I remember listening to Kenny Rogers sing “The Gambler” growing up in my community. As many of you know, Rogers is a country artist. I was well aware that if my friends knew I listened to country music, I would have lost my ‘cool card’ among my rapped-crazed peers. Today, the lyrics of “The Gambler” still guide my business strategy.
“You got to know when to hold ’em, know when to fold ’em
Know when to walk away and know when to run
You never count your money when you’re sittin’ at the table
There’ll be time enough for countin’ when the dealing’s done
Every gambler knows that the secret to survivin’
Is knowin’ what to throw away and knowing what to keep”
If most senior leaders would guide themselves with this simple lyric, their organizations would be better off. For example, you find a good spot in the lake where there are an abundance of fish. You keep this secret, but then start sharing it with a few friends. Sadly, the word gets out about your special spot.
Finally, you find yourself squeezed out from your favorite spot. It’s a hot spot now. The fish are being topped out. Yet, people continue to fish there despite obtaining less fish and requiring more time to get the same results. Even though you love the spot and have a sentimental connection with this area, you abandon this location and move to another unknown location that shows plenty of potential. You moved not because you wanted to move; you moved because you are a fisherman who loves catching fish.
Likewise, today’s businesses are operating abroad in order to catch more fish and obtain more profitability. U.S. multinational companies, like Coke Cola and McDonalds, realize that America’s market is pretty saturated and riddled with hypercompetitions.
How many more burgers or cokes can Americans continue to consume? Additionally, companies hope to lower their costs by searching for a lower cost labor force. Charles Hill, author of International Business, suggests that outsourcing is systematic: “By doing this, companies hope to lower their overall cost structure or improve the quality or functionality of their product offering, thereby allowing them to compete more effectively.”[1] Therefore, emerging markets become more attractive.
The fragility of today’s world’s economies demands that businesses act more prudently and decisively about their market strategies. Emerging markets, which were once stigmatized with the name ‘Third World’ markets, will be a dominate player in the world’s future economy.
[youtube=http://www.youtube.com/watch?v=zU4Z4XH3NH0]
The top four emerging markets include China, Brazil, India, and Russia. According to Goldman Sach’s projects, these countries will overtake the seven largest industrialized countries (United States, Japan, Germany, France, UK, Italy, and Canada) by 2040. Antoine va Agtmael, author of The Emerging Markets Century, argues that the prominent role of emerging markets is in future commerce.
He predicts revolutionary changes due to these emerging markets and equates these changes to the second industrial revolution. Some of the key success factors for these emerging companies are the following: (1) an obsessive focus on quality and design, (2) brand building, (3) logistics, (4) being ahead of competitors in adapting to changing market trends, (5) acquisition savvy, (6) sustaining an edge on competition in information technology, (7) clever niche strategies, and (8) unconventional thinking.[2]
Additionally, these companies have a hunger to compete since their success will improve their way of life. Sadly, many Americans do not understand the level of poverty that motivates these countries. Agtmael further notes: “A new breed of companies will play a critical role in producing this shift; a select number of which truly deserve to be regarded as world class.
In the face of these firms’ vigorous emergence on the world stage, there will be a temptation to go into protective mode….”[3] However, globalization makes retreating a passive signal of being defeated in a world market. Therefore, U.S. companies like IBM and Google may see themselves fighting to keep their dominance from unrecognized firms from these emerging countries with a hunger to topple established U.S. businesses.
Discuss how U.S. companies can effectively address the competition from firms located in emerging markets.
© 2012 by Daryl D. Green
[1] International Business by Charles Hills
[2]The Emerging Markets by Antoine va Agtmael
[3]The Emerging Markets by Antoine va Agtmael
September 8, 2012 at 6:03 pm
Chris,
Great points! I too feel that innovation is a major factor in a business’s sustainability in the global environment. One of the best ways to create ideas is to foster an environment for innovation. This starts at the leadership positions. Anthony (2012) states that leaders who “make it clear that innovation is everyone’s business create conditions where its various forms can flourish.” However, this cannot be just a feel good speech. Leaders must be ready to provide space and resources for real innovation to take place. Every employee must be made to feel like their suggestions count and are considered. Promoting this type of openness can also lead to stronger commitment between employee and employer. In the global business environment companies will need to exploit every last resource to stay ahead. Leveraging employees for innovative ideas is a positive step on the road to sustainability for any employer.
References
Anthony, S.D. (2012). Innovation 3.0: Sparking an American Renaissance. Financial Executive, 28(4), 30-33.
