Competitive Strategy: International Business Term Paper

Globalization is one of the most controversial and meaningful notions in the modern business, in international relations, having impact upon various spheres of business and production. Globalization is able to influence the market dynamics, create new corporate competition, demanding greater levels of efficiency and maximum optimization of supply chains. Modern companies are to withstand a strong competition and be able to develop their brands internationally and locally, earning customers’ loyalty and efficiently utilizing their available resources. Modern business landscape is rapidly changing under the impact of globalization and aggressively acting new competitors.

A lot of experts supported the idea that competition of companies against companies is losing its positions, being substituted with competition of supply chains with supply chains. Before companies were used to competing on products and services, still the development of global competition forces the companies develop their supply chains and make them stronger in order to be competitive. The process of globalization is still in action, thus the final impact of it could not be commented upon, still it is evident already that business companies would not be able to remain the same and develop using the old strategies. Modern companies are to look for new reliable partners, increase the speed of operating and promotion of their products or service, introduce innovations.

Globalization is able to bring not only numerous challenges to the international business relations, it has a strong potential at the same time. “Business is moving at a dizzying pace. Success requires focus on product innovation to strengthen the brand while outsourcing non-core operations. Optimizing the supply chain to reduce lead times and achieve the lowest total landed cost is critical, but truly competitive supply chains assimilate the entire product life — from product development to end-of-life — into an integrated solution that out-innovates, out-performs and out-serves the competition.” (Tallman, Fladmoe-Lindquist, 2002, p. 120).  Taking into consideration these characteristics of globalization, it is evident that sustainable competitive advantage and business successful development are directly related to speed and innovation, upon ability to immediately meet the demands of the customers and penetrate into new markets, beating the competition there.

Globalization contributes to integration of various societies in different spheres, economic, cultural, etc. Such processes as flow of services and products, information and finance are normally taking place within the frames of globalization. Generally experts state that the intensity of globalization started to grow from 1980s. “However, a comparison of the period between 1870 and 1914 to the post-World War II era indicates a greater degree of globalization in the earlier part of the century than the latter half. This is true in regards to international trade growth and capital flows, as well as migration of people to America.” (De Marchi, Di,  2012, p. 113).

Development of globalization caused interdependence of different societies and economies. Globalization is made up of several key processes:

  • location of integration activities
  • flows of capital
  • migration of work force and work
  • diffusion of technology
  • impact upon poorer countries
  • development of specific strategies for global development

All these aspects constitute the process of globalization, contribute to its complexity and diversity, forcing most of the companies work out the strategies for their competitive advantage development. “There is a growing propensity for governments to monitor and regulate trade and international investments.” (Rugman, 2008, p. 9)

Special attention is paid to quality, as one of the important aspects of competitive strategy. Already starting from the 1980s most of the producers were aware of the meaning of quality for development of their competitiveness and profitability. There were various programs developed with the aim to introduce and implement new strategies of quality management. “Dynamics of world markets demand that global businesses create knowledge using localized customs and values, and this should be very true for quality management practices. However, many businesses and writers fail to incorporate global aspects of quality into their operational plans.” (Mehra, Agrawal, 2006, p. 1010). Nowadays management of total quality is different from the past experiences.  Generally understanding of TQM (total quality management) as a way to secure customers’ satisfaction via offering them good and services of higher quality. “Quality management practices of the past, however, are regarded as “after the fact” control techniques to detect defective items that require reworking. Hence, past practices focused on quality control rather than quality management. Past practices were result‐oriented compared to the current process‐oriented philosophy.” (Mehra, Agrawal, 2006, p. 1012). Nowadays the attitude towards TQM systems has changed, management of quality issues is not seen as a task of a separate department, rather it is seen as the responsibility area of all workers of the company. In addition this process is endless, as there is no final goal possible.

Quality is certainly related to competitive strategies of the company. Modern companies are to consider the fact that market dynamics is constantly changing. New global markets are developing and they present new challenges, creating new competitive environments for various organizations. Those businesses, which used to depend upon their local quality practices, are to introduce changes, as they are to go beyond their national boundaries. In other words global business is forced to reconsider the quality-based elements of their competitive strategies in order to occupy stronger positions in the market.

Starting from the 1980s a lot of researchers studied the issues of quality management and their impact upon competitiveness in global markets. Quality was seen by most of them as one of the competitive priorities. This is the reason, why development of quality standards was seen as a direct way to support strategic potential in business. “Benson et al. (1991) analyzed the effect of an organization’s quality background on its actual quality related performance. Schroeder et al. (1992) reported on the positive impact of various quality management elements on business performance. Other writers have assessed the positive impact of Deming’s quality management methods when used by organizations to enhance competitiveness.” (Rugman, 2008, p. 10). Nowadays most of the researchers agree that quality and strategic planning are complimentary and this means that perfectly organized quality management is a key to building a perspective competitive advantage.

