Competitive Advantage In Global Economy Essay

Question:

Discuss about the Competitive Advantage in Global Economy.

Answer:

Introduction

As opined by Norb?ck and Persson, (2014) some firms are “born to be global firms,” like Google and Facebook. However, other firms sell themselves and their innovations to incumbent firms. The authors argue that both strategies can be beneficial, depending upon the market. The aim of this assignment is to analyze Peng’s five entrepreneurial strategies and its alignment with the global competitive strategies. The assignment also compares the assertions made by Norback and Persson with assertion made by Peng and its implications for small, new, innovative firms. Global firms are the ones that seek to achieve competitive advantage by optimally utilizing the resources and sale of the finished products in various countries all over the world. It is essential for the firms to be innovative in nature. The firms that cannot survive the competition sell their strategies and innovations to the other global firms (Norb?ck & Persson, 2012).

In order to achieve globalization it is essential for the firms to be innovative in their thinking. Most of the organizations use the strategy of innovation to achieve success in business in the global world. It is also very essential for the firms to develop the entrepreneurial skills in order to achieve competitive advantage and globalization. Entrepreneur skill is very essential for big and middle firms to become global. Entrepreneurs are people who are ready to take risks. The firm’s innovation strategies depend on the entrepreneurs. This in turn leads to higher growth in business and expansion (Norb?ck et al., 2014). Developing entrepreneurship skills also helps in developing leadership skills that can be used to effectively manage the firms. The author’s findings can be aligned with Peng’s five entrepreneurial strategies. This is so because Peng has concentrated on the entrepreneurship skills and its importance in achieving competitive advantage.

Peng’s five entrepreneurial strategies are:

  • Growth
  • Innovation
  • Network
  • Financing/governance
  • Harvest/exit (Peng, 2013).

The aim of the entrepreneurs is to create wealth by using proper growth strategies. Entrepreneurship not only exists in small firms but also in large and middle firms. The growth strategies of entrepreneurial skills focus on utilization of resources in such a way so that they are able to achieve competitive advantage. The strategies formed by entrepreneurs are flexible so that it can be used in any circumstances and situations. The entrepreneurs formulate such growth strategies that are risk free in order to avoid over aggressiveness. The second entrepreneurial skill is innovation (Haufler et al., 2014). According to Peng, innovation strategy helps in increasing the profit of the organization and creates sustainable competitive advantage. The aim of entrepreneurs is to create a wide range of network in order to add value to the organization.

The global strategies presented by Norb?ck and Persson comply with Peng’s five entrepreneurship skills as both the theories concentrates on growth, innovation and globalization. Globalization is achieved through properly utilizing the resources and being innovative in thinking. The CEO of facebook that is Mark Zuckerburg has helped the firm achieve competitive advantage through proper utilization of entrepreneurial skills. The entrepreneurial strategies presented by Peng are not only helpful for small firms but also large firms. The small firms struggle in the competitive world to achieve competitive advantage and enter the global world (Drucker, 2014). The small firms are exposed to risk and face competition from the large and middle firms. The cost of production in small firms is higher than large and middle firms due to economies of scale. The small firms also face risk from the competitive market. Hence, it is essential for the small firms to have a leader in form of entrepreneur who is able to convert the risks into opportunities. Entrepreneurs in small firms help in managing the cost of production and formulating strategies so that they are able to provide the products that are competitive in global market.

Innovation of the existing and new products is also very important for the small firms. This is essential to fight over its competitors. Small firms face difficulty in innovating the products as they have less availability of resources and less experience and knowledge in the global world. Hence, developing efficient entrepreneurial skills will help the small firms develop by optimally utilizing the products that is new and innovative in the global market. Born to be global firms are the organizations that from its inception seek to achieved globalization and competitive advantage by properly utilizing the resources and selling the finished products all over the country (Shan et al., 2016). Many companies go global but this does not make born global. The difference between born global firms and global firms are that initial concept from its inception aim at internationalizing the business by committing their resources to international ventures (Muju, 2015). On contrary the globalised firms operate domestically in home country that slowly expand to international countries. The born global firms develops and strategies to expand themselves in the global firms from the beginning and start of its operations. Born global firms export its products to the international market. In order to indulge in extensive export it is essential for the firms to manufacture new products so that they are able to achieve competitive advantage in global world.

Conclusion

Hence, from the above analysis it can be concluded that developing entrepreneurial skill is essential to achieve globalization. Peng’s five entrepreneurial skills comply with Norb?ck and Persson assertion because both the assertions concentrate on globalization and innovation. Born global firms are firms that from its inception aim at achieving globalization and selling its products to the international market. Innovation is essential factor as the competition for the firms are rising. Hence, it is essential for the firms to have leaders that are able to develop strategies that focus on growth, innovation and globalization. Developing entrepreneurial skills is not only important for small firms but also large firms.

References

Drucker, P. (2014). Innovation and entrepreneurship. Routledge.

Haufler, A., Norb?ck, P.J. & Persson, L., (2014). Entrepreneurial innovations and taxation. Journal of Public Economics, 113, pp.13-31.

Muju, S. S. (2015). Entrepreneurship and Innovation.

Norb?ck, P.J. & Persson, L., (2012). Entrepreneurial innovations, competition and competition policy. European Economic Review, 56(3), pp.488-506.

Norb?ck, P.J., Persson, L. & Douhan, R., (2014). Entrepreneurship policy and globalization. Journal of Development Economics, 110, pp.22-38.

Peng, M. W. (2013). Global strategy. Cengage learning.

Peng, M.W., Lee, S.H. & Hong, S.J., (2014). Entrepreneurs as intermediaries. Journal of World Business, 49(1), pp.21-31.

Shan, P., Song, M., & Ju, X. (2016). Entrepreneurial orientation and performance: Is innovation speed a missing link?. Journal of Business Research, 69(2), 683-690.

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