80s with a new generation of graphics enhanced game boxes produced by companies like Nintendo and Sega. This showed the market volatility of technology based industries that could very quickly rise and just as quickly dissipate into some other form of technology – something that would be seen many times in the computer and mobile phone industries later on.

The American automobile industry continued to suffer with many of the large corporations nearly going into bankruptcy. This was exacerbated by their still unclear future directions, poor quality control, an economic downturn, and competition from Japan. During this decade the Korean car Hyundai made its appearance onto the US market in 1986.

The world underwent massive population growth during the 1980s, particularly in Sub-Saharan Africa, the Middle East, and South Asia. The 1980s saw the beginning of the AIDS pandemic, leading to some backlash against certain minority groups. However it was in this decade that the world had been able to cooperate and work together to solve the problem of depleted ozone around the South Polar cap. Western societies began to adopt the concept of political correctness as opposed to showing prejudice to minority groups in society, which influenced media content.51 Society became less tolerant of smoking, opposed to nuclear power after the Chernobyl disaster in 1996, more accepting of gay rights, and interested in recycling and ‘green’ policies. Consumers also became brand conscious with a bias towards luxury brands over previous decades but at the same time frequented discount and factory outlets for bargains. However the 1980s saw a streak of selfishness to it which is probably best epitomized by the phase “greed is good”, spoken by Gordon Gekko in the Oliver Stone movie of that decade “Wall Street”.

Enter Tom Peters. Peters was co-author of a book written at a time when Japan had severely challenged America’s business dominance with many believing that many other industries were vulnerable to this Japanese “attack”. Tom Peters and Robert Waterman were employees at Mckinsey, one of the premier management consulting firms in the United States. They carried out research to identify common characteristics of successful companies, based on selection criteria of six financial measurements. Peters and Waterman called in two academics Richard Pascale and Anthony Athos to assist them make sense of the data and select the important characteristics of success. Strategy, structure and systems had been agreed upon and Pascale suggested style and shared values to complete five components of the Seven S Framework. After some weeks of discussion skills was added to the framework to make up six components. The seventh was decided upon as sequencing, but later replaced with staff. Peters was also proposing adding power, but this didn’t eventuate.52

Their basic conclusion was that excellent companies exercised commonsense and kept very close to the business basics.53 The book opposed analytical management that relied on numbers to make decisions. Peters and Waterman emphasized ‘mindset’, ‘autonomy’, and “culture’.

The Seven S Framework was featured in Peters and Waterman’s book In Search of Excellence, published in 1982. The book was far from being an academic piece of literature and written in a popularist format, easy to read with lots of stories to get the messages across. Even though the Seven S Framework was sharply criticized for making organizational behavior simplistic, akin to an advertising agency developing slogans and that many of the excellent companies described in the book are not performing well now,54 the book had many relevant messages based on eight main themes, in a chapter by chapter format, which came to corporate America at the right time;


1.                   A bias for action, active decision making - 'getting on with it'.

2.                   Close to the customer - learning from the people served by the business.

3.                   Autonomy and entrepreneurship - fostering innovation and nurturing 'champions'.

4.                   Productivity through people - treating rank and file employees as a source of quality.

5.                   Hands-on, value-driven - management philosophy that guides everyday practice
                 - management showing its commitment.

6.                   Stick to the knitting - stay with the business that you know.

7.                   Simple form, lean staff - some of the best companies have minimal HQ staff, and

8.                   Simultaneous loose-tight properties - autonomy in shop-floor activities plus centralized values.55

It was reported nearly two decades later that Peters admitted that he and his co-author falsified the underlying data used in this groundbreaking book, but this was later denied by Peters.56 Nevertheless, given all the criticisms In Search of Excellence was the top selling management book of all time and ushered in the new era of management gurus, management fads, and ‘the quick fix’ mentality. Tom Peters is the most highly demanded speaker in the management circuit, itself a new industry. Peters in his way of putting things has managed to inspire many and bring up the ‘management culture phenomenon’. However, although most managers at the time had a copy on the bookcase behind their desk, actually how many read it and were able to implement any of the ideas was another thing.

Tom Peters as an influence on management thought continued with his books, more recently focusing on personal responsibility in relation to the new economy; A Passion for Excellence (1985), Thriving on Chaos (1987), Liberation Management (1992), The Tom Peters Seminar: Crazy times for crazy organizations (1993), The Pursuit of Wow! (1994), The circle of Innovation: You can’t shrink your way to Greatness (1997), The Brand You50 (1999), Re-imagine! Business excellence in a disruptive age (2003), Talent (2005), Leadership (2005), Design (2005), Trends (2005), and The Little Things: 163 ways to pursue EXCELLENCE (2010).

On the night of 2-3rd December 1984 at the Union Carbide plant at Bhopal, India, a gas leak occurred and exposed thousands of people to the deadly chemical methyl isocyanate leaving thousands dead. The company was blamed for taking short cuts in the production of pesticides, having inadequate safety and emergency procedures, storing excessive amounts of toxic chemicals above safety levels on site, having malfunctioning warning systems, and being located too close to densely populated areas.57 The disaster led to long and protracted litigation, criminal charges against the management, and much public condemnation.

Later near the end of the decade an oil tanker the Exxon Valdez while traveling through Prince William Sound in Alaska struck Bligh Reef and spilled an enormous amount of crude oil into the sound, the largest oil spill in history. Exxon was heavily criticized for its inadequate response to the disaster.58

A number of court cases occurred during the 1980s bringing a new term “insider trading” to public attention. These cases led to the public attention that the ‘corporate highflyers’ who have access to information that the ‘average person in the street’ does not have are able to increase their own personal wealth significantly and unfairly. That coupled with the media coverage of outrageous corporate salaries greatly disenchanted the public about corporate leadership.

This was reinforced through the news footage of the lavish lifestyles of corporate leaders. For example in Australia, Alan Bond an entrepreneur in Western Australia, famous for his 1983 high profile win of the Americas Cup with the yacht Australia II, an elite sport, ended up being sentenced to seven years jail after pleading guilty for using his controlling interest in Bell Resources to deceptively siphon off AUD $1.2 Billion into the accounts of Bond Corporation. Another entrepreneur Christopher Skase after his firm Qintex purchased the Seven Television Network, Hollywood’s MGM Studios, the Brisbane Bears Australian Rules Football Club, and developed the Mirage Resorts in Port Douglas, putting the small town on the world map, suffered badly from rising interest rates in 1989, contributing to Qintex’s collapse. Skase and his wife, well known for their lavish lifestyles fled to Majorca Spain after parceling up their personal collection of antiques, becoming Australia’s most wanted fugitive. Christopher Skase died in Majorca before the authorities could gain his extradition for trial back in Australia.

Prior to the above disasters and scandals, corporations were portrayed as law abiding and patriotic entities that personified freedom and ethics.59 People found that in some cases nothing could be further than the truth. Previously corporations had only very superficially been scrutinized about their basic ethics, but these disasters and scandals led to the beginning of corporations highlighting their ethical standards in what was later going to be known as Corporate Social Responsibility (CSR).

Anita Roddick was one of the early entrepreneurs to create and build a company based on ethical consumerism and Fair-trade.60 In the 1970s Roddick was on holiday in America and visited a shop called The Body Shop in Berkeley California run by sisters through marriage Peggy Short and Janet Saunders. Their ideas inspired Roddick to open her own shop in Brighton England in 1976. In 1987 after some negotiation, Roddick bought the rights to the name from Short and Saunders for a reported £3.5 Million.61 Anita’s husband Gordon Roddick worked out a franchising system which would enable the couple to open many shops around the United Kingdom and overseas.62 By 1991, The Body Shop had over 700 stores and by 2004 over 2,000 stores serving close to 80 million customers around the world. Roddick sold the business to L’Oreal in 2006 for £652 million,63 a decision that many criticized her for appearing to go against her principles.

The Body Shop was one of the early businesses that built their branding upon ethics. During Roddick’s stewardship of The Body Shop, she ran many social campaigns about ethical issues including banning animal testing, recycling, the raising of women’s self-esteem and stereotyping of women, saving the whales campaign with Greenpeace, and promoted fair-trade. In an interview before her death, Roddick claimed the The Body Shop developed from a series of brilliant accidents, had a great smell, funky name, and started in a hot year where people needed lots of sun-block lotion.64 Roddick showed that firms could charge premium prices for ‘integrity premiums’ and ‘packaged idealism’ marketing strategies that would be successfully used by a number of other companies in the coming two decades.

However companies relying upon ethics in their branding are not beyond scrutiny and The Body Shop was no exception. Jon Entine reported that Anita Roddick had just copied the name and concept from the shop in Berkeley California, including store design, labeling, promotional materials, and overall marketing concept, including individual product lines.65 Her stories of traveling around the world looking for new products from indigenous communities were mostly fabricated as she preferred to buy at the cheapest price and only a very small proportion of products sold in The Body Shop originated from her projects or were Fair-trade products. Entine continued to report that most of the ingredients in products with not natural and Roddick herself did not seem to personally care much about these issues and in the first 11 years of The Body Shop operation the company gave nothing to charity. Entire used the term ‘greenwashing’ to depict companies using ethics and sustainability issues to cynically gain sales and that companies extolling ‘social responsibility’ may not in actual fact be operating any more socially responsible than other companies.

