The failure of the Cancun trade talks is not the only sign that globalization could be running out of steam. This new report by Deloitte Research identifies 10 forces that could reverse the trend toward global economic and political unity. One of them — hostility between developed and developing nations — is the key factor being blamed for the shutdown of the recent WTO meeting in Cancun, Mexico. But now, Deloitte Research has identified nine other threats that are equally as great, if not greater. These include:

• The U.S. going its own way rather than cooperating with other nations;
• Competition between rival regional blocs, such as the EU versus the U.S.;
• Increasing friction between individual countries, such as China and Japan;
• Conflict over access to resources such as water and oil;
• Worldwide financial instability.

This report points to warnings about globalization's future by experts on trade, politics and military affairs. Until recently, naysayers about globalization have been in the minority, but the failure of the Cancun talks coupled with disagreements over the war in Iraq give new weight to the pessimistic point of view, Deloitte Research shows. The report also identifies numerous corporate strategies that will need to be revised if the international business environment sours. These include operating factories, stores and offices abroad; importing and exporting key materials; outsourcing overseas; selling to foreign governments; and, tapping foreign capital markets.

A major challenge for companies doing business overseas is coping with uncertainty. Globalization could rebound, and if an era of deglobalization does lie ahead, it could unfold according to any of several scenarios. To deal with this dilemma, the report recommends adopting an approach known as "Strategic Flexibility." Developed by Deloitte Research, Strategic Flexibility permits companies to make low-cost, tentative preparations for multiple future business conditions — while continuing to compete effectively in today's world. Learn more by reading the complete 16-page report, available as a PDF in the file attachment below.

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About Deloitte Research
Operating through a network of research professionals, senior consultants, academics and technology partners, Deloitte Research delivers innovative, practical insights companies can use to improve their overall business performance. Through its in-depth publications, surveys, reports and commentary, Deloitte Research identifies, analyzes and explains major issues that drive today's business dynamics and shape tomorrow's marketplace.