Business and finance go global: while the Depression and World War II dampened global expansion, it has been surging in recent decades. Financial executives have seen their own tools and procedures dramatically altered amid a welter of advances in communication, distribution and technology.

• Author: Marshall, Jeffrey

If you've been to one of Disney's theme parks, you've probably been on the ride that features dolls from around the world chirping a cute but highly repetitive theme song: "It's a small world, after all."

Would that it were so simple. The notion that we live in a closely knit and easily bridgeable world has been widely popularized but is still debatable; after all, most of Africa is largely removed from the world of Westernized commerce and its attendant standards of living, and there are still many remote areas of the world where people's ways are closer to the 19th century than the 21st. But the change in global awareness and economic interdependence during the past 75 years of FEI's existence has been remarkable, and, in recent decades, largely continuous. The world is indeed a lot smaller--or at least, more accessible--through virtually any measure: transportation, communication, trade or acceptance of different languages or cultures.

Much of that, of course, has come since the nightmare of World War II, which reduced swaths of countries like Germany and Japan to charred rubble and put international trade essentially on hold. Yet it was precisely those two nations that helped spark the industrial recovery of the 1950s and 1960s, helped in large part by American-run economic assistance programs.

"In Europe, we had the Marshall Plan, and there was the effective occupation in Japan, led by General MacArthur, that laid the basis for democracy," says Charles Manatt, co-chairman of Manatt Jones Global Strategies and an ambassador in the Clinton Administration. "The next step in Europe and Japan was the formation of a political platform where a free-market economy could evolve."

Indeed, it has been business and trade that have forged the strongest links between disparate nations and continents. Treaties and diplomacy have frequently been meshed in trouble and controversy, but technology--riding the coattails of free (or at least freer) trade--has brought an onslaught of change that has spurred business growth.

Globalization of business has been boosted by any number of developments, but none more important than quantum leaps in air travel and communications. Long gone are the days when traveling to Europe from North America meant days at sea; you can be there in six hours by jet, then fly on to Cairo or New Delhi. And telecommunications lines, once limited to heavy physical cables, have gone wireless; you can punch in a few numbers on a keypad and be talking within seconds with someone in Hungary or Argentina. Cable television, business newswires and the Internet have ushered in an era of "24-7," much of that arriving just in the past decade.

Many products are still shipped by sea, but containerization has brought vast improvements to distribution. Goods are now loaded into truck carriers that are offloaded from freighters in the country of shipment and whisked to warehouses and distribution centers. In the air, Federal Express, United Parcel Service, DHL and other freight carriers are flying millions of tons of goods every day throughout the world.

Globalization of the workforce has meant hiring foreign nationals to run country-based operations; that's been true for American companies for many years, and increasingly so for Asian companies (like the Japanese automakers who have hired U.S. executives to run U.S. divisions). Nationalities and borders are less important: Consider CEOs like J.P. Garnier, a Frenchman who lives in the U.S. but runs British-based pharmaceutical giant GlaxoSmithKline, or Howard Stringer, a Briton who works in the U.S. but heads Japan's Sony Corp.

Increasingly, FEI members have been part of the globalization stream, chiefly as their companies have gone overseas for the first time or have expanded their reach to still more world markets. CFOs are busily tapping on their Black-Berries or talking on cellphones, whether they are in Tokyo or Chicago; or perhaps they're reviewing spreadsheets on a laptop on a flight from New York to Frankfurt.

But FEI leaders have also been involved with globalization through consultative and advocacy efforts done in conjunction with their counterparts in other developed countries (see "FEI Becomes a Global Resource," page 20). This work is separate and distinct from the effort to unify global accounting standards, which will be covered in a separate article later in the year.

FINANCE

For the finance suite, globalization of business has brought a raft of complications and challenges. Any short list would include the jumble of foreign exchange rates and country-specific taxes; the logistics of collection and settlement in areas perhaps half a world away; the mind-numbing explosion of financial instruments like futures, options and hedges--traded on global exchanges--that sophisticated companies now wield to reduce risk; and reconciling ledger entries and other items coming from regions where finance training or...