Most of the modern companies are to exist, develop and earn money in the conditions of global enterprise, which means that their production, marketing and administrative facilities are spread all over the whole world. This is necessary in the frames of comparative economic advantages. A lot of companies are to purchase their raw materials in one country, then send them to a different country to place their productions there. It is not possible to identify a single country, where these products were made. Other companies sell their products in wholesalers from various countries and their consumers are able to purchase them there. Finance and administration do not need to be concentrated in one single country either. This distribution of functions and activities became possible first of all due to rapid development of information and communication technologies, along with development of transportation means. All these opportunities are beneficial under the condition that a company manages to meet the main challenges of globalization. Different locations of production and other facilities are able to create additional challenges even within one country. This is the reason why managers of the organization are to work out the accurate strategies and procedures, which would contribute to achievement of the main aims of their organization, support the quality level and make the company’s competitive advantage stronger.

Often nowadays globalization is seen as a way of turning the whole world into one single market, where various companies from various countries would be able to do business. “For example, many of the major pharmaceutical firms, such as Merck or Johnson & Johnson, conduct major research in numerous research facilities located around the globe, and the international networking of these firms in research, production, and marketing have placed most of their activities into global contexts.” (Rugman, 2008, p. 17). The potential for competitive advantage is then seen through globalization, it is not enough just to concentrate upon delivery of the products or services to the customers, instead it is necessary to consider the challenges of the world new markets.

Sometimes globalization is viewed as one single universal strategy of coordinating and managing of differentiated affiliates, alliances and associations. Initially industry was seen as a pushing force for increase of the efficiency. Still later, this position was reconsidered and researchers stopped treating industry as the only driver of development of multinational strategy, defining internal processes, which are important for development of competitive advantage in different industries. “This process dramatically reduces the “command and control” role of the corporate center in favor of “coordination and coaching.” Clearly, there has been an evolution of thinking about multinational firms from an industry-driven set of similar organizations to a resource- or capability-type model in which unique heritage and idiosyncratic capabilities are reflected in firms facing similar market demands but meeting these with individual responses.” (Gordon et. al. 2004, p. 1090).

In the middle of 1990s the global value chains approach was developed. It was utilized as a tool for making analysis and distribution of labor between various actors from both developed and developing countries. This approach is important for realizing and interpreting of the connections between companies across country’s borders, including for example recognition of production, development of sophisticated firm integrations. “VCs are analyzed within four main dimensions: (i) an input–output structure,  which encompass  all the activities of the VC; (ii) a geographical configuration, giving an account of where activities are located; (iii) an institutional  context, encompassing not only government and  non-government agencies  but  also the  rules  that  govern  society and  the  economy;  and  (iv) a governance structure.” (Gordon et. al. 2004, p. 1095). One of the brightest examples of global value chains is green strategies, as the issues of environment are of the highest importance all over the world. The aim of each company is to work over reduction of the negative impacts upon environment and reducing environmental damage. There is an idea that it is possible to use different types of environmental upgrading with the aim of global improvements of environmental situation, for example reduction of greenhouse effect and rational application of natural resources.

Overall, globalization is a sophisticated process, important for development of international business relations. It brings a lot of new opportunities to various countries of the world in various spheres, at the same time causing a lot of controversies. Globalization is not purely an economic process, neither should it be treated like this. It includes also cultural and political relationships. Managers of organizations are to find their ways of dealing with the process of globalization, especially taking into consideration its meaning for the competitive environment worldwide. Companies are forced to consider their strategies for local development, as well as for internation integration and cooperation. Most of the modern companies are to consider their global strategies, instead of local orientation. Thus local adaptations need to be changed in order to correspond to global competitive environment.

References:

Birkinshaw, J.,  Hood, H. (2006). Characteristics of Foreign Subsidiaries in Industry Clusters. Journal of International Business Studies, 31/1: 141-154.

Britt, D. (2007). Impact of Globalization in Creating Sustainable Competitive Advantage

Bresman, H.,  Birkinshaw, J.,  Nobel, R. (2003). Knowledge Transfer in International Acquisitions. Journal of International Business Studies, 30/3: 439-462

De Marchi, V., Di Maria (2012). Business Strategy and the Environment. Wiley Online Library

Gordon, C., Palaskas, T., Tracey, P., Tsampra, M. (2004). Globalization and Competitive Strategy in Europe’s Vulnerable Regions: Firm, Industry and Country Effects in Labour-intensive Industries. Regional Studies. Vol.38(9), p.1085-1100

Mehra, S., Agrawal, S. P. (2006). Total quality as a new global competitive strategy. International Journal of Quality & Reliability Management, Vol. 20 Iss: 9, pp.1009 – 1025

Prahalad C.K., Hamel, G. “The Core Competence of the Corporation,” Harvard Business Review, 68/3 (May/June 2002): 79-91

Rugman, A. M. (2008).  Multinational and global competitive strategy. Int. Studies of Man & Org. Vol. XV, No.2, pp.8-18

Tallman, S., Fladmoe-Lindquist, K. (2002). Global management review. Vol. 45 Issue 1, p.116-135

The terms offer and acceptance. (2016, May 17). Retrieved from

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[Accessed: March 28, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: March 28, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: March 28, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: March 28, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: March 28, 2024]
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