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Change & Continuity in Contemporary Business
The Global Business arena is a vast area. Since of late many competitors are taking the stage. At the same time many have left the arena defeated. This arena has a landscape which keeps changing constantly. Since the beginning of the 21st century the landscape has begun to shift evermore rapidly causing competitors to fall victim. Some recover and keep fighting for markets, while others leave the arena for good.
This report discusses in brief the new trends emerging in the global business arena as well as new trends in politics and economic sectors.
Successfully adapting to changes are the key for an organizations success in global market competition.
This report also discusses in brief the implications the new trends in Sri Lanka and how it would impact the country and what steps should be taken to ensure the nation will face global competition for investors successfully.
Table of Contents
The global business landscape has started to shift rapidly since the beginning of the technological revolution. The technological revolution has caused large companies to close their doors and allowed smaller companies to grow at an extremely fast rate. This phenomenon is a side effect of globalization.
New trends in economies, politics and business keep surfacing daily. The task of a businessman in the current era is to keep up with the changes or face bankruptcy. The competition has become fierce, and on top of this, the consumers have become more demanding. This is due to a simple fact. At present the consumers have many other alternatives to get what they require. In other words technology has not only made business easier but has made the task of competing challenging.
This report discusses some of the changes in the business landscape and some new trends which are emerging in the economic and political sectors.
The article, which is adapted from “Urban World: The shifting global business landscape” by the McKinsey Global Institute, indicates changes to the business environment. Out of the said changes a few critical changes are mentioned below.
- Competing for customers of diverse income levels.
- Adapting to differing regulatory environments, practices and other laws of the country which the business operates in.
- Focusing on the emerging regions for skilled labour and growing consumer markets.
- The technological advantages for newly starting businesses.
New organizations which are emerging around the globe at an ever increasing rate mainly focus their attention to their local markets and similar markets. Since the new organizations start-up from emerging or developing countries such as India and Brazil, they tend to focus their marketing strengths towards similar or less developed countries. In some cases a multinational giant will have to compete with an emerging company of the developing world. For example, in the motor bicycle market segment, a well-established multinational organization such as Yamaha, has to compete with Bajaj which is a manufacturer based in India. In this case Bajaj has captured the major market share due to its low cost products.
Some companies have the ability to cater to consumers who have diverse income levels. Huawei, a Chinese telecommunication giant, manufactures mobile phones for individuals who have a low monthly income to individuals who have a substantial monthly income. This ability has given organizations such as Huawei to gain a global market share in the mobile handset sector. Although it may not have a large market share or technological development such as Sony mobiles, it is posing a threat to the Japanese technological giant in terms of cost.
Basically organizations established in emerging markets are becoming threats to larger multinationals.
Many countries and states have regulations which are more and more focused on sustaining the earth’s natural resources. Most nations have environmental regulations as such the manufacturers products have to go through vigorous testing prior to selling. (E.G. Automobiles, Electronic devices, perfumes etc.) An organization which is willing to compete in the global arena should be able to adapt to a majority of regulations. In a study conducted by the McKinsey Global Institute, it has been noted that organizations which started from developing countries or emerging global markets have the tendency to adapt quickly to the majority of regulations and enter foreign markets than the more established multinational organizations. In his book, ‘The World is flat’ Thomas Friedman states that the world’s economic playing field is ‘leveling out’ and a more individualistic competition is more likely in the future. In this perspective, it is not a surprise that organizations from developing nations which are smaller in scale, tend to grow quicker than the large multinational companies.
Emerging regions are also referred to as the developing nations. The 21st century has seen the boom in the emerging regions in business as well as skilled labour. Tata group was an automobile manufacturer in India, they mainly restricted sales to the local market and neighboring countries in South Asian region. At present they are the largest private sector industrial employer in the United Kingdom. Many IT organizations are recruiting employees or opening up R & D offices in emerging regions such as India, China and Brazil. Many automobile manufacturers have decided to exploit the labour resources of India and China and built manufacturing plants which employs thousands of locals.
Technology has been growing in leaps and bounds since the beginning of the 21st century. In the business sector almost all processes have at least one stage which there is an involvement of a computer. It is the same in the manufacturing sector, where in the past there was a substantial involvement humans. At present the human factor has been greatly reduced, sometimes replaced by machines and robots. If an individual wishes to start a business, he or she will find the process easier than it was in the past. Businesses today do not require complicated and outdated computer installations and other software. Everything could be handled by a PC, which reduces the start-up time of a business significantly. With the technological development, it has been easier to communicate with clients and business partners across the globe. Finalizing business deals is possible regardless where the client and marketer are located.
