Wednesday, November 29, 2006

Offshoring

Offshoring: Economic geography and the multinational firm

Loosely defined as the relocation of business processes from one country to another, offshoring is currently one of the most hotly debated aspects of globalization. As part of the global disaggregation of the value chain, it provides a critical template against which to view the intertwined issues of geography and the multinational firm. This disaggregation is the outcome of firms combining the comparative advantages of geographic locations with their own resources and competencies to maximize their competitive advantage. (McCann and Mudambi, 2005). The interplay of comparative advantage and competitive advantage determines both the boundaries of the firm (outsourcing decisions) as well as the optimal location of value chain components (offshoring decisions). The importance of this analysis transcends the strategy of international business, for it is a key aspect of unraveling one of the most critical questions in modern social science – why are some nations rich while others are poor?
One of the most important insights to emerge from Pyndt and Pedersen’s (2006) new book is the crucial link between knowledge and value creation in the Danish context. This ‘smile of value creation’ echoes findings in the US, where ‘taking out costs’ is the main reason to offshore (Lewin and Furlong, 2005). Thus, poor countries that host low knowledge, low value-added offshore operations need to think of these as stepping stones to operations with higher knowledge intensity and wealth generation (see Figure 1). Ensign’s perceptive review draws out the essence of each case study and relates it to international business theory.

One of the most important insights to emerge from Pyndt and Pedersen’s (2006) new book is the crucial link between knowledge and value creation in the Danish context. This ‘smile of value creation’ echoes findings in the US, where ‘taking out costs’ is the main reason to offshore (Lewin and Furlong, 2005). Thus, poor countries that host low knowledge, low value-added offshore operations need to think of these as stepping stones to operations with higher knowledge intensity and wealth generation.

http://astro.temple.edu/~rmudambi/Publications/Mudambi-Offshoring-overview.pdf

Tuesday, November 28, 2006

Philadelphia Marathon

The Philadelphia Marathon

November 19, 2006

Ram Mudambi

It was a perfect day for marathon – cloudy and overcast, but no rain, with temperature in the high 30s at the start, getting up into the low 50s by the finish. The only thing to complain about was the gusty wind, but more on this later.

For us newbies, the whole event was eye-opening. So much hoopla compared to even fairly large bike races! The pre-race expo was huge. My wife, Susan and I spent over an hour there on Friday evening, going from stall to stall, buying gloves and gels.

The start was even more of an eye-opener. I don’t quite know what I expected, but it was mass chaos. Susan and I never found the promised apparel drop-off site and eventually just dropped our old sweatshirts and bags by the roadside – we never saw them again.

Somehow, we managed to find our Cliff Bar pace groups. I decided (in what turned out to be a very wise choice) to go with the 3:40 pace group rather than the 3:30. Susan was to go with the 4:00 pace group. We are packed in the start area like sardines and could see or hear any instructions. I had ‘Dreaming of 3:35’ on my Cliff Bar Pace tag on my back with my name a woman standing next to me said that she was shooting for that time too, could she come along with me? I said fine. However, once I said that it was my first marathon, she quickly lost interest.

We moved forward when the huge crowd in front of us moved. Our pace leader, Bill, warned us to not cross the start mat before him, as he would be running to finish in 3:40 and if we crossed before him, our chips would record an earlier start time.

The Start

After what seemed like ages, we crossed the start mat and we were off. The first few miles were chaotic as we funneled from the wide Benjamin Franklin parkway on to narrow Arch Street and even narrower Race Street. It was so tight that I was constantly hitting people with my elbows and getting hit in return. We finally turned on to Columbus Boulevard and it got a bit wider and there was some elbow room.

We turned on to Washington Avenue and hit the first water stop. It was a struggle to get to the water as everyone tried to get fluid and back on the run as quickly as possible. Pushing, shoving, stepping on toes, using shoulder and stiff arms – all of these tactics and more were used. I followed our pace leader, who went for the very last table at the water stop and was in and out without much trouble. This pattern repeated itself at every water stop thereafter. Another learning experience for the first time marathoner.

