Essay Sample on Global Strategies: Enhancing Competitive Advantage Across Borders

Introduction

Global strategy refers to techniques designed to allow an organization to expand internationally (Jensen, 2017) effectively. Fundamentally, the term encompasses three areas including global, multinational as well as international strategies. Ideally, the international strategy involves a scenario where a company’s objectives are mostly related to their home country. Nonetheless, some objectives are geared towards oversees activities. With this strategy, competitive advantage is mainly developed form home. A multinational strategy involves a situation where the company takes part in numerous markets beyond its home market. This strategy requires distinctive strategies to cater to different consumer needs and competition levels in different countries. In this case, the competitive advantage is separately determined for every country. Conversely, the global strategy involves a scenario where a company looks at the world as one market and one source of supply with local variations (Jensen, 2017). In this case, competitive advantage is usually developed from a global perspective. This paper aims to explore competitive dynamics and rivalry in global strategic management.

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Competitive Dynamics

Gottinger (2016) defines competitive dynamics as factors that affect the causes and consequences of inter-organizational rivalry. In a bid to understand competitive dynamics, most economic scholars focus on economic theories to identify the dynamic ways in which various firms across the world compete for the market. According to Inamete (2014), the leading most capitalist organizations are driven by various factors including new customer goods, contemporary methods of production and transportation, new forms of industrialization as well as new markets. These factors influence firm behavior and determine the level of performance, a factor that results in an ongoing struggle between various firms.

Various Markets

Slow-Cycle Market

Slow-cycle markets refer to markets where an organization’s competitive advantage is shielded due to factors such as costly imitation as well as restricted entry into a market. In this scenario, a competitive advantage can last for long. Inamete (2014) maintains that this competitive advantage is focused on protecting, maintaining and extending the market advantages that the dominant firm already enjoys. In slow cycle markets, a firm maintains its competitive edge by continually launching new strategies.

Fast-Cycle Market

In the first cycle markets, a firm’s competitive advantage does not last for long as the imitation is cheap and there not many restrictions to market entry. In such a market, a firm can efficiently utilize technology to manufacture quality products and subsequently take over the market. Jensen (2017) maintains that this factor is because technology is neither proprietary nor a patent. Ideally, fast cycle markets are incredibly competitive, mainly due to the similarity of products. In this regard, companies need to keep being creative and innovative in order to compete effectively.

Standard-Cycle Market

Standard-cycle markets are less violent as products are significantly different. Consequently, they are subject to price decrease and sometimes less profitable in comparison to products in a fact-cycle market. Jensen (2017) notes that when the company profit changes, its most significant competitors also change. In this regard, firms in standard-cycle markets must work hard to improve their competitive edge in order to improve their profitability.

Competitive Rivalry

Oliveira & Trento (2020) define competitive rivalry as the measure of the intensity of competition between two firms. The higher the intensity of the competition the harder it is for other companies to grow their profits. With the development of technology and globalization, the level of competition has significantly increased. Various firms, including automobile companies, e-commerce and smartphone industries, continue to experience intense competition. Gottinger (2016) notes that in some industries, the competitive rivalry has increased so much that it has become more difficult for new entrants in the market. Ideally, great rivalry results in more investments in customer acquisition and new marketing strategies. In this regard, it can be argued that the higher the rate of competition, the harder the cost of operations. Primarily, various factors affect competitive rivalry including the size of the organization, the market dependence and the actor’s reputation.

Organization Size

Raj et al. (2019), note that the size of the firm determines whether it will effectively compete with other firms in the market. Furthermore, the size also determines the competitive strategies adopted as well as their timing. Ideally, smaller companies can launch competitive actions more quickly than larger firms. Therefore, Raj et al. (2019) maintain that small firms can be described as nimble and flexible competitors as they can quickly react to competitive moves from other organizations.

The speed with which small firms launch competitive strategies determines how long they survive in the market and the amounts of profits they amass. Due to their flexibility, smaller firms can develop a variety of competitive stands to maintain and even expand their market share. Nonetheless, larger firms must initiate any competitive activities along with strategic actions for a specific period. In this regard, companies must determine the total number of employees and total revenues when assessing the strength of their competitors.

Actor’s Reputation

In regards to competitive rivalry, an actor refers to the organization that is acting or responding. In contrast, reputation refers to the negative or positive attributes associated with the company in the context of its competitive behavior. Ideally, a positive reputation could result from high income and revenue, particularly for companies producing consumer goods. From this perspective, a positive attribute provides a strategic advantage. Oliveira & Trento (2020) note that the best way to predict a firm’s competitive move is by first examining the attributes of associates with the company. In most cases, past behavior determines future response in the market. Competitive firms are more likely to adopt strategic and tactical business moves taken by the market leader. According to Gottinger (2016), successful strategic actions are more likely to be imitated even on a global scale.

Market Dependence

According to Raj et al. (2019), the market defines the extent to which a specific market determines a company’s income. Typically, markets that heavily depend on a particular market have a higher likelihood of launching defensive actions in the face of new competitors. The defensive techniques may not always be fast but in most cases, they are practical and tactical. In this regard, Inamete (2014) recommends that firms with high market dependence should be ready to defend their position by being tactical and innovative.

Conclusion

With the development of technology, firms have become more competitive, and rivalries have increased across the world. To compete on a global scale, a company must be willing to take the financial risk and diversify their business to maintain a competitive edge. In most cases, establishing a thriving business abroad can be instrumental in sustaining the domestic-based business. Interestingly, competition dynamics and rivalries are the ultimate drivers of innovation and global business development.

References

Gottinger, H. (2016). Innovation, Dynamics of Competition and Market Dynamics`. Archives Of Business Research, 4(1).
https://doi.org/10.14738/abr.41.1737

Inamete, U. (2014). Strategic Management and Multinational Corporations: A Case Study of Bacardi Limited. Global Business Review, 15(2), 397-417.
https://doi.org/10.1177/0972150914523601

Jensen, P. (2017). Strategic sourcing and procurement of facilities management services. Journal Of Global Operations And Strategic Sourcing, 10(2), 138-158.
https://doi.org/10.1108/jgoss-10-2016-0029

OLIVEIRA, S., & TRENTO, S. (2020). THE EFFECT OF MANAGEMENT PRACTICES ON THE BUSINESS INCUBATORS PERFORMANCE: TOWARDS AN AGENDA FOR STRATEGIC ENTREPRENEURSHIP. Journal Of Global Strategic Management, 2(13), 13-28.
https://doi.org/10.20460/jgsm.2020.278

Raj, R., Beck, V., & Soliman, A. (2019). Utilization of Value-based Management in the Strategic Management of German Automotive Industry. Global Business Review, 20(4), 871-886.
https://doi.org/10.1177/0972150919845236