The economic growth of the 1980s saw a wave of mergers and acquisitions that was going to continue to become a permanent feature of the corporate landscape. Mergers and acquisitions started increasing in the 1980s because of the slowly relaxing regulatory environment, the development of the European Union as a single jurisdiction and market, and the easier access to funds through emerging pension funds, junk bonds, and underwriters. 1980s mergers and acquisitions consequently tended to be much more leveraged than they were in later decades. Some deals were fiercely resisted while some were friendly to achieve quick growth and synergies.

One of the largest leveraged buyouts in history was the merger between R. J. Reynolds Tobacco Company and Nabisco in 1985 and then the hostile and bitterly fought takeover of RJR Nabisco by Kohlberg Kravis Roberts & Co. three years later. In 1989 Philip Morris Corporation purchased Kraft for USD $12.9 billion and merged Kraft with their General Foods Division. General Motors purchased Hughes Aircraft Company from the Howard Hughes Medical Institute for USD $4.7 billion. Gulf Oil, one of the seven sisters, merged with SOCAL and rebranded the company as Chevron in 1985, RCA was taken over by General Electric in 1986, US Steel acquired Marathon oil in 1982, and Burroughs and Sperry merged in 1986 to form Unisys in 1986, changing the Fortune 500 listings dramatically.

Generally firms merge or acquire another firm to achieve quick growth, achieve some forms of synergy between the two operations such as cost savings through combining administration, production, and sales forces, etc, achieve some diversification like the tobacco companies tried to do due to long term uncertainty about their major product cigarettes, add to their product portfolios, horizontally diversify, acquire intellectual property, buy market share, or vertically integrate their business. However many mergers and acquisitions don’t work out as planned and failed to bring the financial results expected. Very often in mergers that take a firm away from the core business there is often a failure to understand the new industry. In acquired companies, the acquiring company’s executives may act as conquers and lose many talented people and value from the acquired company. There can also be a clash of different cultures and values between the acquiring and acquired companies. When companies merge with similar companies carrying similar product ranges, customers may rationalize the products they purchase from the new company, resulting in a loss and decrease of overall sales. Finally as was the case in General Foods after the Kraft takeover, the effort and time needed to consolidate the merging of the two companies takes focus away from new product development, which was the strength of General Foods and the market in general.

Outsourcing of goods and services from other firms and/or individual contractors rapidly grew in the 1980s as firms looked at new ways of cutting costs, increasing efficiencies and improving quality. In the 1960s many major corporations acquired goods suppliers or other service providers as a means to save costs through vertical integration. However after going through this exercise most companies found that dedicated suppliers actually raised overheads, lowered innovative creativity, became complacent toward their captive customer, and had difficulty expanding the divisions due to hesitancy of competitors to purchase from a company owned by another competitor.

Companies utilized bureaus to undertake their computing needs as mainframes, mini-computers, and software was very expensive at the time and the ability of micro computers to undertake corporate accounting, retail, and production management had not yet been achieved. Companies that had their own computer systems would hire contractors as programmers, as it was more expensive to have them as fulltime staff. Likewise companies that had in-house delivery logistics also found it cheaper and less worrisome to hire outside logistic firms. Even warehousing was contracted out to third parties. On the sales side, sales brokers and merchandising was also contracted out to third parties, sometimes ex-employees who had specifically left to undertake contractual services for their former companies. The advantage for companies that outsourced was that it could get rid of ‘hidden costs’ that go with employing fulltime staff and provide certainty about monthly costs. Companies and organizations with large revenues would be able to be managed by relatively few people with a minimum number of employees. The outsourcing phenomena added greatly to the growth of opportunities for people with specific skills and networks within the service sector.

On Monday 19th October 1987 equity stock prices in Hong Kong started falling dramatically, spreading through all the markets in the world during that day. By the end of ‘black Monday’ the Dow Jones Industrial Average had dropped 22.61%.66 Within the next 10 days almost 50% of the value of the world’s equities had been eroded. There is a great deal of debate about what caused the crash, although once it started electronic trading and psychological factors contributed to the downward momentum. The effect of the crash was to severely financially strain business in repaying extremely large loans due to relatively liberal lending regime of the 1980s by banks and other financial institutions. This led many firms into bankruptcy and liquidation putting strain on banks, finally leading to a major recession in 1990. One of the legacies of the 1980s was that leveraging would be more conservative in the next decade.

7. The 1990s

The 1990s was the decade where new mass technologies began to embrace peoples’ lives. There was a rapid transformation from things mechanical, to analogue, and to digital. Cell phones transformed from something a high placed executive would use at the beginning of the decade to a means of communication for the masses by the end of the decade. The World Wide Web emerged for public use in the early 1990s and by the year 2000, almost 50% of western households had access to it. This was supported by a rapid improvement in the speed and capacity of modems and communication transmission lines during the decade. Satellite television also emerged bringing programming around the world in a way that had never happened before.

The phenomena called globalism was felt much more in the 1990s with better air transport, media communications, multinational brand presence, and the quicker transfer of cultural and counter-cultural artifacts between countries and regions. Individualism became much more prevalent in western cultures, where through rapid portrayal in the media also followed in major urban centers around the world. Urban youth domed tattoos, body piercing, and retro fashion of the ‘sixties’ and ‘seventies’ creating urban counter-cultures all over the world. New interests emerged in extreme sports and outdoor activities like marathon running, triathlons, and bicycle riding. The baby-boom generation was reaching their forties and companies targeted products at this demographic group because of their relatively large incomes. Some radio stations also focused on the generation by presenting rock and roll and easy listening formats. Market opportunities moved with this demographic. The 1990s also saw strict ethics regarding sexual harassment and there was a general rise in the power of women in both business and politics. Prize money in major sporting events like tennis became equal for the men’s and women’s competitions.

The fall of the Soviet Union led to a global political realignment with the American intelligence and military complex without an enemy to focus their activity upon, until Saddam Hussein, strapped for cash after the Iran-Iraq war invaded Kuwait. The military would see action a number of times during the decade in regional and localized conflicts. Parts of Europe, the United States, and Australia drifted into the post industrial economy stage of development with East Asian economies steadily reaching a high standard of living during the decade.

Sustainable development and environmental protection became much more important in the 1990s with the 1992 Earth Summit in Rio de Janeiro and the adoption of the Kyoto Protocol in 1997.

Due to the downsizing in the 1980s and 1990s the concept of job security began to evaporate and self employment became a viable option chosen by many. The 1990s saw a dramatic rise in small business. The expansion of small business numbers started in the 1980s in the United States and skyrocketed during the 1990s where the United States was increasingly becoming an entrepreneurial economy.67 For the first time, the national level of economic growth could be correlated with the national level of entrepreneurial activity.68 This is where Silicon Valley emerged and successful entrepreneurs were seen as the heroes of the nation with entrepreneurship taking on positive connotations in society once again.

Due to the success of many new entrepreneurs, large corporations became interested in ways they could install creativity and innovation back into their own organizations to emulate small business success. This led to the development of the concepts of knowledge organization, innovation management, and the learning organization during the decade. Demand for entrepreneurial studies at colleges and universities increased dramatically where specialized courses were developed rather than just incorporating entrepreneurship as a single elective in general courses.69 This momentum brought structural change which seemed to bring on a new form of capitalism where one in ten people in the United States were now self employed.70 Some of America’s richest people were entrepreneurs and government policy in many countries started looking towards entrepreneurship as a means of creating economic growth and employment.71 This structural change made the economy an organic entity that was now always in the process of ‘beginning’ rather than ‘being’.72 Entrepreneurship was now seen as a means of upward mobility73 and access the “American dream,74 a perception followed by other societies around the world.

Satellite television broadcasting began with experimental broadcasts in the 1970s and expanded with some free to air television available on C band in the 1980s, but it wasn’t until the 1990s that the concept was universally popular.75 One early pioneer was Ted Turner who purchased a defunct UHF television station WTCG and commenced running old movies. UHF stations were not as popular as their VHF counterparts and most often had trouble surviving in these early times. He renamed the station WTBS (Turner Broadcasting System) in the early 1970s. In December 1976 WTRS was beamed by satellite and became a national subscriber station. WTBS broadcast movies, cartoons, sports, music videos, and current affairs, all on a single channel. WTBS became a regular broadcaster of sports events, becoming the home of the program World Championship Wrestling (WCW) broadcast each Saturday night.

