Globalization and Competitive Advantage - Essay Example

Having access to low-cost factors of production cannot guarantee a competitive advantage in a globalized world. A global value chain, innovation, differentiation and customer satisfaction, etc. influence competitive advantage in a globalized world.

This research paper presents a discussion about the analysis of competitive advantage in an era of globalization. Contents Introduction 1 An Overview of the Components of the Global Mosaic that Influence Firms wanting to succeed in International Competition 5 Formulating Global Competitive Strategy based on Attributes of a Firm, its Competitive Strengths and Global Forces 10 Case Studies for International Strategy 21 Implications for Firms Aspiring to Enter International Competition 25 Conclusions 27 Bibliography / References 29 List of Figures Figure 1: Relatively Recent Phases in the Development of Globalization List of Tables Table 1: Firm Resources that Help with Enhancing Sustainable Competitive Advantage 20 (This page intentionally left blank) Introduction Globalization is not a new phenomenon because international trade has existed since ancient times when recordkeeping began (Abele et al, 2008).

The incentive for international trade was to access larger markets, which were foreign markets, and the quest for profit led to an intermingling of peoples, cultures, goods, and ideas. However, despite the fact that globalization is an ancient phenomenon, it is possible to distinguish phases in the nature of globalization. Trade in the ancient world required merchants to haul goods to markets for sale at a profit over land or sea, but later sales offices were established at sales locations, and depending on the demand, merchants could order required quantities of goods as desired.

When higher value-added products were in demand, differentials in cost of production associated with locations for production and markets forced business people to select production locations independent of home location. Now, international supply chains with worldwide cross-functional collaboration cater to the needs of sophisticated consumers demanding sophisticated products of high quality at affordable prices in an era of scarce raw materials, rapidly increasing prices for energy, and diminished disposable incomes due to an increase in the price of basic food items.

Figure 1: Relatively Recent Phases in the Development of Globalization, from (Abele et al, 2008, Pp. 4) McGregor (2010) states because of the evolutionary path on which the world has embarked, it is now necessary for firms to produce with the global in mind. Information and Communication Technologies (ICT) have made it possible for ideas from around the world to traverse vast distances in a matter of seconds, but significant differences persist between cultures, peoples, and nations. Thus, consumers influenced by global ideas are inclined towards that which appeals to them in their local context and this makes globalization scary because only the best strategies will succeed in the face of intense competition.

Globalization results in global interest in markets, linkages between institutions and people, and faster blending of cultures and ideas together with vastly expanded possibilities and options.