|Global business and the Internet, Albert A. Angehrn|
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There was a time when resources and markets were generally co-located. A company would set up business where the resources - what used to be labelled the four Ms (men, machines, materials and money) - were readily available. It would use these resources to manufacture a product. It would then build up and serve a local (sometimes national) customer base.
Progressively "home" markets became saturated and companies started to export excess production to more distant markets - essentially, in descending order of GNP or cultural proximity [Hofstede 1985]. Growing demand from these markets sometimes warranted establishing a local sales office or manufacturing operation. Occasionally, it even led to a token R&D presence, to adapt the offering to local tastes.
Alongside the dispersal of markets, came the dispersal of resources. Initially, it was just a question of capitalizing on cheaper sources of materials or labour in remote locations - while the strategic competencies remained buried in-house. But over time, many of the overseas producers used the low-cost platform to build up real expertise in a particular domain with the result that pockets of excellence have sprung up around the world [Porter 1985] - a striking example being the emergence of India's software industry.
Finally, companies themselves have grown increasingly dispersed and decentralised in order to 'get close' to these emerging markets and technologies. Global coverage allows companies to be responsive to market needs and gives them rapid access to far flung strategic resources. At the same time, however, it impedes the internal flow of communication.
Dispersion on all fronts has therefore dramatically changed some of the rules of business competition. Companies no longer own all the key resources but must locate and access them; the attractive growth opportunities have to be actively identified as the domestic market is not necessarily the lead market; and corporate competencies are not all co-located at HQ but have to be pooled from distant nodes. All this puts a premium on the movement of information - internally and externally - as a competence. This is where the strategic value of the Internet lies. It can significantly enhance the quality of a company's linkages. Externally, it helps the company to sense new markets and to access new knowledge as these emerge. Internally, it allows information acquired or generated on the periphery to circulate throughout the group.
The other key feature of global competition is
speed. Speed in detecting markets, in the first place. Speed in finding out which are the
required resources and where they lie. Speed in internalising them and combining them with
existing competencies. And ultimately, speed in exploiting markets before competitors
acquire similar competencies. Here again, the Internet promises to be a powerful weapon.
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