Globalization and competitive advantage

Citation

Brookfield, J. (2003), "Globalization and competitive advantage", Strategy & Leadership, Vol. 31 No. 3. https://doi.org/10.1108/sl.2003.26131cae.003

Globalization and competitive advantage

Jonathan Brookfield is an Assistant Professor of International Business in the Management Department of the Mays Business School at Texas A&M University (brookfield@tamu.edu).

The Quest for Global Dominance: Transforming Global Presence into Global Competitive Advantage

Vijay Govindarajan and Anil K. GuptaPublished by Jossey-Bass, 2001

The Quest for Global Dominance usefully frames a number of important issues faced by companies expanding globally. What are the implications of globalization for our firm? How should our company go about building a global presence? What must our company do to transform global presence into global competitive advantage?

The nine-chapter book, with a short foreword by C.K. Prahalad, offers what amounts to a series of thoughtful and helpful meditations on globalization and business strategy. For example, the first chapter considers globalization and its drivers, asks what is a global firm, and provides a useful overview of the implications of globalization for managers. The chapter takes note of the size and economic growth of India and the People's Republic of China, and the authors do not shirk from considering the implications of the growth of those economies for the regional composition of the world's largest firms.

In other chapters, the authors discuss the challenges involved in building a global presence and the difficulties involved in transforming such a presence into global competitive advantage. They illustrate the complexities of establishing a global presence through a description and discussion of Wal-Mart's internationalization process.

Govindarajan and Gupta consider a number of issues critical to the establishment of a global presence, including choice of product(s) for international exposure, target markets, entry mode and speed of expansion. They also focus on six opportunities for creating value on the way to global competitive advantage. Such value creating opportunities include adapting to local market differences, exploiting global scale economies, exploiting global scope economies, tapping optimal locations for business operations and resource acquisition, maximizing knowledge transfer across the organization, and playing the "global chess game".

Overall, the authors argue that a global company ought to be seen not just as a portfolio of subsidiaries with tangible assets, but also as a portfolio of knowledge centers. At the same time, the authors also include a number of practical observations regarding the realities of organizational politics that can make cooperation across a global corporation difficult. In an effort to connect analysis to action, the authors put forward a framework for evaluating the strength of a company's global value chain network in terms of a company's network architecture, nodal competencies, and coordination among company nodes.

They also provide a look at the softer side of the global organization. For example, they consider the notion of a global mindset and what may be necessary to cultivate such a view. They then examine the metaphor of companies as knowledge machines, and they search for effective ways to organize global business teams.

In addition, the authors look beyond pure international issues in order to put forward a more general framework for understanding business competition. In so doing, they posit three basic ways for a company to establish a superior business model and thereby change the rules of the game for industry competitors. According to Govindarajan and Gupta, three potential areas for transformation include: the boundaries of a company's targeted customer base, the conceptualization of what exact value is being delivered to customers, and the overall design of a company's business activities and value chain.

Caught up in the enthusiasm of the Internet era, Govindarajan and Gupta end their book with a discussion of "Globalization in the Digital Age'", which includes a final section entitled, "The Future Beckon!". In it, the authors argue that, in the Internet age, the race will be won, not by those who are big, but by those who are fast. Given this perspective, the authors then ask, "What happens when everybody is trying to be both big and fast?'' While the authors don't have an immediate answer to this question, they do aver that, at the very least, "over the coming decade, it should be a lot of fun to watch that race!" For investors in the stock market over the past few years, "fun" might not be the first word that comes to mind, but this is a minor quibble.

A bold book with a macho title, The Quest for Global Dominance, does not shrink from discussing big ideas or important business issues. Moreover, this book provides a serious and sensible discussion of the business challenges facing companies in an increasingly global world.