In 1980 Ted Turner and a group of investors formed the Cable News Network (CNN), the first 24 hours news station broadcasting from its headquarters in Atlanta, Georgia at a former country club. Turner later purchased a defunct shopping centre with a tower and relocated the operation there calling it the CNN Centre, which helped to rejuvenate downtown Atlanta. It was the CNN coverage of the Gulf War in 1991 that established CNN and the concept of 24 hour news broadcasting into international prominence. CNN was the only network that was allowed to broadcast directly from inside Iraq and gave a live broadcast from the al-Rashid Hotel in Bagdad with reporters Bernard Shaw, John Holliman, and Peter Arnett all became household names. The Gulf War showed that live news coverage of events were to greatly influence how events played out which has been shown in numerous international events up until the fall of Hosni Mubarak in Egypt recently, coined by some in the Pentagon as the “CNN effect.76 Previously news had been broadcast in cycles allowing authorities to control the timing of events for their benefit. Live news coverage had a great impact on peoples’ perceptions and views and tend to force authorities to hasten their actions in many circumstances. CNN had grown from a channel seen by 1.7 million American households in 1980, to been seen by viewers in over 212 countries today, with 10 US News bureaus and 27 international bureaus today.77 CNN has inspired the creation of a number of similar channels including the Weather Channel in 1982, CNN international in 1985, Sky News in 1989, CNBC in 1989, Court TV in 1991, CNN Airport Network in 1992, BBC Worldwide in 1995, MSNBC in 1996, Fox news in 1996, and al Jazeera in 1996. CNN was taken over by Time Warner in 1996 and operates as a semi-autonomous division.

The concept of transmitting data between two computers was very limited before the 1980s. Packet switching protocols were developed during the 1960s that enabled messages to be broken down into arbitrary packets with routing decisions made according to the packet as opposed to rigid physical routing systems. In the late 1960s universities began building networks between their individual computer systems that allowed inter-computer communications. In the United States this network grew with new hosts situated primarily at universities being added on a regular basis to build the forerunner to what we call the internet today.78

Meanwhile the X.25 protocol was developed to allow companies to send data down telecommunications lines which eventually became and international packet network by the late 1970s and early 1980s. This would enable the connection to a computer through any telephone line. A group of researchers at Stanford University developed a universal protocol that would allow the linking of all these systems together. The control of this working network was handed over to the Defense Communications Agency in 1975 to operate the system as a gateway for defense and university communications. The government restricted commercial use at first, but government agencies became heavy users of the system right into the 1980s. Email was one of the first important applications of this network which began to be called the internet or internetworking.

In the late 1980s the first internet service providers (ISP) were formed to provide internet access to private customers. Companies like PSINET, Netcom, and Portal Software provided dial up services to the internet. In 1992 the US Congress passed the Scientific and Advanced Technology Act to allow commercial use of the internet. Finally in 1994 the centralized routing protocols or NSFNet Internet Backbone was replaced by a Border Gateway Protocol (BGP) which allowed direct communications between computers without having to go through the central system.

The internet was about to become a platform that was going to change world commerce and itself bloom into a massive industry that would have some of the largest capitalized companies in the world utilizing it. One of the early battles of the internet was over the web browser. Netscape Communications Corporation’s proprietary web browser dominated the market in terms of its usage over the mid 1990s. The Netscape Browser had good features, an attractive licensing scheme, and was free for non-commercial users and became the de facto standard on the windows platform. Netscape saw that the computer operating system would not be as important as the web browser which could connect to all the applications a user required.

The rise of the Netscape browser worried Bill Gates at Microsoft and so the company developed their own web browser Microsoft Explorer (IE) to enter the market. Microsoft succeeded in getting most computer vendors to distribute Microsoft Explorer on their computers and leaving out the Netscape Explorer using leverage from their windows OEM licenses. By the end of the decade Netscape lost its dominance over the Microsoft Windows Platform. Netscape launched an antitrust action against Microsoft and the court ruled that Microsoft bundling of Internet Explorer with the Windows Operating System was a monopolistic and illegal business practice, but this decision was too late as Microsoft Explorer had become the de facto web browser. In 1998 Netscape went open source, releasing the product as Mozilla. America Online bought Netscape but couldn’t win back users to the Netscape navigator.

Fiber optic cables were being laid all around the world to distribute primarily cable television to households with the internet piggybacking upon the new infrastructure. The internet spread faster than any other technology ever developed and commercialized.79 America Online (AOL) utilized the fiber optic network for the internet and became one of the first internet providers with novel services like on-line gaming. AOL went public in 1992 pioneering the way people spent their leisure time, but was quickly overtaken by a number of smaller internet service providers and taken over by Time Warner in 2001.

Tools that guided users on the internet were the next enhancement to the internet environment. In January 1994, Jerry Yang and David Filo, electrical engineers at Stanford University created a web site called “David’s and Jerry’s guide to the World Wide Web”. The site contained a collated list of web sites with a searchable index. The site was renamed Yahoo in April 1994 and grew in popularity over the decade.Lycos started as a research project at Carnegie Mellor University by Michael Loren Mauldin in 1994, after unsuccessfully trying to launch it as a software company. With Bob Davis as CEO the company concentrated on building an advertising supported web portal. The company listed in 1996 and became one of the first profitable internet businesses. This business model became well accepted and the company grew to become one of the most visited online sites in the 1990s. At nearly the same time a group of students at Stanford University, Graham Spencer, Joe Kraus, Mark Van Haren, Ryan McIntyre, Ben Lutch, and Martin Reinfried, developed an internet portal with a search engine, web email, instant messaging, stock quotes, and a customized web-page that could collate information from a number of web sources. The site was formally launched around the end of 1995 and although developed to become one of the most well known brands on the internet, failed to make a profit and was sold to @Home Network in 1999.

Two Stanford University students Larry Page and Sergey Brin had developed a search engine that ranked results by their search popularity. They ran the project on the Stanford University computer and in 1998 and shortly after incorporated the company Google, operating from a friend’s garage in Menlo Park, California. Concerned that the enterprise was taking up too much time from study, Page and Brin tried to sell the company to Excite but the offer was rejected. In 1999 venture capital firms Kleine Caulfield & Byers and Sequoia Capital provided Google with USD $25 million funding. Since 2000, Google has purchased a number of companies adding to the services it provides on the internet and had a public listing in 2004 making Larry Page, Sergey Brin and a number of Google employees instant millionaires.

During the 1990s there were a number of successful web business start-ups that would dominate international e-commerce. Amazon was formed in 1995 by Jeff Bezos. The company began an online bookstore that had a massive amount of titles a physical bookstore could not compete with. Bezos made a number of acquisitions to expand the business over the years including an internet movie database, online music, print on demand e-books, e-book software company, audio books until Amazon now offers almost a full range of products. Amazon also created a lot of extra features like allowing people to write make book reviews. The firm became profitable by 2001 and is listed in the NASDAQ.

Another start-up during the mid 1990s was eBay. eBay grew out of a personal web site of French born computer programmer Pierre Omidyar in San Jose California. After being shocked by selling a broken laser pen on his website Omidyar realized the potential of that an auction web site would have.80 This inspired Omidyar to develop this site and he started selling plane tickets and other travel products. The company expanded its product lines and bought out the European internet auction company IBazar in 1995. By 1997 the site hosted more than 2,000,000 auctions and the firm obtained USD $6.7 million from Benchmark Capital to list on the stock exchange the following year. The company bought out PayPal in 2002 and linked it to the eBay site. The company now has over 15,000 employees and revenues in excess of USD 7.7 billion.

Web-based business start-ups were not restricted to the United States. A Chinese entrepreneur (Jack) Ma Yun had seen the need of Chinese businesses to find international customers and the need of international customers to find Chinese suppliers. With 18 financial supporters, Ma developed the trade web-site Alibaba.com in 1999. In August 2005 Yahoo purchased a 40% interest in the company for USD $1 billion.

The internet was changing the nature of how companies were doing business and most significant companies developed their own web sites. The internet began to be used as an important aspect of a firm business model where airline, rail, and concert bookings could be made and online banking transactions undertaken.

Internet business start ups were very common in the late 1990s. A new start up based on a new idea would commence with the backing of funds by friends and family. Founders would develop a business plan with exit strategies that would attract venture capital firms to support the venture. The venture would run on initial venture capital finance and even a public offering of shares before any income would come in. Companies would then attempt to grow as quickly as possible to develop a presence and user loyalty before a competitor could come in and exploit the idea better.81 Firms could then prepare a public offering (IPO) where founders could profit enormously and venture capital firms could exit with a massive profit, just like Yahoo had done in 1996 where the share price tripled on the first day of trading.

However these meteoric rises of new companies were not always based on fundamentals and tended to be valued on novelty and potential.82 Few companies actually really had a business plan that made any sense. In reality there was a very long period from start-up to profits due to the need to grow before revenues would be higher than expenses to make a profit, if indeed they made any profit at all. At the end of the 1990s the Federal Reserve Bank raised interest rates a number of times and Microsoft had some bad publicity with anti-trust cases. These factors led to some sell offs of internet company stocks where values starting falling causing a panic. Several companies ran out of capital and were forced to file for bankruptcy or be acquired by traditional firms. Some firms were also found to be employing fraudulent practices to overstate profits leading to very poor confidence in internet companies generally. With a shakeout affecting almost half of the internet companies, some like eBay, Amazon, and Google were able to survive and dominate their industries within the coming decade.

