As Kotler and Armstrong (2014, pp.572) observe, it is hard to imagine a business in the modern world which is not influenced to some extent by global competition. Indeed, Baily et al. (1995) argue that national competition is no longer sufficient and that global competition is not only healthy for business but essential for driving efficiency in manufacturing.
Ease of Travel and Communication
I would argue the primary reason for the increase in globalisation has been the increase in mobility and the shrinking physical world created by the ease of travel and communication technologies such as the Internet. Indeed, Kirsch (1995) refers to this as the “incredible shrinking world”, explaining that technology has increased the interconnectivity of individuals and facilitated communication. As Borrus and Zysman (1997) observe, many companies no longer necessarily need to operate hierarchically and instead have a number of global sites operating as a hub and spoke making global competition a reality.
While communications and mobility can be attributed to the increase in globalisation, a number of political, demographic and economic factors have amplified the intensity of global competition.
The global marketplace has inevitably increased pressure on businesses to innovate, improve products and optimise supply chains but the increasingly global market has also offered opportunities for businesses to engage with a wider audience of consumers and ultimately increase and drive business (Colantone and Sleuwaegen, 2010).
Culture and Demographics
Globalisation has influenced the dilution of national boundaries and resulted in the homogenisation of cultures making it easier for businesses to break into a new economy (Leidner, 2010). Particularly with the advent of social media, information transcends geographical boundaries facilitating the uptake of new products and services at a global level, relying on individuals rather than businesses to market the product and reducing the impact of cultural differences.
Like the homogenisation of cultures, Dobbin, Simmons and Garrett (2007) note the moderating impact of national governments in the facilitation of trade suggesting that increasingly governments are working together to form trade agreements and reduce legislation and barriers to trade.
Internationally Recognised Standards
The development of internationally recognised standards for services and products is one such example of government policy breaking down some of the traditional barriers which might have inhibited trade. Guler, Guillén and Macpherson (2002) observe how the ISO 9000 quality standard has been rapidly adopted as businesses strive to keep up with their competitors. Similar ISO standards exist for other areas of industry which have seen widespread adoption, increasing the competitive advantage of businesses and increasing trade.
Baily, M., Gersbach, H., Scherer, F. & Lichtenberg, F. (1995) ‘Efficiency in Manufacturing and the Need for Global Competition’, Brookings Papers on Economic Activity, pp. 307-358, JStor. [Online]. Available from: http://www.jstor.org.ezproxy.liv.ac.uk/stable/2534776 (Accessed: 25 January 2014).
Borrus, M. & Zysman, J. (1997) ‘Globalization With Borders: The Rise Of Wintelism As The Future Of Global Competition’, Industry and Innovation, 4(2), pp. 141-166, T&F Online. [Online]. Available from: http://www.tandfonline.com.ezproxy.liv.ac.uk/doi/abs/10.1080/13662719700000008 (Accessed: 25 January 2014).
Colantone, I. & Sleuwaegen, L. (2010) ‘International trade, exit and entry: A cross-country and industry analysis’, Journal of International Business Studies, 41, pp.1240–1257, Palgrave Macmillan. [Online]. Available from: http://www.palgrave-journals.com.ezproxy.liv.ac.uk/jibs/journal/v41/n7/full/jibs2009105a.html (Accessed: 25 January 2014).
Dobbin, F., Simmons, B. & Garrett, G. (2007) ‘The Global Diffusion of Public Policies: Social Construction, Coercion, Competition, or Learning?’, Annual Review of Sociology, 33, pp. 449-472, Annual Reviews. [Online]. Available from: http://www.annualreviews.org.ezproxy.liv.ac.uk/doi/full/10.1146/annurev.soc.33.090106.142507 (Accessed: 25 January 2014).
Guler, I., Guillén, M. & Macpherson, J. (2002) ‘Global Competition, Institutions, and the Diffusion of Organizational Practices: The International Spread of ISO 9000 Quality Certificates’, Administrative Science Quarterly, 47(2), pp.207-232, Sage. [Online]. Available from: http://asq.sagepub.com.ezproxy.liv.ac.uk/content/47/2/207.short (Accessed: 25 January 2014).
Kirsch, S. (1995) ‘The incredible shrinking world? Technology and the production of space’, Environment and Planning D: Society and Space, 13(5), pp. 529-555, EPD. [Online]. Available from: http://www.envplan.com.ezproxy.liv.ac.uk/epd/fulltext/d13/d130529.pdf (Accessed: 25 January 2014).
Kotler, P. & Armstrong, G. (2014) Principles of Marketing, 15th Edition. London: Pearson Education Ltd.
Leidner, D. (2010) ‘Globalization, culture, and information: Towards global knowledge transparency’, The Journal of Strategic Information Systems, 19(2), pp. 69–77, ScienceDirect. [Online]. Available from: http://www.sciencedirect.com.ezproxy.liv.ac.uk/science/article/pii/S0963868710000089 (Accessed: 25 January 2014).