After analyzing the above mentioned trends, it is compelling evidence to prove the theory that the business world playing field is levelling out, in which case, Thomas Friedman’s theory is in action. If this theory continues, it is evident that multinationals will no longer be representing a country or region, it will be individuals that would be representing a country or region in business. In 10 years it is quite possible to see small startup businesses progressing rapidly and conducting business in a larger scale than the current multinational organizations. However if Thomas Friedman’s theory prevails, multinational organizations will be an obsolete concept in business, due to the fact that individuals also have an equal opportunity in competing in the global market place. Friedman’s 10 flatteners allow the more individualistic approach. He also mentions of a system in which the average employee should update their skills as updating software of an electronic device.
Evermore increasingly governments are forming alliances with neighboring nations to improve economies. These groups are known as trade blocks. The primary objective of this is to improve the economy and create more job opportunities for the citizens. Political agreements such as using a common currency is one method to improve a region’s economy. The EU is currently discussing a program which will see all of the countries in the union to be governed by a single government rather than individual governments. This will help the EU to integrate resources and skills making it a stronger global economy.
The observed trends in the business sector can be implemented in Sri Lanka, in order to reap the benefits from FDI’s. At present it is crucial for the government of Sri Lanka to take steps to improve exports to support the development of the country. The government should get in to agreements which favour the country. The regime change in India shows a positive effect for Sri Lanka and the government and economists are expecting more friendly and beneficial trade agreements from the incumbent government.
The government should encourage more exports. Although it is suggested by economists the government has not brought a policy which favours exports. The government should also encourage planters to get more from their plantations. At present Sri Lanka is the largest tea exporter. Although it is clear that China is catching up gradually. If the government does not act on this issue, Sri Lanka could lose its place. Sri Lanka is the 4th largest Tea producer in the world, with China at the top of the list.
The Sri Lankan government should also allow exports of goods which are requested by foreign countries. For example, the Sri Lanka Tea Board will not allow the export of low grade teas. The fact that the officials should know is that while Sri Lanka is not providing such teas, other nations are providing and gradually gaining the market. It is known fact that there is a market for the low grade teas as well as the high graded teas. Catering to only high grades is less profitable although the value is much higher. As mentioned above, the government should encourage private institutions to cater to consumers of various income levels. If the country does not move adapt to the changes happening globally the industry and economy could collapse. Identifying markets and penetrating the markets with local products is beneficial for the entire country. In order to compete in the new age of business, the government should amend its export policies.
In terms of infrastructure Sri Lanka is heading the correct direction. Improving infrastructure is the first step to attracting foreign investors. The port city project which is currently underway is a large undertaking by 4 Chinese firms which earn the government approximately Rs. 8 million per perch from the land reclaimed from the Sea. This will also improve the business sector of the country as the port city is designed to become a business hub in the Indian Ocean. Project like the Port City is a large step towards attracting larger multinational or global business firms to invest in the Sri Lankan market.
The government should also adapt a policy where importing should be regulated and a policy should be implemented that locally manufactured products should match the product quality of the imported item. This policy would help the growth of local industry as well as restrict unwanted expenses in exports. This will allow the products manufactured locally to be more competitive in the international market since the quality is almost the same as imports to the country. The governments should provide assistance to organizations which are seeking to enter foreign markets. Diplomatic ties should be used to promote trade as well as educate the local manufacturer of the regulations and laws of the particular country. This will help the local manufacturers to adapt to regulatory bodies of all countries and will be able compete successfully against foreign competitors.
The government should also utilize the population to attract foreign investors. The government should encourage the workforce to update their skills in order to successfully retain their employment and improve in their personal careers. The government should also implement a policy where youths are to be trained in the latest form of technology and enable the youth to gain knowledge of the career path of their choice. Since organizations are focusing on regions with skilled labour, it would be appropriate to implement the policies mentioned.
Technology is growing increasingly every moment. The government should use the latest technology available to provide a better service to the people. The government should implement computerized systems to all government offices in order to make these offices efficient. Providing technology at a low rate to small businesses will help the business to grow. Growing small businesses leads to a growing economy. This could result in some Sri Lankan firms entering the prestigious Forbes 500 list.
The global business field is an entity which has seen many revolutionary changes. It has been growing rapidly since the beginning of the 21st century. New business techniques, economic and political trends keep emerging. An organization which fails to keep up with these is bound to fail and drop out of the market.
The article from McKinsey Global Institute states several emerging trends. The most prominent trends were discussed above and the implications of these trends in Sri Lanka were discussed in comparison with some current development project which are underway.
In conclusion it could be said that the Sri Lankan government has not implemented policies which will help the country perform well globally as well as the industries in Sri Lanka. In the researches point of view Sri Lanka has the potential to grow as a nation and as a business hub in the South Asian region.
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