Think of the title to each passage from the text.

Date: 2015-10-07; view: 402.

1. Strategy is also the test of the Theory of the Business. Failure of the strategy to produce the expected results is usually the first serious indication that the Theory of the Business needs to be thought through again. And unexpected successes are often also the first indications that the Theory of the Business needs to be rethought. Indeed, what is an “opportunity” can only be decided if there is a strategy. Otherwise, there is no way to tell what gen­uinely advances the organization toward its desired results, and what is diversion and splintering of resources

2. The final fundamental on which to base strategy in the period of worldwide structural change and uncertainty is the growing incongruence between economic reality and political reality.

The world economy is increasingly becoming global. National boundaries are impediments and cost centers. As discussed in the first chapter of this book, business—and increasingly many other institutions as well—can no longer define their scope in terms of national economies and national boundaries. They have to define their scope in terms of industries and services worldwide.

But at the same time, political boundaries are not going to go away. In fact, it is doubtful that even the new regional economic units, the European Economic Community, the North American Free Trade Zone (NAFTA) or Mercosur, the proposed economic community in South America, will actually weaken political boundaries, let alone overcome them.

3. We have in fact three overlapping spheres. There is a true global economy of money and information. There are regional economies in which goods circulate freely and in which impedi­ments to the movement of services and of people are being cut back, though by no means eliminated. And then increasingly there are national and local realities, which are both economic, but above all political. And all three are growing fast. And busi­nesses—and other institutions, for example, universities—have no choice. They have to live and perform in all spheres, and at the same time. This is the reality on which strategy has to be based. But no management anyplace knows yet what this reality actually means. They are all still groping.

4.There is no country today that is immune to sudden currency fluctuations—for the simple reason that the world is awash in “virtual money,” that is, in liquidity for which there is no prof­itable investment. Every country, therefore, is awash in money that is not invested in property, in businesses, in manufacturing or in service enterprises, but kept in liquid and volatile “portfo­lio” investment. And very few countries have enough of a surplus in their balance of payments to service the interest on this “port­folio investment,” let alone to pay it out should it take flight. Every country's currency, in other words, is at the mercy of short­ term movements of money for which there may not be any eco­nomic rationale whatever.