GLOBAL AND COMPETITIVE ORGANIZATIONS

Organizations now increasingly operate in global business, social, and political environments because the products, services, and customers of most large corporations are multinational. Many industries are dominated by major competitors that are global in their operations; they produce products that are created on a global basis and targeted at global markets. This is true for the energy, automotive, and information technology industries, and for major services such as finance, consulting, and advertising.

Yes, there are still many businesses that are local, but they represent a decreasing percentage of the total business that is done in such places as China, the European Union, and the United States. Even those organizations that do not operate globally are significantly affected by the organizations that do; they compete for labor with them, and often find themselves doing business with and at times competing with global organizations.

One interesting example of the growth of globalization in the last twenty years is provided by food service and package delivery companies, both of which continue to “go global” at a rapid rate. McDonalds and Starbucks are prime examples of U.S. national food service organizations whose reach has become global in a relatively short period of time. FedEx and UPS have both gone global with their delivery operations. Information technology concerns such as Google and Microsoft have also gone global and in turn made it possible to connect organizations’ worldwide operations.

One of the most important features of the global business environment is the ability it provides to internationally source the production and delivery of products and services. Information technology has made it possible to globally source talent for software development as well as phone sales and customer service. Many of the most obvious examples of this global sourcing are in the manufacturing sector: many products are partly or completely produced in countries that have low labor costs and, in some cases, easy access to natural resources that aid low-cost production. As a result, an increasing number of organizations now face global competitors rather than just local ones. This is true of both service organizations and manufacturing organizations.

A major factor that has led to the highly competitive, rapidly changing global business environment that exists today is the availability of financial capital. There is—particularly in developed countries—an increasing amount of venture capital available; as a result, individuals and organizations who wish to create new businesses or grow existing ones can access the financial backing they need relatively easily. There is no reason to believe that in the foreseeable future this supply of capital will decrease; the best prediction is that there will be an ever greater number of start-ups on a worldwide basis in decades to come and, as a result, the business environment will become increasingly competitive.

Strongly supporting the argument that more competitors will be created is the reality that more technology will be available to create new businesses. What happened in the case of information technology—with smartphones, personal computers, and tablets replacing typewriters, telephones, adding machines, and mainframe computers, and with social media creating new businesses—is likely to happen in other areas.

The globalization of business makes talent a global resource, and that raises many talent management issues. Organizations increasingly can and need to go where the “right” talent is available for the best price to be competitive. They need not only to source talent globally to be competitive but also to make good strategic decisions about how they manage talent coming from different national cultures. One clear implication of this is that an increasing number of organizations will need to manage talent effectively on a global basis, dealing with governments and other cultures—and the complexities they create—with respect to all talent management issues.

Perhaps the greatest impact the global business environment will have will be on the need for organizations to consistently improve their performance. What is good enough today will not be good enough tomorrow. This point was captured in the quality literature decades ago by the argument for continuous improvement, and it is even truer today. In fact, not just continuous improvement but dramatic improvement is often needed—not just in quality but in speed, cost, and innovation.