We turned on to Front Street and then on to South Street. Here we came upon the first really large crowds. It was nice to hear the cheering and we were still less than 5 miles into the race, so we were all feeling good waved back, many ever whooped and hollered back. I stuck to waving, minimizing energy expenditure. I looked back and now got a fairly good idea of the size of our pace group – there were over a hundred of us at this stage.

Chestnut Street was a long straight run that took us over the Schuylkill River and on to the University of Pennsylvania campus. We turned on 34th Street through Drexel University campus. There was a slight rise here that felt paradoxically good. The pace was still very comfortable, and by now I could see that our pace leader was maintaining metronomic cadence. We were doing 8:23 miles and each mile marker and we were never off our pace by more than 3 seconds. It was uncanny.

We went by the Philadelphia Zoo at about nine miles on to a long steady descent. Here our pace leader left us to answer a quick call of nature, abruptly handing his balloons to one of the front running women in our group with ‘Laura Meyer’ on her name tag, saying, ‘Just run a steady pace, Laura.’ Half a mile later, he was back, looking a bit hot and slightly less effortless. ‘A little bit of higher heart rate work to liven things up,’ I said to him. He nodded.

Mid-race

A few hundred yards later, we hit the only real climb of the course, the run up to Memorial Hall. It is not much of a climb, and coming at about the 10th mile, it was not very taxing. I felt pretty good going up – heart rate had been running between 144 and 146 and it only got up to about 155 by the top of the climb. It brought back many pleasant memories as we came on to the Memorial Hall Criterium course, the scene of so many hard efforts and good finishes. As we crossed the old start-finish line (going against the direction of the bike race), I remembered my 3rd place finish in 2004. I hoped for a similarly successful effort at this marathon.

From the top of the ridge at Memorial Hall, it was a long descent back to West River Drive. We split with the Half Marathon here. Several of the women in the group talked about how much better it was going down than up – I couldn’t disagree more! The jolts on the descent were the first signs of the pain in the race. Getting to the first water stop on West River Drive, we were at the half Marathon point. I was feeling very good at this point and very hopeful.

It seemed a long run from the half Marathon point to the Art Museum start/finish area. Perhaps it was that from here on, I knew the course intimately from innumerable bike rides and commutes. Running is so much slower than biking that every section seemed to take an inordinately long time.

The start/finish and the Rocky Steps seemed to pass in a blur. There were cheering crowds here, but I guess I was focused on our pace group, now down to about 30 runners. Besides, I did not expect anyone I knew to be there. Past Boat House Row, there was an oddly sited mat for chip timers that I only accidentally managed to cross. We crossed mile 15 on Kelly Drive and now the race, at least to me, was on in earnest. So far it had been fun, a relatively easy effort. Now I began to feel the distance a bit. I checked my heart rate monitor – I was up to 150.

The struggle begins

At mile 16, I saw my friend, David Reeb riding on the Kelly Drive bike path. He yelled encouragement and I called back – ‘Still here!’ Shortly thereafter, we saw the winner (a Kenyan, of course) pass us with the preceding police cars and bicycle escort. The second place runner was quite a way back. Soon thereafter, a ‘runner-type’ in our pace group asked me when I planned to ‘break away to go for my 3:35 target.’ ‘Right about now,’ I said. With that I experimented with a mini surge to get in front of the pace group. The increase in effort and pain was tremendous. I tried gamely for about 400 yards, but it was clear that I was not getting away from the pace group. When the pace group caught back up to me, I said to the runner-type, ‘I don’t think a 3:35 is in the cards today.’ He nodded. ‘Yeah, not me either.’

The really fast runners were now steadily streaming past in the opposite lane. For the most part, they looked lean, focused and fit. We saw the West Point team, its front runners looking like finishing inside 3 hours.

By the time we got to Falls Bridge and mile 18, I knew that it was going to be hard to stay with the 3:40 pace group. We had been shedding runners steadily outbound along Kelly Drive and were down to about a dozen now. We dropped on to Main Street Manayunk, running past the furniture stores and my heart rate was 155. There is a small riser on Main Street and it was hard going on the outbound leg. I was also starting to get hot.

