Global Business Environment

Global  Business Environment
To  date,  our  world  market  is  dominated  mostly  by  many  well  established  global  brands.  Over  the  last  three  decades, there have been a steady trend of global market convergence – the tendency that indigenous markets start converge on a set of similar products or services across the world.  The end-result of the global market convergence is that companies have succeeded on their products or services now have the whole wide world to embrace for their marketing as well as sourcing.

The rationale of global market convergence lies partially in the irreversible growth of global mass media including Internet, TVs, radios, news papers and movies, through which our planet has become truly a small global village. Everybody knows what  everybody  else  is  doing,  and  everyone  wants  the  same  thing  if  it  is  perceived  any  good.  It  also  lies  in  the  rise  of emerging economic powers led by BRICs (Brazil, Russia, India and China), which has significantly improved the living standard and the affordability of millions if not billions of people.
For organizations and their supply chains, the logic of going global is also clearly recognizable from economic perspective. They are merely seeking growth opportunities by expanding their markets to wherever there are more potentials for profit-making;  and  to  wherever  resources  are  cheaper  in  order  to  reduce  the  overall  supply  chain  costs.  Inter-organizational collaborations in technological frontier and market presences in the predominantly non-homogeneous markets can also be the strong drivers behind the scene. 

One can also observe from a more theoretical perspective that the trends of globalization from Adam Smith’s law of “division of  labour”.  A  global  supply  chain  is  destined  to  be  stronger  than  a  local  supply  chain  because  it  takes  the  advantage  of the  International Division of Labor . Surely, the specialization and cooperation in the global scenario yields higher level of economy  than that of any local supply chains. Thus the growth of global supply chain tends to give rise to the need for more coordination between the specialized activities along the supply chain in the global scale.

As  the  newly  appointed  Harvard  Business  School  dean  professor  Nitin  Nohria  said  “If  the  20th  century  is  American’s century,  then  the  21st  century  is  definitely  going  to  be  the  global  century.”  The  shift  of  economic  and  political  powers around  world  is  all  too  visible  and  has  become  much  more  dynamic  and  complex.  But,  one  thing  is  certain  that  there will be significantly and increasingly more participation of diverse industries from all around the world into the global supply chain network; hence bringing in the influences from many emerging economies around the world. Their roles in the globally stretched network of multinational supply chains are going to be pivotal and will lead towards a profoundly changed competitive landscape.