The 1990s saw a dramatic increase in the amount of regulation governing business. This included food, cosmetic, chemical, equal opportunity, anti-discrimination, occupational health and safety, environment protection, transport, and public liability regulations. Many countries also introduced a value added tax system which added to paperwork compliance. The result of all these new regulations was a decrease in productivity and greatly increased cost of doing business with some estimates as being as high as 10% of national GDP,83 which ended up increasing the cost of living.84 Any average person wishing to start-up a new business in a post capitalist society needed a large amount of extra capital just to comply with regulations.

Just as Japan and East Asia had risen dramatically in the 1970s and 1980s, South East Asia rose steadily during the late 1980s and 1990s with local family owned conglomerates becoming very powerful. A boom in foreign investment created a large manufacturing base where Malaysia became the world centre of semiconductor production. The manufacturing sector also encouraged rapid urban growth, generating new skylines and greatly increased the standard of living. Government linked companies particularly in Malaysia had also participated in the boom in growth and became wealthy. Vibrant stock exchanges emerged that attracted foreign capital and commodity prices for rubber and palm oil were high adding to a favorable balance of trade.

However suddenly in 1997 Asian currencies started devaluing rapidly causing great panic. This also occurred in East Asia and Hong Kong, where Joseph Yam the CEO of the Hong Kong Monetary Authority announced that Hong Kong and the region was facing a severe conspiracy by speculators that launched coordinated and well planned attacks across regional markets.85 Although this was fanciful,86 in Malaysia, Dr. Mahathir unlike other ASEAN countries that took IMF packages, steered alone and insulted Malaysia from the crisis by fixing the pegging the Ringgit to the US Dollar at 3.80/1.0, and bailed out a number of companies to maintain employment to prevent undue suffering by the local population. The Asian financial crisis however gave an unparalleled opportunity for foreign multinationals to buy up Asian assets relatively cheaply; so many manufacturing, cement operations, hotels and resorts were bought or completely taken over from their local partners as they were strapped for liquidity.87

The world before the end of the decade became concerned about the Y2K problem, where some computer programs had utilized only two-digit dates for the year instead of four. There was great concern at the time that at the stroke of midnight on 31st December 1999 computers all over the world would malfunction. A vast amount of money in the hundreds of billions, most probably unnecessarily was spent to remedy this potential problem.

8. Into the New Millennium

The first decade of the 21st Century was plagued by financial and economic crises, energy and food crises, two flu pandemics, and a spate of natural disasters. The decade began with fallout from the Dot.com collapse which disrupted financial markets and brought a general downturn in economic activity. This forced the Federal Reserve to reduce interest rates a number of times to avoid recession. In 2007 the US housing market collapsed causing loan defaults and a number of financial institutions to collapse, leading to a bailout and partial nationalization of banks, financial institutions and automobile manufacturers. Governments utilized Keynesian fiscal spending to induce economic activity again to avoid a deep recession. This was followed with a debt crisis in a number of European countries that faced trouble financing their budgets.

During the decade the price of oil slowly drifted up until it reached the mid USD $160s per barrel in 2008, caused by concern over oil reserves, crisis in the Middle East and oil speculation. This put great strain on many national economies and led to a high food prices and shortages, putting stress upon many under developed and developing countries. This triggered a renewed interest in alternative fuels and ‘green’ energy development.

The September 11th attacks on the Pentagon in Washington DC and the World Trade Center in New York City led to the United States, United Kingdom and a coalition of other countries invading and occupying Afghanistan and Iraq. This occupied American Defense and foreign policy for the rest of the decade and the formation of the Homeland Security which introduced numerous security measures within the United States and abroad in what became known as “the war on terror”. A spate of other terror attacks occurred during the decade including Anthrax attacks in the United States during 2001, Bali during 2002, Casablanca in 2003, Istanbul in 2003, Moscow, in 2004, Barcelona in 2004, London in 2005, and Mumbai in 2008.

The world was hit by two pandemics in the decade with the SARS (Severe Acute Respiratory Syndrome) in 2003 and H1N1 (Swine Flu) epidemic in 2009. A large tsunami produced by a massive earthquake in Sumatra claimed almost 250,000 lives around the Indian Ocean rim in 2004. There were a number of severe tropical Hurricanes and cyclones of which Hurricane Katrina wiped out most of New Orleans, bringing back some focus onto the issue of climate change. Many stories emerged in the media about farming regions struggling with traditional crops like viniculture in Australia, South Africa, and California, while at the same time new regions like Nova Scotia quickly developed wine industries, due to the decline in frosts.88 An Australian CSIRO report put the above concerns to the Australian Government stating that “…Australia is one of many global regions experiencing significant climate changes as a result of global emissions of greenhouse gases (GHGs) from human activities.89 The report confirms that average temperatures have globally risen over the last 100 years and there are marked declines in precipitation in some regional areas, while increases in others. The report concludes that even though initially there are some benefits of longer day period and shorter winters, with increasing crop yields; rising temperatures, droughts and adverse weather conditions will negate these benefits and become a factor threatening the vitality of agriculture in the future. A more recent report released by the IPCC based on actual measurements rather than projections, establishes that greenhouse gases in the atmosphere are increasing much faster than previously estimated and are already over the threshold that could be potentially dangerous to climate change.90

The world economy doubled in size during the decade. The United States managed to maintain its place as the world’s largest economy and Japan the second largest, but its contribution to the world economy shrank dramatically as the Japanese economy sank into the doldrums. China rose dramatically becoming the third largest economy, having double digit GDP growth during most of the decade.91 The dramatic improvement of education, a large pool of skilled labor, artificially low exchange rate, and removal of trade barriers has turned China into an export powerhouse. Many companies have outsourced their entire production to China, closing down their production facilities in their home country. As a consequence manufacturing in Japan, Europe, and The United States has declined with the creation of the of urban prairie phenomenain traditional industrial strongholds like the city of Detroit in the United States, while at the same time the rapid development of new industrial cities like Shenzhen along the coastal areas of China. Due to the increased demand for energy and mineral resources the Australian, Brazilian, Russian, and United Arab Emirates economies benefited greatly.

The European Union came closer again to becoming one market with the introduction of a common currency, the Euro in 15 countries with the United Kingdom, Denmark, and Sweden opting out. During the debt crisis many European states found it very difficult to manage their respective economies with no control over exchange rates, affecting both budgeting and competitiveness.92 In 2004 the EU admitted 10 more countries, mainly from Eastern Europe and in 2007, Bulgaria and Romania joined.

Corporate America once again shook peoples’ confidence. The well respected Enron energy company was involved in dubious contracts in Central and Latin America and had bribed officials in India to gain a contract. Enron executives with the complicity of Arthur Anderson & Co. formed subsidiary companies to park the losses that Enron had been making, and in 2001 both companies filed for bankruptcy. Two officers of Adelphia were found guilty of siphoning off USD $100 million from the company and the former chairman and chief financial officer of Tyco International were convicted of stealing USD $600 million from the company. A biopharmaceutical company ImClone was rocked by insider trading charges that put the company’s CEO Samuel Waksal and media personality Martha Stewart in jail. In March 2009 the high profile Bernard Madoff was convicted of turning his wealth management scheme into a massive Ponzi scheme that defrauded billions of dollars from many high profile clients.

Trust in governments also went down to low levels as the invasion of Iraq had not unveiled any weapons of mass destruction (WMDs), which was the reason given as justification for the invasion in the first place. Many people, including those from outside the United States put almost messiah like expectations on Barack Obama’s run for the US presidency, as did the Nobel Prize committee, awarding the peace prize to him in 2009. British and Australian parliamentary elections resulted in hung parliaments, perhaps suggesting peoples’ skepticism of major political parties in those countries. According to the Edelman Trust Barometer released at Davos at the 2011 World Economic Forum, the level of trust in both business and government institutions in the United States was below 50% and at the bottom of 23 countries measured.93

However while political and business trust waned, the internet was becoming the means for people to get their messages across to others. Even online news had room for readers to make comments at the bottom of articles, so news was becoming two-way. People had turned from downloading music, which was becoming more difficult with the demise of Napstar in 2001 due to legal challenges and participating in the new phenomena social media, beginning with the bulletin boards, chat rooms and blogs that were used to communicate within special interest groups during the later part of the 1990s. Social networking sites had existed but until this decade had very little success, as for some reason people were not yet attracted to them.94 However, in 2002, Jonathon Abrams and Peter Chin from California wanted to create a safer environment for meeting new people by browsing user profiles, connect to friends, and build up their own networks of acquaintances. When Friendster went live in 2002 it quickly attracted millions of users within the first few months. This rapid success generated the phenomenon of social networking.95 Frienster today has over 115 million members that are rapidly rising in Asia, but declining in the United States.

Very soon after the launch of Friendster, some eUniverse employees (now called Intermix media Inc.) saw the potential of social networking and emulated Friendster, starting up MySpace which went live in August 2003. Through aggressive recruitment MySpace quickly gained millions of members and became one of the leading social networks by 2006. Other sites that opened up included WAYN an acronym for where are you now, that had a goal to unite travelers in 2002, LinkedIn, a business orientated social networking website in 2002, CouchSurfing in 2003, aiming to be a hospitality website, and Tagged founded in 2004, allowing people to play games, share tags and give virtual gifts.