The turnaround at the Manayunk firehouse was a welcome sight. ‘Just a little 10K to do,’ someone in the group quipped. ‘With a 20 mile warm-up.’ It was back up the Main Street riser now and it was all I could do to stay with the group. ‘You have to stay really close to me now,’ our pacer said. ‘If you drop back 10-20 yards now, you’ll never get back on.’ This sounded ominous. It was even hard word to stay with the group on the downhill side of the riser – in my heart of hearts, I knew that the end was near. Nonetheless I hung on grimly till we hit the 21 mile marker.

Hitting the wall

A hundred yards past mile 21, all systems shut down. It seemed like the pace group – now reduced to 8 runners – suddenly sped up dramatically. Obviously it was the reverse – my own pace had dropped catastrophically. I struggled up the climb out of Manayunk, trying to keep the group in sight. But it was no use. By the time I go to Ridge Avenue, they were out of sight. I passed two members of the pace group on the Ridge Avenue overpass – the so-called ‘heartbreak climb’ of the Philadelphia marathon. One of them passed me back on the descent.

Back on Kelly Drive for the return leg, the first thing I saw was Susan coming the other way. She looked tired, but game. She waved at me gaily and called encouragement. I think I waved back, but my encouraging response came out as an unintelligible gargle.

At Falls Bridge it was less than 4 miles to go, and I knew every inch from my bike commuting. A runner pulled up in front of me and stepped on to the grass verge. His legs seized up immediately and he fell over like he had been pole-axed. That was a sobering lesson. I knew that if I stopped, I would never get going again.

Every yard was hard now. The pain in my quads was almost unbearable. It felt like I was moving in slow motion. Two more water stops and at each one the volunteers called out encouragement – ‘You’re almost home! Not far now!’ But I knew exactly how far it was – and I was not almost home. I checked my watch, but I no longer cared about my time – I just wanted to finish. I kept expecting the 3:50 pace group to come by me. I noted that my heart rate had slowed, paradoxically, to 144. I feel like I’m going to pass out, but my heart seems to think things are going pretty well!

Just past the 25 miles marker there was a troop of photographers from the Island Photography, the official commercial vendor attached to the Philadelphia marathon. ‘Smile, this is your official photo! It doesn’t matter how you feel, its how you look that matters!’ I tried a smile, but it came out as a grimace. The resulting photo was not pretty.

The finish

Just past the sculpture garden on Kelly Drive we turned on to Boat House row. Here the crowds began and the volume of cheering grew with every step. Incredibly, I found that I was picking up the pace – the prospect of finishing was now so tangible, I could taste it. I passed two or three runners but eight or nine passed me. I didn’t care. I rounded the bend past the Rocky statue and beheld the finish, barely a hundred meters away. I turned in a 100 meter sprint that felt like I was running in molasses. But getting to the finishing mat was a wonderful feeling. I was dimly aware that the large finish line timer read about 3:52.

The finishing chute was full of solicitous volunteers who urged all of us to drink water and get a polythene victor’s shawl. I forgot to stop my stop watch till I had drunk some water and gotten my shawl. I then heard the announcer calling out the arrival of the 3:50 pace group – so at least I had held them off. (I later discovered that my chip time was 3:49, for an average pace of 8:45.)

I got to the table to return my timing chip tried to bend to remove it and found that I could not. Both my legs seized up simultaneously. I teetered precariously, but managed to stay upright. A few people asked if I was OK, and I managed to nod. Eventually, I found a pair of scissors at the chip table and managed, with great difficulty to cut off the chip and return it.

I walked around to get circulation going and settled down to wait for Susan. She came in at 4:45 and in much better shape than me. She helped me across Kelly Drive and then went ahead to warm the car for me. The half a mile from the finishing area to the car was the hardest half a mile I have ever walked in my life. It took me more than 25 minutes to make it. But I did.