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All firms-and managers-are challenged to achieve strategic competitiveness and earn above-average returns.  This challenge can be formidable.  A primary challenge facing managers today is the need to recognise-as illustrated by the comments on such companies as Infosys and Reliance-that the strategic management process and the striving for strategic competitiveness takes place in a dynamic global economy.  As a result of this ongoing struggle, success today does not necessarily equate with success tomorrow.

 

An inspection of Table 1.4 points out that not all companies will be able to successfully meet the challenges of strategic management as measured by market value added (defined as market value minus capital invested).

 

N.A. Not applicable as HCL Technologies was listed only in November, 1999

 

TABLE 1.2 Top Ten Wealth Creators in India between 1996-97 and 1999-2000

 

As shown in Table 1.2, Wipro and Infosys lead the list of wealth creators for several consecutive years as they have created more wealth (measured by market value added) than other Indian firms.

 

The transient nature of strategic competitiveness is pointed out even more clearly when one realises that only 16 of the 100 largest industrial companies in the world in 1900 remain competitive in the 1990s and that six members of 2000's top ten wealth creators above were not among the top ten in 1992.

 

This transient nature of strategic competitiveness means that companies in both traditional and new industries (including Infosys, Wipro, Zee Telefilms, Reliance Industries, Hindustan Lever and ITC) must be prepared to compete flexibly and anticipate the unexpected if they hope to achieve long-term strategic competitiveness.  One key to success will be which firms' strategies will represent the best fit between the demands of the external environment and the resources and capabilities in their respective internal environments.

 

The competitive environment of today implies that traditional sources of competitive advantage-economies of scale and large advertising budgets-may not as important in the future as they were in the past.  The rapid and unpredictable technological change that characterises this new competitive landscape implies that managers must adopt new ways of thinking.  The new competitive mindset must value flexibility, speed, innovation and integration.

 

A term often used to describe the new realities of competition is hypercompetition, a condition that results from the dynamics of strategic moves and countermoves among innovative, global firms: a condition of rapidly escalating competition that is based on price-quality positioning, battles to achieve first-mover advantage and battles to protect or to invade established product or geographic markets.

 

S. No.	COUNTRY	1998 RANK	1999 RANK
1	USA	1	1
2	SINGAPORE	2	2
3	FINLAND	5	3
4	LUXEMBOURG	9	4
5	NETHERLANDS	4	5
6	SWITZERLAND	7	6
7	CHINA – HONG KONG	3	7
8	DENMARK	8	8
9	GERMANY	14	9
10	CANADA	10	10
11	IRELAND	11	11
12	AUSTRALIA	15	12
13	NORWAY	6	13
14	SWEDEN	17	14
15	UNITED KINGDOM	12	15
16	JAPAN	18	16
29	CHINA MAINLAND	24	29
34	THAILAND	39	34
38	KOREA	35	38
39	INDIA	41	39

Note: Italics show that country has improved its ranking over last year

 

Table : The World Competitiveness Scoreboard 1999

 

The emergence of this global economy has resulted in a number of challenges and opportunities.  For instance, Europe is now the world's largest single market (despite the difficulties of adapting to multiple national cultures).  Including the nations that make up the former Soviet Union and the rest of the Eastern bloc, the European economy has a gross domestic product (GDP) of $8 trillion, comparable to the US, with 700 million potential customers.  In addition, China is seen as an emerging giant that is expected to have a higher GDP (but a lower per capita output) than Japan by 2015 or sooner. Table above shows the recent competitiveness rankings for 20 nations (top 15 and 5 others including India).

 

Improving a nation's competitiveness involves several factors and outcomes. It creates a higher standard of living for a country's citizens. It requires companies to view the world as its marketplace. It involves both additional benefits and risks.

 

Internationalisation or globalisation of markets and industries has added another dimension of challenge, which makes it quite difficult to classify many companies as purely domestic. Honda, a major player in the global automobile industry, builds over 70% of cars for the U.S. market in the U.S. Another automaker, Toyota continues to reduce its Japanese employment while expanding its global workforce and builds its Avalon sedan, Camry coupe and station wagon, and Sienna minivan exclusively in US.

 

Thus, these automobile companies are more properly thought of as global companies striving for strategic competitiveness in today's competitive landscape.  Because of the economic benefits, it is likely that the trend toward further globalisation of industries will be unstoppable.  For example, using the Europe-U.S.-Japan Triad as an example, free trade is expected to positively impact the Triad with a 5 to 10% increase in annual economic outputs of manufactured goods and a 15 to 20% additional increase in economic outputs from free trade in services.

 

This potential for continued economic growth means that all industrialised nations must continue to seek the expansion of agreements-such as the European Union, NAFTA and GATT-that will eliminate national laws that impede free trade among all nations.

 

As a result of this emerging competitive landscape, companies must re-think how they can achieve strategic competitiveness by positioning themselves to ask questions from a more global perspective. This would enable them to (at least) meet or exceed global standards. The questions could include questions like:

• Where should value adding activities be performed?
• Where are the most cost-effective markets for new capital?
• Can products designed in one market be successfully adapted for sale in other markets?
• How can we develop co-operative relationships or joint ventures with other companies that will enable us to capitalise on international growth opportunities?

 

As a result of globalisation and the spread of information technology, competition will become more intense.  As a result of this:

• Customers-even domestic customers-will continue to expect high levels of product quality at competitive prices
• Global competition will continue to pressure companies to shorten product development-introduction time frames
• Strategically competitive companies successfully leverage insights learned both in domestic and global markets, modifying them as necessary

 

However, before a company can hope to achieve any measure of success in global markets, it must be strategically competitive in its domestic market.