To begin with, generally what the 10% presumption is when we
are dealing with numbers and the fraction of gross domestic product (GDP), we
see that mostly everything is connected locally rather than globally. In other words, Ghemawat predicts that less
than 10% of any type of activity takes place in a truly global manner than
locally. For instant, an issue related to the 10% presumption is the foreign direct
investment (FDI) which stayed about less than 10% in the last three years and the
remaining 90 percent of the fixed investment around the world is still
domestic. Another good example is telephone calls which was mention by
Ghemawat. In today’s generation many of us have smart phones and internet which
made communication around the world so much easier than buying a phone card and
calling international. Therefore, telephone calls as a fraction of gross
domestic product, it stands at a rate of 10% than compare to 100 percent. Don’t you agree that hardly anyone make
telephone calls everyone just text or chats on their cell phones. Some don’t
even have a house phone. What are some other issues you can think of related to
the 10% presumption? The issue with the 10% presumption is that most people have no contact outside of their local environments. While this might make our global community seem as large as ever, if we believe in the idea of six degrees of seperation we might just be a friend of a friend away.
Pankaj Ghemawat is the Anselmo Rubiralta professor of global
strategy at IESE Business School and the Jaime and Josefina Chua Tiampo
professor of business administration at Harvard Business School. His
new book is Redefining Global Strategy (Boston: Harvard Business School Press, September 2007).
