Globalization and Competitiveness

Competitiveness is frequent topic of conversation these days among managers and government officials and in the news media. We define competitiveness as the relative standing of one competitor against other competitors. Competitiveness is like the gamer of musical chairs: There are a finite number of places to sit, and some are more desirable than others.

Competitiveness is an idea that applies in a number of different settings. For decades, managers at the so-called Big Three American automakers – General Motors, Ford, and Chrysler – have worried about their organizations’ relative standing in the US automobile marketplace. Merchants in many small towns across America think about the competitiveness of their prices in comparison to prices at Wal-Mart stores in their towns. If you participate in sports, you, your teammates, and coaches seek competitiveness in relation to your opponents by practicing day after day. Or if you watch the ups and downs of the stock market read the business press, or watch the competitors in your industry, and you find that competitiveness has accelerated over the last 20 years.

One organization that has addressed its desire to remain competitive in the global economy is General Electric Medical Systems Group. To expand its ability to deliver quality products and services in a highly competitive industry, the GE Medical Systems Group has developed a Global Leadership Program (G.L.P) to provide its top managers with a global outlook G.L.P is a multiyear process that brings together managers from its three regions – the America, Europe and Asia within a highly organized framework to work on specific business projects. The results of these projects drive the global progress of the organization.

Competitiveness has become a prominent business and government concern in the era of global business as a contest among nations. Members of the news media routinely talk about the competitiveness of the United States versus Japan and the United States versus the Pacific Rim. This meaning of competitiveness is part of the new attitude of globalization that we just discussed. And it is a direct consequence of the unprecedented proximity among nations in the global market place. It is easy to see the Sumitomo fire in terms of the Japanese computer industry’s influence on world markets.

A renowned expert on competition, has observed that while people are talking about competitiveness among nations, they do not always use the same criteria of competitiveness. Two different competitiveness criteria are useful in understanding globalization and management. These criteria both involve relative standing, but differ in terms of their time perspectives: looking forward or looking back.

Relative Standing Today: Looking forward, competitiveness can refer to a nation’s preparedness for future competitive interaction. To be competitive in this sense is to have a chance to win upcoming contest. The Sumitomo fire affected the chance to win for a number of industry players who faced higher costs.

Several measures of this criterion are commonly discussed in business and political circles today. One is the cost of labor in a nation. A commonly cited statistic in the debate about relaxing international trade barriers is the questionable competitiveness of US labor costs in relation to lower wage rates in other countries such as Mexico. This creates some controversy and an ethical dilemma for managers when companies seeking lower wage personnel close factories in the United States and move production facilities to other nations. Another measure of this criterion is the education level of a nation’s work force. Government representatives who seek to attract new investors in their economies like to cite literacy rates and skilled training.