If you try and wrap your head around the number of businesses functioning globally, you will be astonished. If we look at the statistics, approximately 1.5 million accounting services businesses are running internationally, and around 2.2 million management consultant businesses. However, the list goes on; these numbers are enough to explain how competitive the global industry is.
Businesses try hard to make themselves stand out in the market since that is what drives the profits. Customers need to see you as a business offering something different and unique from the other rivals in the marketplace. And organizations achieve this through acquiring a competitive advantage. A competitive advantage is built on all those factors that help you produce goods and services better or affordable than your rivals in the industry. Competitive advantage gives your business a solid grounding. It is an effective way to acquire a significant market share in the industry.
The furniture store, IKEA, is an apt example. It leveraged its economies of scale as its competitive advantage since it could produce standardized goods on a large scale. As a result, they lowered their costs, resulting in lower prices, which became the talk of the town and the whole international market. IKEA is a famous name now. But how do companies gain competitive advantage in a globalized era, where your rival businesses operate on the other side of the world?
Let us discuss how:
1. Make Use of a Diversified Workforce:
One viable way businesses gain a competitive advantage is by structuring their business to minimize costs. When the costs are low, companies can sell their products at a lower price, giving their rivals a tough time.
This era of globalization has helped businesses to acquire resources from all over the globe. Likewise, companies can also hire affordable labor from other countries with excellent skills and knowledge. Globalization has also assisted workers in acquiring the education and skills necessary to work in international firms from top-notch universities while staying in their homeland. Online educational programs are a perfect way for professionals to equip themselves. Plus, it offers businesses an opportunity to hire a specialized workforce at lower rates.
For example, an individual can acquire a masters in business online and quickly hone the skills crucial to land a job in multinational firms. Today, many international companies set up their business in developing countries and seek affordable yet talented workforce. Fortunately, because of online learning options, the human resource in developing countries is able to fulfill this need. Businesses can utilize this to create a solid competitive edge.
2. Competing In a New Market:
Once you plan to go international, it is of utmost importance that your strategy evolves accordingly. Applying the same plan as you did locally will not work for the business. It would help if you first looked into whether your current products could sell in the global market. You can then determine whether you would have to customize them according to the needs of the international customers. Moreover, each international location offers its distinct advantages; do not forget to tap into these benefits.
3. Take Advantage of Growing Markets:
Often emerging economies are full of opportunities. Companies already established in a mature economy can use their expertise and connections to take advantage of these growing markets. Businesses can look into selling their existing products in a market they deem will show interest. Additionally, they could innovate to make better utilization of the emerging opportunities.
However, this could also go the other way around. Mature economies can also offer specific opportunities for innovation. Businesses from developing countries with something unique to offer can take this competitive advantage and benefit in an already saturated market.
4. Promote a Culture of Innovation:
The global market has rapidly expanded over the years. Many businesses are competing on the front now, making it essential for organizations to offer something unique. Companies need to be innovative to distinguish themselves in the market. This inventiveness needs to originate from all aspects of the business. The management should forecast and adapt to the changing trends in advance rather than reacting to them. Organizations that evolve quickly with the changing market preferences gain excellent competitive advantages.
For example, in the past, investing in the education and training of your employees was not a thing. However, torch-bearing businesses started realizing the significance of grooming their workforce over the years and the trend kick-started. Now many organizations support further education of their employees, knowing that eventually, it will benefit them. For this purpose, they are utilizing online platforms that allow employees to work and study simultaneously. It is a win-win situation. Therefore, urging your employees to opt for an online executive MBA will add to their career profile and provide you with a competent workforce.
5. Create Strategic Alliances:
When planning to compete globally by establishing functions in different locations, you must understand the laws and standards of that region. An optimal way to do this is to form strategic alliances with local companies that offer you information and data specific to that location. Strategic partnerships help fill gaps in your structure, and you can also reap benefits through synergy. For example, you could work alongside an HR company to offer you insights into the talent pool and other local labor laws and regulations.
Setting foot in a global market is tricky. You need to evolve according to the needs of the new market and innovate relentlessly to stand out. Going global also means understanding the law, rules, limitations, and advantages of these locations. Strategically a business has to transform to cater to the requirements of an international industry. It is essential to train your diverse workforce, monitor rivals in new regions, cater to underlying customer needs, and so forth. Being proactive will allow you to flourish quickly in the new market.