Globalization: Chapter 1

By: Gabriel Lennon

University of Hawaii: West Oahu

Globalization is the process and progress of companies, countries, and individuals linking
themselves together mainly through the use of technology that has evolved in the last two
decades or so. Fewer people share proprietary technologies however. There is still a lot of
concern around which idea belongs to whom and just how much money is made off these ideas.
Intellectual property, identities, and products are, legally or otherwise, sold, traded, stolen, and
forgotten in the space of minutes. The amount of data that can change hands in an hour would
stun a layman. What comes after this? More integration? A regression? This paper will look at
the future plans of different companies and how they plan to grow and change with their
respective industries.
The first of our companies is the innovative and multi-market servicer, Kennametal.
Kennametal was founded in 1938 in Latrobe, Pennsylvania. They deal in things from rotary discs
in car brakes and aircraft landing gear, to pieces of spacecraft and alloy drill bits. This company
had a pretty rough 2015 fiscal year, with more than a 30% drop in their market performance from
year-start. This is attributed mainly to market woes and international currency irregularities.
Their outlook for near-future is optimistic, expecting 2016 to be another poor year, but with a
turn-around leading into 2017. In their Investor Relations press release published in the first
week of November, they state, The depth and duration of the downturn in the companys served
end markets coupled with recent macroeconomic concerns has weakened the companys fiscal
2016 outlook. The company now expects fiscal 2016 total sales to decline in the range of 10 to
14 percent (Kennametal, 2015). They later go on to state, Kennametal remains committed
to maintaining investment-grade credit ratings. Cash from operations, as well as any working
capital reductions, will be used primarily for the purpose of debt reduction in the near term.
(Kennametal, 2015).
Kennametal accepts their poor performance, and knows why it happened. They were
circumstances beyond their control, for now. It should be noted that they are planning to put all
inbound assets towards shrinking their liabilities and accounts payable. This speaks well to their
management model and as an international company they absolutely have to keep an eye on their
foreign markets. Currency exchange is something that the general public does not necessarily
consider when they are dissecting a companys performance. The limitation placed on a
company that deals across borders is very real. A thorough indexing of assets and accounting is

required for a corporation to maintain its firm foundation. Without strategic information systems
assets they would not have survived this long.
Another company to consider is Microsoft. There is one key factor that should be
discussed here. Theyre earnings from cloud computing and Windows 10 issuances alone
surpassed 8 billion dollars this year. Keeping in mind some of the things mentioned in the
introduction to this paper several of Microsofts projected statements are, Intense competition in
all of Microsofts markets. And Microsofts ability to protect and earn revenues from its
intellectual property rights. As well as, Cyber-attacks and security vulnerabilities in Microsoft
products and services that could reduce revenue or lead to liability. (Microsoft, 2015). These
statements, along with several others in their report touch on multiple key points. Firstly, in this
global economy the competition in the technology market is incredible. A good product is fairly
easy to come by, a great product however, is not. Intellectual property is a huge piece of the
puzzle. If you cannot effectively maintain your hold over something like proprietary software,
and cloud data storage then you might as well give up now. As we saw above those two specific
segments alone make up an impressively large part of their revenue stream.
These two companies are large in their own right, Kennametal Inc is a mid-cap company
in the S&P 500 and they hold a reasonable amount of market share for their performance output.
Microsoft is a Fortune 500 company and the approaches of these two large companies are unique
to their position in their respective economies. While Kennametal looks towards their future with
reserved optimism and plans to conquer the market slump; Microsoft is looking at keeping what
theyve created, maintaining their hold in one of the most competitive markets in todays
economy.
Both of these companies maintain a huge edge by focusing on their information
infrastructures. Globalization has allowed them both to expand across multiple markets both by
manufacturing and storing internationally as well as selling and researching across multiple
different facilities in different countries. While one company requires technology to integrate its
operations and keep moving forward, the other produces technology and software and requires
both to keep ahold of those same properties. In this global marketplace we see it now more than
ever that things will eventually become one in the sense that research, production, sales, and
information infrastructure will flow together.

Bibliography
Kennametal inc. (2015, November 3). Press Release. Retrieved November 1, 2015, from
Kennametal: http://phx.corporate-ir.net/phoenix.zhtml?c=119933&p=irolnewsArticle&ID=2105667
Microsoft Corporation. (2015, Octoboer 22). Earnings Release FY16 Q1. Retrieved November 2,
2015, from Investor Relations:
https://www.microsoft.com/Investor/EarningsAndFinancials/Earnings/PressReleaseAndWebcast/
FY16/Q1/default.aspx