Introduction
Various countries differ greatly in terms of their overall competitiveness in the global market. This is the result of different factors which are at work in this country. These factors range from social, economical, political, and cultural, and often have a defining effect on the way business is conducted within these countries. As a result, when different countries begin engaging in the global market, cultural differences can create conflict, misunderstanding, and variable levels of competition (Tahir 2014).
For example, the article “An institution-based view of international business strategy: a focus on emerging economies” gives us an example of the Chinese industry. In China, it is legal for the management of competing firms to meet and discuss prices, and divide the markets between each other, despite the fact that the same action would be illegal in the US and most parts of the world (Peng, Wang & Jiang 2008). The difference can also be seen in the approach to intellectual property, as different cultures attribute different value to IP. Again, China is a good example, as it does not have the same concept of IP as the western countries (Budde-Sung 2013)
Analysis
The competitiveness of a country in an industry is in many ways determined by the political-institutional environment it cultivates, and if this environment, along with social, economic, and cultural circumstances, can help the country to develop an effective competitive advantage, which will allow it to find its niche in the global market.
The government has a powerful regulatory ability over the market and cost structure, the ability to limit the company’s growth and activities, as well as impact production and service provision. The judicial system, in particular, is a powerful tool for regulation of corporation’s practices, and, in turn, can be the basis of competitive advantage (Evans & Gabel, 2014). For example, in Brazil, there are several policies directed at aiding the international expansion of its companies, supporting and endorsing strategically valuable industries, and increasing the countries’ competitive advantage overall (Bazuchi et al 2013). The geographical and economic attributes of a country can severely limit or augment the countries competitiveness in the industry.
As mentioned before, culture also plays a significant role in determining the company’s competitive advantage. A Dutch psychologist Geert Hofstede defined four attributes of culture, which affect business. These are power distance, which defines the attitudes toward unequal power distribution along the hierarchy, uncertainty avoidance and distaste for risk, capacity for individualism and masculinity, which defines which values are more appreciated in the society (Rugman & Collinson 2012).
Conclusion
Although different countries approach firms and individuals within them differently, to successfully achieve competitiveness in the global market the countries need to use all available advantages to them, which includes giving firms a degree of freedom in order to best develop its strength, and motivate individual input to maximize efficiency, and to strive for high innovation and diversification. These last two concepts are of chief importance to the development of a competitive environment. Additionally, the better members of the company work together, the more competitive is the firm in the global market.
This means that to fit into this environment, multinational corporations need to adopt strategies that invite innovation and employee participation. Additionally, companies need to work with the governments, in order to receive support and protection in the global market and to be able to complete successfully even with the major nations by fully exploiting their competitive advantages.
References
Bazuchi, K, Zacharias, S, Broering, L, Arreola, M, & Bandeira-de-Mello, R 2013, ‘The role of home country political resources for Brazilian multinational companies’, BAR – Brazilian Administration Review, vol. 10, no. 4, pp. 415-438, Scopus®, EBSCOhost. Web.
Budde-Sung, A 2013, ‘The Invisible Meets the Intangible: Culture’s Impact on Intellectual Property Protection’, Journal of Business Ethics, vol. 117, no. 2, p. 345-359.
Evans, J, & Gabel, A 2014, ‘Legal Competitive Advantage and Legal Entrepreneurship: A Preliminary International Framework’, North Carolina Journal Of International Law & Commercial Regulation, vol. 39, no. 2, pp. 333-422, Business Source Complete, EBSCOhost.
Peng, MW, Wang, DYL, & Jiang, Y 2008, ‘An Institution-Based View of International Business Strategy: A Focus on Emerging Economies’, Journal of International Business Studies, pp. 1–17.
Rugman, A. & Collinson, S 2012, ‘International culture’, in International business, New York: Pearson, pp.132-164.
Tahir, R 2014, ‘The Impact of National and Organizational Cultural Differecnes on Performance’, IBA Business Review, vol. 9, no. 1, pp. 47-63, Business Source Complete, EBSCOhost.