Meanwhile, a childhood prodigy and extraordinarily talented computer programmer Mark Zuckerberg enrolled at Harvard College in 2002. Zuckerberg very quickly gained a reputation for computer programming designing a site CourseMatch which enabled students to select courses based on popularity with the other students. As an amusement, Zuckerberg also created Facemash that let students select the ‘hottest’ face among paired female students and rank them. Within hours of the program going live it jammed the Harvard computer system and Zuckerberg was forced to apologize for using people’s pictures without their permission.

Zuckerberg then decided to develop a Facebook for students to list themselves and connect with their friends, as he saw at the time when he developed Facemash that some colleges in Harvard didn’t have a student directory. He teamed up with Eduardo Saverin who provided the initial capital to go live from Zuckerberg’s dormitory room in February 2004. The response was very good and Zuckerberg started expanding the project to other schools. He moved to Palo Alto California for the summer holidays with Dustin Muskovitz and some other friends and expanded. He met up with Peter Thiel co-founder of PayPal, and Sean Parker, co-founder of Napstar who arranged start-up finance for the venture. Eduardo Saverin went to New York to do an internship and in what appeared as a coup de grace was forced to dilute his shareholding, a matter which he sued Zuckerberg over in April 2005. Zuckerberg settled the matter outside of court for an undisclosed amount.

Another controversy around Zuckerberg was his obligation to develop a similar website for two brothers Cameron and Tyler Winklevoss and Divya Norendra called HarvardConnect.com. It was claimed that Zuckerberg stalled on this development to incorporate their ideas into his own site Facebook. The Winklevoss brothers and Norendra issued a lawsuit which Zuckerberg settled out of court.

Today Facebook is the most used social networking site worldwide with over 500 million members and Mark Zuckerberg became the youngest billionaire ever. Although some social networking websites have been capitalized into the billions of dollars, it has taken some sites a number of years to generate a good financial return. Most sites rely upon advertising revenue from third parties like Google. It actually took some of the site founders a period of time before they realized where they could attract revenues.

Two other important sites that were started include YouTube founded in 2005 and Twitter in 2006. There is no doubt that social networking sites have made a social and political contribution. Social networking sites have been utilized very heavily by American politicians during the last few campaigns, and have played a role in peoples’ uprisings in Iran, Tunisia, and Egypt. Many companies now utilize social networking websites to keep in contact with consumers and run viral campaigns. Social networking is also a forum where people will use to complain and expose poor products and services.

In addition to the rise of China as a source of manufactured goods, India had been establishing itself as a service outsourcing centre. Originally multinational companies came to India for the domestic market but found that the market was not quite ready for their products.96 India had a good education system, a large number of trained professionals, predominately spoke English, and by the mid 1990s the internet was versatile enough to enable new ways of doing business that would provide cost savings for firms in high cost structured countries.97 This trend began in the early 1980s when a number of European airlines began using New Delhi as a location to undertake administrative tasks cheaply. General Electric followed in the 1990s and was the first to use voice out communications very successfully. Eventually an employee of GE ventured out with a few colleagues and the help of a venture capital firm to create the company Spectramind as a third party business processing operation (BPO).

The industry soon expanded to undertaking general IT functions like programming and data storage with firms like Wipro, Tata, Infosys, Infolinx, HCL, and Patni entering the business. American executives could have their assistant in India undertake jobs like drawing up architectural drawings or PowerPoint presentations overnight, ready for the next morning at a fraction of the cost it could be done in their home country.

Today this booming industry is centered in Bangalore, Chennai, Hyderabad, Kolkata, NCR, Mumbai, and Ahmadabad, but as costs are increasing in the major cities, new ventures were dispersing to rural areas. More than 500,000 workers are involved, bringing in more than USD $8 billion to the Indian economy.98 Approximately 80% of the world’s top 500 companies now have offshore work undertaken in India. Although the 2008 financial crisis slowed the industry down,99 its growth has put stress on infrastructure, skills availability, and is leading to rapid wage increases in India.100

This trend has not been without its criticisms. There was a great outrage in Indiana when the local government gave a USD $15 million service contract to Tata, which had to be withdrawn.101 There have been fears about the security of data and the loss of jobs to these offshore operations. This represents job migration in the service industry, which is not yet fully understood as multinationals move administrative work offshore. One of the consequences is that there are now little chances that western employees have the same opportunities to gain administrative experience and climb up the company hierarchy as they had been able to do before.

The development of new technologies that allowed the outsourcing of administrative has created a new breed of service companies which is now a competitive industry where it is the quickest and cheapest telecom lines that provide competitive advantage for future competition in this emerging industry. The need for a service company to be located near to the client is no longer applicable. Countries like China,102 Russia,103 Philippines,104 Mexico,105 Uruguay106 and Vietnam107 are also entering this industry competitively.

This decade also saw the demise of a century old product and the associated industry that supported it. In 2009 Kodak announced it was discontinuing Kodachrome film production, which represented the death of a technology that had been in use since the 1880s. The technology behind the digital camera was derived basically from the same technology that television images were recorded. Television images were converted to electrical impulses and stored as impulses on magnetic tape (VTR). Image capturing technology was enhanced by Eugene F. Lally of the NASA Jet Propulsion Laboratory who produced a mosaic photosensor to assist in guidance and navigation systems (Lally 1961). Texas Instruments patented a filmless camera in 1972 and Sony released the Professional ProMavica MVC-5000 electronic still camera where images were stored on a mini disc and then put into a video reader attached to a television monitor or printer in 1981. Kodak developed in 1985 the world’s first pixel sensor capable of recording 1.4 mega-pixels that produced 5 X 7”prints. In the following year a Kodak researcher Dr. Ching W. Tang developed the first multi-layer OLEDs that comprised of self illuminating pixels that did not need background light as LCD displays required. Kodak also released a number of products for recording, storing, manipulating, transmitting, and printing electronically stored images and in 1990 developed a photo CD system. In 1991 Kodak launched its first professional digital camera system (DCS) aimed at photojournalists based on the Nikon F-3 SLR.

In 1990 the Dycam Model 1 could produce black and white shots at a resolution of 320X240 pixels which was able to store 32 images on a 1 MB internal RAM with battery power. In the mid 1990s a series of cameras that could be connected to computers through a cable were released including the Apple QuickTake 100, Kodak DC40, Casio QV-11, Olympus Deltis VC-1100, and the Sony Cyber-Shot digital still cameras. The technology was still poor where film photography was still of superior quality. Kodak collaborated with Microsoft to create digital image software workstations where customers could produce photo CDs and photographs at camera kiosks.

In 1995 Ricoh introduced the first digital camera RDC-1 that could capture moving images and store audio recording. Then in 1997 Hitachi launched the MP-EGI that could transfer pictures to a computer in MPEG format. This technology was closely followed by Sony and Fuji which introduced memory cards. The further improvement of memory storage technology, especially the invention of flash cards enabled more convenient and greater image storage capacity.

The enhancement of digital photography also required printers that could provide quality pictures. In 1997 HP introduced the PhotoSmart Printer that could print on glossy paper limited to a maximum size of 8 X 11” paper. This was followed by Epson but ink and paper costs were still very high putting digital photography at a disadvantage to conventional film based photography. Cannon and Sony produced menu driven software that made digital photography much more user friendly which greatly increased consumer viability of the product.

During 2000-2009 mega-pixel capacities, battery life, memory size, lens quality, software, and printing technologies have greatly improved dramatically until the ease of use, convenience, cost, and quality of digital photography was superior to conventional film photography. “New” companies to the photography industry like Sony, Cannon, Panasonic, Samsung, and LG, were taking advantage of the new technology and provided fierce competition with traditional firms in the industry like Kodak, Nikon, Fuji, and Leica. This in some cases has been at great cost to companies like Kodak in the market place. Although Kodak was given many awards for excellence in innovation, since 2004 the company has been losing billions of dollars and half its workforce, as well as being dropped from the S&P 500 list.

New technologies like the development of active pixel sensors will further improve digital photography and produce lower product costs. With the advance of digital technology traditional camera and film processing stores have almost become redundant and those still in business are trying to adapt to servicing customers within the new digital technology paradigm. There is now a greater emphasis on camera sales through department stores, changing the way cameras are marketed to consumers. Mobile phone manufacturers have aggressively incorporated digital cameras into their phones, and now lenses and mega-pixel capacity is not far away from standard digital cameras, leading to a merging of the mobile phone industry into the digital camera industry.

The decade saw the rise of the fourth generation of modern automobile manufacturers, the first being the US automakers, then the Japanese emergence in the 1960s and 70s, and then the Korean emergence during the 1990s. The fourth Generation consists of Indian manufacturers like Tata Motors and a number of newly created Chinese manufacturers which include BYD, Lifan, Chang’an (Chana), Geely, Cheri, Hafei, Great Wall, Jianghuai (JAC), Roewe, Martin and a number of others.

