Free Essay Sample: Competitive Advantage in a Global Setting

The multinational companies

The various multinational companies that have been operating in foreign countries have come to view the international markets as mere extensions of their home markets featuring different needs. Those which have never explored a foreign country, however view the international market as one which carries with it endless possibilities for growth and development. Globalization brings with it a wide range of opportunities for financing and investments. To fully take advantage of the global setting, however, a company must be able to effectively deal with critical factors such as financing, investment, risk management, and incentive management issues. In addition, exchange rate risk, how the internal capital market will be structured, and the expected response to taxes will be considered. This paper features an analysis of how organizations can gain competitive advantage in a global setting.

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The responses of organizations to the opportunities and challenges of the global operations are extremely heterogeneous. The newly created business environment is not exclusively focused on profit but also on sustainable business (JovanoviF and Nina 33). In addition to this factor, globalization and also the present economic recession are further magnifying the profound influence over different business industries. As a result, business environments have become extremely dynamic and quite complex. These are the reasons why it has become more difficult for businesses to achieve and maintain competitive advantage.

Bartmess and Keith

According to Bartmess and Keith (78), several companies have managed to make location decisions which have worked to foster growth of critical capabilities as well as to ensure lasting competitive advantage. In the present dynamic business environment, products can be used as the sole source of competitive advantage. This is because they tend to become obsolete much faster than before. Therefore, in such an environment, a company will only gain and maintain competitive advantage if it manages to consistently respond to the changes in the markets by ensuring a constant release of new products. Bartmess and Keith (79) describe capabilities as a company's proficiency in the business processes which allow it to constantly distinguish itself along the dimensions that are important to its customers. These capabilities are present within the employees of a company, and are generally supported by its procedures, culture, and infrastructure. Therefore, to obtain sustainable success, businesses must first focus on building and nurturing these capabilities in its employees.

According to Bartmess and Keith (84), Like the traditional approach to facility location, a capability-focused approach works to exploit the costs and benefits of external conditions and factors, but, unlike the traditional approach, it also attempts to foster both the internal and external relationships that sustain critical business processes. Therefore, although traditional approaches basically focuses on conditions and benefits, the more recent capability approach seeks to make use of benefits that are dynamic and self-renewing. With this in mind, various recommendations may be considered.

First, when a business seeks to go global, it should ensure that its human resource is well prepared to battle in the highly competitive environment. Training should be offered to the team as they also get exposed to specific global meetings. This ensure that they acquire relevant skill and knowledge which will enable them to compete in the competitive international environment. For instance, if the capability of operational flexibility is to be achieved, the employee must have sufficient knowledge in manufacturing and design, manufacturing and the customer, manufacturing and sales or distribution, and Information Systems and Manufacturing. To develop and maintain these critical capabilities, groups and the leaders need to stop arm's length, period, and contractually oriented mode of communication. It should be replaced by a rich, constant and frequently informal mode of communication.

Second, employees who have sufficient training should be encouraged to be more innovative. This may be done by fostering positive competition within the organization, whereby the most productive employee is awarded. To make it better, the employees may be expected to work in small teams so that continuous learning may be encouraged. As they push themselves towards hitting a target or achieving a goal, they will be actively learning from one another.

Another area where businesses experience a challenge is in relation to the leadership employed. A global business environment means that there will be different cultures, politics, and even institutional backgrounds which will influence how people interact with each other. As such, the expectations of managers differ depending on their area of origin. For instance, in the Middle East, an American executive who does not stay behind to socialize after work may be viewed negatively by others as he has not taken measures to build a close and trusting relationship with workmates (Javidan and David 44). The kind of training that is needed to ensure a leader develops a flexible mindset that is capable of understanding such a diverse and complex environment is not provided in schools or workplaces. This is why, even when corporations seek to go Global, the managers will often feel unprepared and vulnerable.

Intellectual capital

In relation to this issue, it is recommended that leaders should grow their intellectual capital. This features learning more about different cultures and business practices of other regions. This will present a strong foundation that is needed for one to gain a global mindset. These advanced cognitive skills will ensure that a business leader is able to understand and process contradictory information, before using existing knowledge to identify and predict implications to stakeholders. Another leadership requirement is to grow global psychological capital. The best approach to do this is through first-hand experience. Coaching and experiential learning should be used hand in hand to achieve this capability (Javidan and David 46). For example, one should actively start to attend global team meetings as it will provide the best opportunity to interact with individuals from other regions, hence learning more about their cultures and how relationships with them can be fostered. Lastly, there is need to grow global social capital. Social networking may seem petty, but the impact it has on businesses is tremendous. The manager needs to maintain the perfect social relationships with others as it enhances trust.

According to KajanovUE (160), A change in the demand and supply existing in the labor market, employment level, efforts for maintaining the job positions, pressure on decreasing the payment burden of entrepreneurs and other factors have been a stimulus for the identification of external factors determining the competitive advantage. Competition is crucial for the sustainable development of the World economy, its welfare, and the technological progress. It encourages companies to work harder so that they can be better than competitors. It also provides ground for the offering of reasonable prices for products as it ensures companies try as much as possible to lower production costs. Finally, all companies have a major goal of ensuring the maximum satisfaction of customers. The external factors which may impact competitive advantage of a company include; political stability, increase in GDP, increase in the average wage, the economic crisis impacts, currency stability and so much more.

With these in mind, the location of going global is quite important. A company needs to choose the perfect market, whereby the least risk is being taken. A good example of such a place is India. This is an emerging market that presents endless possibilities for new entrants. The politics in the region is balanced, therefore the risk of losing properties due to political violence is reduced. Similarly, the exchange rate of the currency is quite favorable. The country needs more investors, which is why they currency is not that expensive. Finally, legislative measures are also in favor of the investors. Business is not excessively restricted, as long as taxes and other legal fees are paid for.

When deciding to enter in the highly competitive internal business market, players need to be fully prepared. This includes having a management that is well informed and skilled to deal with the various international business issues, having employees who possess the relevant capabilities that will ensure a constant supply of innovative products, choosing the location with the least amounts of business risk, and many more. These are the factors which are needed to ensure a company gains competitive advantage in a global setting.

Works Cited

Bartmess, Andrew and Keith Cerny. "Building Competitive Advantage through a Global Network of Capabilities."T California Management Review, vol. 35, no. 2, Winter93, pp. 78-103. EBSCOhost, search.ebscohost.com/login.aspx?direct=true&db=bth&AN=5478510&site=ehost-live.

Javidan, Mansour and David Bowen. "The Global Mindset: A New Source of Competitive Advantage."T Rotman Management, Spring2015, pp. 42-47. EBSCOhost, search.ebscohost.com/login.aspx?direct=true&db=bth&AN=102477055&site=ehost-live.

JovanoviF, MiloT and Nina FokoviF. "Cloud Computing as a Source of Competitive Advantage in the Global Market."T Serbian Project Management Journal, vol. 6, no. 2, Dec. 2016, pp. 33-47. EBSCOhost, search.ebscohost.com/login.aspx?direct=true&db=bth&AN=121456996&site=ehost-live.

KajanovUE, Jana. "The Competitive Advantage in the Global Labour Market."T Business, Management & Education / Verslas, Vadyba Ir Studijos, vol. 9, no. 2, Dec. 2011, pp. 157-170. EBSCOhost, search.ebscohost.com/login.aspx?direct=true&db=bth&AN=79367011&site=ehost-live.