September 19, 2012 at 10:19 am
Josh,
You are right. It is up to businesses to provide an atmosphere that promotes innovation and with Generation Y coming into the workplace it is more critical now than ever. Generation Y grew up with technology and they tend to thrive in an environment that encourages innovation. If they are allowed to provide input to their company they are happier with working there. On being a part of Generation Y, Garlick (2009) says, “My generation doesn’t want to “paint a wall” or “pile bricks” in the developing world. Generation Y wants to do more. Generation Y’s thirst is to create something lasting that works.” Letting employees provide feedback and input stimulates creativity and discourages stagnation in the workplace. Employees also like to know that they did something to help their company. It gives meaning to the work they do.
Reference:
Garlick, S. (November 20, 2009). Gen Y: The social innovation generation. Retrieved from: http://www.huffingtonpost.com/saul-garlick/gen-y-the-social-innovati_b_365141.html
September 5, 2012 at 12:23 am
In order to combat emerging markets U.S. firms must stay innovative. Though these markets are building momentum, in most cases, businesses in the U.S. and other developed countries are farther along the experience curve in their fields. Scott D. Anthony (2012) states that “innovation is as simple as something different that has an impact.” He goes on to say that businesses in the U.S. can be innovative by “looking for new ways to solve old problems” (Anthony, 2012). There does not have to be an earth shattering discovery for a business to stay viable. One way for businesses to discover these ideas is to go to their employees. Walgreens has a program like this that allows any employee to submit any idea that might improve the company to the corporate office for research and analysis. For the majority of companies, constant and consistent improvement must be the main goal in order to combat emerging markets. “Companies that bury their heads in the innovation sand will feel the impact of this decision; those that recognize and act appropriately can spearhead an American Innovation Renaissance” (Anthony, 2012).
Reference
Anthony, S.D. (2012). Innovation 3.0: Sparking an American Renaissance. Financial Executive, 28(4), 30-33.
September 5, 2012 at 3:14 pm
For U.S. companies to maintain their competitive edge they must be innovative, listen to their front end employees so that they can make their existing products even better, and also look into more sub-brands to break into the emerging markets to further companies’ global recognition and start to gain trust in these new markets as well. The sub-brand concept is explained by this quote relayed by (DeGroat, 2012):
“On the strategy side, established players should consider a flexible brand architecture that relies less on standard global offerings and more on sub-brands for emerging markets, he says. Those could leverage the appeal of the global brand and yet meet local needs and wants.” (p.3) Stepping up a company’s marketing plan is also a good idea. Moving into sponsoring globally recognized events such as the French or British Open. (DeGroat, 2012) offers this advice “They can sponsor global events like the Olympics and the World Cup.” Batra said. “They can have major entertainment, fashion and sports stars endorse their products.” (p.3)
Reference: DeGroat, B. (2012, July, 12). Global competition: Combating emerging market multinationals. Ann Arbor, MI, United States.
September 6, 2012 at 8:40 pm
Kathy,
Excellent! How can American businesses infuse innovation in today global market?
Professor Green
September 6, 2012 at 9:57 pm
(Nickels, 2010) defines the concept of brain drain as “The loss of the best and brightest people to other countries.” In order continuous bring innovation to the market you must work with the brightest people in your chosen field. If those productive and creative minds are lost to another company or another country than how can innovation be a mainstay in your organization. (Nickels, 2010) also relayed the idea of absolute advantage “The advantage that exists when a country has the monopoly on producing a specific product or is able to produce it more efficiently than all others.” If the United States is to have the absolute advantage of any products than we must prevent brain drain at any cost.
Reference: Nickels, W.G. (2010). Understanding Business, New York,NY: McGraw-Hill/Irwin.
Leave A Reply
One way that U.S. companies can compete with others in a global market is to know your competitor. The phrase keep your friends close, but your enemies closer comes to mind. Be proactive in technology advancement, be cost-effective, but also be innovative. According to Griffin (2010) ” The domestic environment in which firms compete shapes their ability to compete in international markets. To survive, firms facing vigorous competition domestically must continuously strive to reduce costs, boost product quality, raise productivity, and develop innovative products”. Staying ahead of your competition in innovation and costs is key to staying ahead in the global market.
Griffin. R. W. (2010). International Business. Upper Saddle River, NJ: Prentice Hall
Chris,
Outstanding insight! Knowing your competitor is critical today, especially in a global environment.
Professor Green