Competitiveness can mean different things depending on the context.
For countries, competitiveness is akin to a global beauty contest to attract investors.
Countries employ policies and initiatives to increase their attractiveness and make investors stay.
Firms compete by gaining market share, making competitiveness more complex.
Historical Perspective
Mercantilism: Zero-sum game where the colonial power prevents rivals.
Old views focused solely on direct competitors.
Modern Competitiveness
Not just about direct competition; includes differentiation and broader indicators like the ability to engage in foreign direct investment (FDI), operate internationally, and earn above-average returns.
Linked with productivity: Efficient utilization of resources and cost-effectiveness.
Indicators include GDP and productivity metrics.
Wealth of Nations
Wealthy nations often have high productivity and competitiveness levels.
Small yet productive countries like Singapore and certain northeast European countries are noted.
Tax havens and their impact on GDP are discussed.
Sustainable growth and the rise and fall of countries over time emphasize the ability to build and lose competitiveness.
Internationalization of Markets
Firms and nations expand beyond borders to find value and scale operations.
Economies of Scale: Cost advantages from increased output and efficiency.
Firms seek to identify new opportunities continuously to sustain growth and competitiveness.
Different types of efficiencies include technical, specialization, bulk buying, marketing, risk-bearing, and financial economies of scale.
Trade and Arbitrage
Global Trade has expanded significantly since the 1950s, highlighted by WTO's influence.
Arbitrage: Profits from price, regulatory, wage, or capital differences between markets.
Significant aspects of Arbitrage include price differentials, currency, regulatory environments, and interest rate differentials.
Emphasis on the importance of information and technology in exploiting arbitrage opportunities.
Foreign Direct Investment (FDI)
FDI has grown, especially in developing countries, creating uneven benefits across regions.
Trends include increased attention to environmental concerns and sustainable development projects.
Growth in sectors like renewable energy, support for sustainable projects, and Greenfield investments.
Wage Arbitrage and Global Labor Market
Wage Arbitrage: Movement from high-cost to low-cost labor markets, impacting the global labor market and tech support industries like call centers and auditing.
Digital Nomads: A new trend of professionals working remotely across different countries, creating new business ecosystems.
Countries are adapting to attract and accommodate digital nomads through infrastructure development and policy adjustments.
Cultural and Market Considerations
Cultural and language barriers, data security, and intellectual property protection remain challenges in global labor arbitrage.
Understanding and responding to both internal and external efficiency are crucial for dynamic, agile companies.
Technology, productivity, and cost considerations play significant roles in firm strategies.
Strategic Management and Globalization
Management needs to appreciate changes in the global market and how they impact firm strategy.
Importance of being agile and responsive to external shocks and opportunities.
Internal and external efficiencies are crucial for a firm’s long-term sustainability and dynamic capabilities.
Practical steps include understanding market trends, regulatory environments, and potential risks.
Conclusion and Application for Projects
Begin project preparation early, using models like SWOT analysis and Porter’s Five Forces to assess companies and international markets.
Evaluate cultural, financial, and operational factors to make strategic recommendations for firms seeking to globalize.
Apply insights from readings and lectures to practical case studies and real-world business scenarios.