Tata Motors is part of the Tata Group, the largest privately owned conglomerate in India. Tata began operations in 1945 building locomotives and then in 1954 commenced manufacturing commercial vehicles as a joint venture with Daimler-Benz. Tata entered the passenger car market in 1991 launching the Tata Sierra and a number of other models. In 1998 Tata launched the Indica, the first fully indigenous car built in India which was a great success and now exported to South Africa, the United Kingdom, and Italy. The company acquired Daewoo truck manufacturing operation in 2004, a controlling interest in Aragonese (within Spain) Hispano Carrocera in 2005, formed a joint venture with Marcopolo in Brazil in 2007, acquired British Jaguar land Rover in 2008 and took an 80% stake in Trilix of Italy in 2010. In 2008 Tata launched the Nano, a car priced around USD $2,000 so that more people could afford to purchase an automobile in India. Tata is experimenting with electric cars and compressed air engines. Today Tata has an extremely strong customer based on the Sub-continent and exports to 26 countries with manufacturing plants in the UK, Korea, Spain, Thailand, South Africa, and Argentina. Under franchise Tata cars are also assembled in Russia, Ukraine, Kenya, Bangladesh, and Senegal.

China’s auto industry began in the 1950s under the guidance of the Chinese Communist Party Central Committee, with technical assistance from the Soviet Union. From the 1980s to 2000 all of the China’s leading automakers were joint ventures with foreign automobile companies. Output was tightly controlled with most production focused on commercial vehicles. As China prospered, vehicle ownership has increased dramatically, where production increased from one million automobiles in 2000 to almost 14 million vehicles in 2009,108 making China the largest automobile manufacturer in the world.109

Many of the local companies that commenced operations after the 1990s were owned by the Defense Ministry, Chang’an Motors, Changhe, Hufei Motors, or provincial authorities, Brilliance China Auto, Cherry Auto, and Chang Feng Automotive. A few private companies BYD Auto, Greely Automotive and Great Wall Motors also started up. On the whole Chinese automakers lack the efficiency and quality, but still produce cars much cheaper than manufacturers in other countries. R&D is still low at present with some companies taking inspiration from international models. The state owned Cherry Automobile Co. Ltd. is the largest independent domestic vehicle manufacturer and will be privatized soon. Some of the other major domestic manufacturers First Automobile Works Group Corporation (FAW), Greely, SAIC, and Dong Feng have built their cars upon platforms provided from international automakers while the rest have been the result been built from knowledge gained through reengineering or just outright copying.110 Some firms like SAIC and Nanjing Automobile Group acquired MC Rover to access technology and there is a tendency for domestic companies to acquire international brands rather than build them.111 The Chinese Government is encouraging domestic automakers to merge so that three or four main domestic players exist in the industry.112 Due to the economic downturn of 2008 Chinese Automakers had been able to acquire struggling part manufacturers such as the Greely purchase of the Australian Drivetrain Systems International (DSI).

Chinese companies are working on developing electric cars. However costs are still too high for the average Chinese consumer, and there are still many practical problems as most Chinese live in apartments and access to power supplies may be difficult. Nevertheless China is the largest producer of electric cars in the world. One company committed to the development of electric cars is BYD, a Shenzhen based company founded by entrepreneur Wang Chuanfu in 1995 when he was 29 years old.113 By 2005 BYD was the largest manufacturer of batteries in the world for mobile phones, iPods, digital cameras, and other electronic goods. While he still eats in the company canteen and lives in the company housing block, Wang Chuanfu is now considered one of the richest people in China.114 Warren Buffet is an investor in BYD.

The idiosyncratic and evangelistic entrepreneur Steve Jobs who co-founded Apple but was deposed as CEO in 1984, made a massive impact upon the computer industry again this decade. After Apple bought out Job’s NeXT corporation, Job returned to the tenure of CEO at Apple in 1997. Much of NeXT’s technology was used in Apple products including Mac OS X operating system. The company widened its focus away from computers and launched the iPod portable music player, iTunes digital music software, the iTunes stores, Apple TV, consumer electronics stores, and introduced the iPhone, a multi-touch display cell phone which included the features of iPod and was equipped with a mobile browser. The iPhone revolutionized the mobile phone industry, merging it with the computer and internet industry beginning the era of the cyber cloud, where Apple became the third largest mobile phone supplier.115 In January 2010 Apple launched the iPad, a touch screen tablet using a similar operating system to the iPhone and uses the same apps which are already a billion dollar business for Apple.116 Apple was now a company that exceeded Microsoft’s capitalization with a capital value of USD $ 222.117

Steve Jobs was either primary or co-inventor of over 230 patents of computers and other portable devices and the largest shareholder in Disney after Disney’s takeover of Job’s former company Pixar in 2005. Jobs was seen as a larger than life character whose career has influenced the computer, entertainment, music, and mobile electronic device industries over a 40 year period, iconic of the Silicon Valley culture118 - the epitome of how an individual can influence events and the way our society develops.

With the almost replacement of the personal computer by the notebook and the emergence of IPads, consumer book reading is undergoing tremendous change, even though many believed that people would not pay for a e-book when they could buy the physical copy for the same price. But by 2010 e-books designed for Amazon’s Kindle had for the first time surpassed Amazon’s sales of hardcovers and was soon about to surpass paperbacks as well.119 This will again lead to changes in how the book industry will be structured in the near future.

The decade ended with the financial crisis and civil unrest around many parts of the world and some sense of disappointment in political leadership. Commodity prices were beginning to rise, once again bringing concerns about future energy and food crises and terrorist attacks were continuing. China emerged as a superpower and the first signs that China would flex its muscles in the foreign policy and international arena were showing. Currency exchange rates were also beginning to become a major political issue as it had a great impact on terms of trade and competitiveness between countries. The decline of the US currency also undermined it as the major trading currency, but the Euro as well was weak and had its own problems.

Smart-phones and wireless internet enabled many in urban societies to remain connected to the internet on a continual basis. Generation Y was beginning to enter the workforce while many of the baby-boomer generation were beginning to enter retirement age. Although there were leaps and bounds in the advances of medicine, the widening gap between North-South may mean that only the privileged few would benefit for it. This had already been an issue with medicines for the treatment of HIV and related diseases earlier in the decade, threatening respect for patent law. These issues along with climate change would most probably become more important issues as the next decade continued.

9. The Future

hunter02_400_01We know many things about what will happen in the future from past events, trends, and the present. We know that it will be extremely likely that the US economy will be surpassed by China as the largest economy in the not too distant future. This will bring in a completely new set of geo-political, military, social, economic, cultural, and business dynamics. We may have some doubt, but where is the world’s fastest train? Where is the world’s tallest building? Where is GDP growth fastest? Where are the most cars sold? Which country uses the most cement? Which country uses the most steel? and which country has the most engineering graduates? Compare this to the country which produces mostly arts, sociology, and communications graduates.

We know that industry is relocating to Asia, which is eroding Western tax bases and will also erode standards of living. China and India are catching up and closing the technology gap through education and research and development. It may take a number of years but it will happen. We are not certain that the next person who walks on the moon will be an American.

Post industrial economies are less controllable that people think and cannot be relied upon for continual growth. This is bolstered by the loss of employment due to offshoring of work and the West’s future maybe similar to Japan’s deflationary economy.120 Other authors add that firms in post industrial societies invest in primarily unproductive enterprises and that capitalism in general has lost its creativity.121

Some of the above is inevitable due to demographics. The population in most post-capitalist societies is generally aging as babyboomers retire. Aggregate incomes will decrease, thus decreasing the standard of living in those countries. As a consequence savings will decrease, as will domestic investment. GDP in the future will be more dependent on exports to the growing economies of China, Asia, and Brazil.

It is generally agreed that by 2050 world population will be around 9 billion, which brings up many issues about consumption, technology, and resource usage. This population increase will mainly occur within Sub-Saharan Africa, India, and Latin America, which will bring questions about the gap between North and South. Population will be expected to fall in China, Eastern Europe, and the former Soviet Bloc countries. Population in 2050 will most probably be more urban and witness the emergence of mega-cities. The UN predicts that by 2025 Tokyo will have 30 million, New Delhi, Sao Paulo, and Mumbai 20 million, with Dhaka, Ciudad de Mexico, New York-Newark, Kolkata, and Shanghai, very close behind.122

Although we can see many trends concerning the future, predictions about what will happen are extremely difficult as we don’t know what crises the world and individual countries will face, and how these crises will be overcome. Any shock that is large enough may put a country or the world on a completely different trajectory, look at Haiti and Japan. This could be a financial accident, a pandemic, an international security crisis (think of Iran and North Korea), or an extreme earth or climate event that may potentially put the world off course. On the other side there may also be technological breakthroughs that may change some aspects of life that we cannot foresee at this point. It is very difficult to always immediately know what the implications of new technologies are on business. For example the internet’s influence on British GDP occurred in spurts, rather than linearly and has disrupted some industries but empowered others.123

Predicting the future is difficult and as Bremmer & Keat point out that back in the 1950s nobody was predicting that the Soviet Union would be transformed into a number of capitalist successor states in the 1990s, or that China would become a capitalist powerhouse.124 What we certainly don’t know is where a new Oprah, Bill Gates, Thomas Edison, John D. Rockefeller, Sam Walton, or Steve Jobs will appear and what they will do. This is the most unpredictable element of the future but also the most important driver of the future.

Some of the issues that will influence opportunity in the future will be;

·                     Continued volatility of commodity prices, levels of economic activity, employment, aggregate demand, and exchange rates, which could undermine the stability and confidence of the financial system.

·                     Global warming and the necessary changes to our lifestyles to compensate for the effects. Also the need to find solutions to these emerging problems.

·                     Declining oil reserves and higher petrochemical prices.

·                     Water shortages in some regions, where we may witness conflicts over the issue.

·                     Food shortages in some regions.

·                     The emergence of new technologies.

·                     Higher unemployment in post industrial societies, with accompanying social pressures.

·                     Increasing world population size and changing demographics.

·                     A likelihood that this generation will not be as financially well off as the last.

·                     An increase of immigration around the world.

·                     Any single country i.e., Middle East, Iran, or North Korea able to start intensive international diplomacy and highlighting the weaknesses of existing international bodies, and

·                     Changing political scenarios with the Asia-Pacific being the focal point of tension between shifting balances of power between the superpowers.

If we draw lessons from the 1974-84 period, we will most likely experience mooted economic growth in post industrial societies which will place pressure on SMEs and make it more difficult for new start-ups.125 How self employment will be able to compensate for growing loss of jobs due offshoring remains to be seen. 2007 also showed us that the capitalist system works well during times of growth and comes under strain during times of retraction. Just a few years after the creation of the Euro, member countries are already considering leaving it to revert back to their old currencies. The results of the Rio talks in June 2012 leave little room for optimism about any global determination for consensus. The new green economy may become a big bubble itself with unsatisfactory technologies, rip offs, and a big burst, just like what has happened before with other new technologies. However what we will see are new electric cars with perfected battery technology, the massive leapfrogging of technology by China and India with the west, the development of safer and more compact nuclear technologies like the pebble bed reactor, new ways of diagnosing diseases with nano-sensors that roam inside our body, new cures to diseases based on new genome knowledge and biotechnology processes, a move away from the petroleum based economy, and new business models to supply our wants and needs.

Notes and References

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2. Gibb, A. A. & Ritchie, J. (1982). Understanding the process of starting small businesses, European Small Business Journal, Vol. 1, No. 1, pp. 26-46, McGuire, J. (1964). Theories of Business behavior, Englewood Cliffs, NJ, Prentice Hall, Newman, P.C. (1981). The Acquisitors, Toronto, McClelland and Stewart.

3. Filion, L. J. (1997). From entrepreneurship to entroprenology, Journal of Enterprising Culture, Vol. 16, No. 1, pp. 1-23.

4. Diamond, J. (1997). Guns, Germs, and Steel: A short history of everybody for the last 13,000 years, London, Vintage.

5. Indeed management theories can also be seen as being a product of their time and place. Scientific management at the turn of the century could be seen as being reflective upon the values and needs of industry at the time, as with strategic planning in the 1960s, international management of the 1970s, the quality management movement of the 1980s, the learning organization of the 1990s, and knowledge management of the turn of this millennium. As we will see later on in this book, one’s surroundings are critical to creativity.

6. Private communication.

7. Shane, S. & Venkataraman, S. (2000). The promise of entrepreneurship as a field of research, Academy of Management Review, Vol. 25, pp. 217-226.

8. Schweikart, L. & Doti, L.P. (2010). American Entrepreneur, New York, AMACON, P. 309.

9. CNN Money Fortune 500 information (2006)
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14. Reuters http://www.reuters.com/article/2009/02/05/idUS173002+05-Feb-2009+PRN20090205

15. Kroc later purchased the McDonalds brothers’ equity in the business in 1961 which lead to a protracted dispute over the terms.

16. Wilson, K. & Kerr, R. (1996). Half Luck and half brains: The Kemmons Wilson, Holiday Inn Story, Nashville, TN, Hambleton Hill Publishing.

17. http://www.thisdayinquotes.com/2009/09/too-cheap-to-meter-nuclear-quote-debate.html (Accessed 30th January 2011).

18. In 1929 Seatrain lines had carried railroad boxcars on its ships to transport goods between New York and Cuba.

19. Whyte, W.H. (1956). The Organization Man, New York, Simon & Schuster.

20. Collier, P. & Horowitz, D. (1987). The Fords: An American Epic, New York, Simon & Schuster.

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22. Deutsch, J.G. (1976). Selling the People’s Cadillac: The Edsel and Corporate responsibility, New Haven, Yale University Press.

23. Brands probably developed during the 19th century in the tobacco industry, where different tobaccos produced in regional America had to be transported to different locations and identified by brand. Coca Cola was one of the first soft drinks that carried the name to distinguish it from the number of other colas on the market.

24. Russell, J.T., Verrill, G., & Lane, W.R. (1988). Kleppner’s Advertising Procedure (10th Edition), New Jersey, Prentice Hall.

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35. According to Blasi, Kruse, and Berstein (2003) Julius Blank, Victor Grinich, Jean Hoemi, Eugene Kleiner, Jay Last, Gordon Moore, Robert Noyce, and Sheldon Roberts left Shockley because they had difficulties with William Shockley’s authoritarian management style and trait of impatiently waiting for results. These eight went to Fairchild but weren’t satisfied there and went on to form a number of spin-off companies, Noyce and Moore founding Intel, Kleiner co-founding Kleiner Perkins, a venture capital firm, Roberts, Hoemi, and last founded Teledyne, Blank founding Xicor, and Grinich becoming a professor at Stanford University.

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37. Schweikart, L. & Doti, L.P. (2010). American Entrepreneur, P. 358.

38. McNamara, C. (2005). The pursuit of happiness, American style: Tom Wolfe’s study of status and freedom, Perspectives on Political Science, Vol. 34, No. 1, pp. 16-26.

39. A host of books came out discussing the Japanese phenomena providing warnings and advice to American business on management, strategy, marketing, and manufacturing. These included William Ouchi’s (1983), Theory Z, Richard Pascale and Anthony Athos’s (1982) The Art of Japanese Management, Akio’s Morita’s (1987), Made in Japan, Kenichi Ohmae’s (1991), The Mind of the Strategist, Philip Kotler et. al. (1985), The New Competition, and Richard Schonberger’s (1982), Japanese Manufacturing Techniques.

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49. Kotler, P., Fahey, L. & Jatusripitak, S. (1985). The New Competition: Meeting the Marketing Challenge from the Far East, Englewood Cliffs, NJ., Prentice-Hall, P. ix.

50. Two examples of this would be Kao Corporation’s purchase of The Andrew Jergens Company and Sony’s purchase of Columbia Pictures.

51. Political correctness is a term to describe the foregoing of using language, ideas, policies, or behavior that might cause offence to occupational, gender, racial, cultural, sexually orientated, religious believing, disability, and/or age related minority groups.

52. Crainer, S., (1998), Key Management Ideas, 3rd Edition, London, Financial Times.

53. Crainer, S., (1998), “Key Management Ideas”.

54. Companies like Wang Computer actually closed down.

55. Peters, T. and Waterman, R., (1982), In Search of Excellence, New York, Harper & Row.

56. Byrne, J. A. (2001). The Real Confessions of Tom Peters: Did In Search of Excellence Fake Data? A Magazine suggests it did, Bloomberg Businessweek, 3rd December, http://www.businessweek.com/magazine/content/01_49/b3760040.htm, (accessed 9th February 2011).

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60. See Dame Anita Roddick, The Sunday Times, 11th September 2007,
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61. Bronstein, Z. (2004). Made in Berkeley: Berkeley’s Body Time the Original Body Shop, The Berkeley Daily Planet, February 4th, http://www.berkeleydailyplanet.com/issue/2004-02-03/article/18201?headline=Made-In-Berkeley-Berkeley-s-Body-Time-the-Original-Body-Shop, (accessed 9th February 2011).

62. See: Dame Anita Roddick dies aged 64, BBC News, 10th September 2007,
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63. L’Oréal buys Body Shop for £652m, The Independent, 17th March 2006,
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64. See Anita Roddick, capitalist with a conscience, dies at 64, The Independent, 11th September 2007, http://www.independent.co.uk/news/uk/this-britain/anita-roddick-capitalist-with-a-conscience-dies-at-64-402014.html, (accessed 9th February 2011).

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74. See: The New American Revolution: The Role and Impact of Small Business, Washington DC, US Small Business Administration, Office of Economic Research, (1998).

75. Before the 1990s equipment was expensive and could not compete against the other modes of transmission, i.e., cable and UHF.

76. The CNN effect has become a theory in political science where 24 hour news broadcasting has significant effect on the conduct of a states foreign policy. 24 hour news broadcasters like CNN have brought events directly into world attention which has a great effect on how authorities play out their actions due to live public observation.

77. See: In 20 years, CNN has changed the way we view the news, Enquirer Local New Coverage, 28th may 2000, http://www.enquirer.com/editions/2000/05/28/loc_kiesewetter.html, (accessed 11th February 2011).

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79. The personal computer took around 16 years, the telephone took 35 years, the airplane around 18 years, and the automobile around 55 years.

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82. These types of booms also developed during earlier history where new technologies were introduced. For example, the steam engine and railroads attracted high interest in the 1840s, automobiles in the 1920s, and transistors in the 1950s.

83. Bovard, J. (1994). The Destruction of American Liberty, New York, St. Martins.

84. Hopkins, T.D. (1995). A guide to the regulatory landscape, Jobs & Capital, Vol. 4, pp. 28-31.

85. See: Joseph Yam, ‘Causes of and the solutions to the recent financial turmoil in the Asian region’ a speech given to Asian Central Bankers in Manila,

86. Studwell, J. (2007). Asian Godfathers: Money and Power in Hong Kong and Southeast Asia, New York, Grove Press, P. 141.

87. Backman, M. & Butler, C. (2007). Big in Asia: 30 Strategies from Business Success, New York, Palgrave Macmillan, P. 95.

88. Fraser, S. (2007). Hot properties in vineland: Rising temperatures, cheaper land are starting to lure Ontario grape-growers to the Maritimes, The Star.com, 4th October, http://www.thestar.com/travel/article/263748, (accessed 6th October 2007).

89. Preston, B. L., and Jones, R. N., (2005), Climate Change Impacts on Australia and the Benefits of Early Action to Reduce Global Greenhouse Gas Emissions: A consultancy report for the Australian Business Roundtable on Climate Change, Melbourne, CSIRO, P. 5.

90. Television Interview, Professor Tim Flannery discusses greenhouse gas levels, Australian Broadcasting Corporation, 8th October 2007, Text of interview at
http://www.abc.net.au/lateline/content/2007/s2054168.htm, (accessed 9th October 2007), copy of draft report at http://news.bbc.co.uk/2/shared/bsp/hi/pdfs/17_11_07_ipcc4.pdf, (Accessed 17th November 2007).

91. Figures released at the end of 2010 indicate that China has surpassed Japan as the second largest economy in the world. Japan’s GDP was USD $5.474 Trillion and China USD $5.8 Trillion. See: China overtakes Japan as world’s second-biggest economy, BBC News Business, 14th February 2011,
http://www.bbc.co.uk/news/business-12427321, (accessed 14th February 2011).

92. See: The future of the Euro: Don’t do it, the euro is proving horrible costly for some. A break up would even be worse, The Economist, 2nd December 2010, http://www.economist.com/node/17629661, (accessed 25th December 2010).

93. Edelman, R. & Flieger, N. (2011). The United States and the Trust Barometer, Davos Dairies, The Washington Post, 25th January, http://voices.washingtonpost.com/davos-diary/2011/01/the_united_states_and_the_trus.html, (accessed 27th January 2011)

94. Probably exceptions were theGlobe.com founded in 1994 (although declined quickly after 2000) and FriendFinder founded in 1996.

95. Rivlin, J. (2006). Wallflower at the Web Party, The New York Times, 15th October, http://www.nytimes.com/2006/10/15/business/yourmoney/15friend.html?_r=2, (accessed 14th February 2011).

96. Engardio, P. (2007). Chindia: How China and India are Revolutionizing Global Business, New York, McGraw Hill, P. 81.

97. One important advance in the internet that allowed the outsourcing industry to rapidly grow was voice over internet protocol (VOIP) which allowed very cheap telephony communication around the world.

98. Ram, C. (2010). India’s Next Outsourcing Wave, Bloomberg Businessweek, 9th March, http://www.businessweek.com/globalbiz/content/mar2010/gb2010039_433787.htm, (accessed 14th February 2011).

99. Bhushan, S. (2008). Indian BPOs hit by financial meltdown, NDTV.com, 17th October, http://www.ndtv.com/convergence/ndtv/story.aspx?id=NEWEN20080069056, (accessed 15th February 2011).

100. See: India’s Outsourcing revenue to hit $50 bn, The Financial Express, 29th January 2008,
http://www.financialexpress.com/news/indias-outsourcing-revenue-to-hit-50-bn/266661/2, (accessed 14th February 2011).

101. Engardio, P. (2007). “Chindia”, P. 47.

102. Focusing on taking work from Japan based in Dalian.

103. Engineering, particularly aviation engineering.

104. BPO and voice out.

105. IT services.

106. India’s Tata Consulting opened branch to support US businesses in same time-zone as India is in the middle of the night.

107. Software development.

108. See: Motoring Ahead: More Cars are Sold in China than in America, The Economist, 23rd October 2009, http://www.economist.com/node/14732026?story_id=14732026&fsrc=nwl, (accessed 16th February 2011).

109. Marr, K. (2009). As Detroit Crumbles, China Emerges as Auto Epicenter, The Washington Post, 18th May, http://www.washingtonpost.com/wp-
, (accessed 15th February 2011).

110. Tang, R. (2009). The Rise of China’s Auto Industry and its Impact on the U.S. Motor Vehicle Industry, Washington D.C., Congressional Research Service, P. 13,
http://www.fas.org/sgp/crs/row/R40924.pdf, (accessed 15th February 2011).

111. Jian, Y. (2009). Chinese Car Companies Resort to Buying Brands Rather Than Creating Them, Advertising Age, 15th July, http://adage.com/china/article?article_id=137900, (accessed 16th February 2011).

112. Tang, R. (2009). “The Rise of China’s Auto Industry”, P. 14.

113. Wang Chuanfu: Building electric dreams in China, CNN.com/asia, 20th April 2009, http://edition.cnn.com/2009/WORLD/asiapcf/04/20/byd.wangchuanfu/index.html, (accessed 14th February 2011).

114. See: http://www.forbes.com/lists/2010/10/billionaires-2010_Wang-Chuanfu_39SU.html

115. Chen, B.X. (2008). Jobs: Apple is Third Largest Handset Supplier, Wired, 21st October, http://www.wired.com/epicenter/2008/10/with-iphone-app/#, (accessed 17th February 2011).

116. McLaughlin, K. (2008). Apple’s Jobs Gushes Over App Store Success, CRN, 11th August, http://www.crn.com/blogs-op-ed/the-channel-wire/210002313/apples-jobs-gushes-over-app-store-success.htm, (accessed 17th February 2011).

117. See: Apple passes Microsoft to be biggest tech company, BBC News, 27th May, http://www.bbc.co.uk/news/10168684, (accessed 17th February 2011).

118. Appleyard, B. (2009). Steve Jobs: The man who polished Apple, The Sunday Times, 16th August,
http://technology.timesonline.co.uk/tol/news/tech_and_web/article6797859.ece?token=null&offset=0&page=1, (accessed 17th February 2011).

119. See: Amazon Kindle e-book downloads outsell paperbacks, BBC News, 28th January 2011, http://www.bbc.co.uk/news/business-12305015, (accessed 29th January 2011).

120. King, S. D. (2010). Losing Control: The Emerging Threats to Western Prosperity, New Haven, CT., Yale University Press.

121. Harvey, D. (2010). The Enigma of Capital: and crises of capitalism, London, Profile Books.

122. United Nations Department of Economic and Social Affairs Population Division, World Urbanization Prospects: The 2009 Revision, New York, United nations.

123. Kalapesi, C., Willersdorf, S., & Zwillenberg, P. (2010). The Connected Kingdom: How the Internet is Transforming the U.K. Economy, Boston, The Boston Consulting Group, Inc.

124. Bremmer, I. & Keat, P. (2009). The Fat Tail: the power of political knowledge for strategic investing, Oxford, Oxford University Press.

125. This is from an aggregate point of view as there will always be individuals starting up new enterprises.


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Alan2014-03-26 00:50:39
Great work Mr. Hunter

Emanuel Paparella2014-03-25 14:04:09
An entrepreneur by the name of Mitt Romney running for president of the US at the end of his acceptance speech at the RNC two years ago delivered this memorable line: “President Obama has promised to begin to slow the rise of the oceans and heal the planet. My promise is to help you and your family.” Thus he turned the greatest challenge civilization has ever faced into a joke.

As we speak, in the streets of Miami sea water can be seen at times and people misguidedly think that a water main has broken. So a more urgent and relevant question is the one asked by David Sparenberg only a few days ago: “When the report arrives at the end that the end of the world is at hand, what are we to do?” No doubt Romney’s answer would be to suggest the building of submersible automobiles so that we can keep on driving merrily around in a submerged Florida, and he would not suggest it as a joke but in all seriousness.

There was a wise man in Palestine some two thousand years ago who also spoke about entrepreneurship and markets and expenditures and profits at the end times, saying that when the end of the world is at hand many will be busy with wedding last minute arrangements and will be worrying with what they will eat and what they will wear and what their profit ledger shows; and then he said: let those who have ears let them hear. Was anybody listening then? Is anybody listening now? One wonders.

Meanwhile Sparenberg's question awaits an answer. So does the question: Why is there something rather than nothing? But I suppose the entrepreneur is too busy figuring out more profitable markets, the harbingers of "Progress and prosperity."

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