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STRATEGIES THAT BUSINESSES USE TO STAY COMPETITIVE IN THE GLOBAL MARKET



Kirjoittanut: Jignaben Patel - tiimistä Kaaos.

Esseen tyyppi: Akateeminen essee / 3 esseepistettä.
Esseen arvioitu lukuaika on 12 minuuttia.

STRATEGIES THAT BUSINESSES USE TO STAY COMPETITIVE IN THE GLOBAL MARKET by Jignaben Patel and Manpreet Kaur

Introduction 

The world is continuously becoming globalized. There is a lessening of trade barriers, and trading blocs’ establishment has acted as a catalyst for regional or even global market formation for many services and products. Increased communication and mobility among customers across national boundaries and the global expansion of companies of various distinctive origins further increase and stimulates the potential for market integration. Additionally, technological advancements in communication, like satellite communication growth, the internet, and cheap mobile technologies, all stimulate market integration and offer new ways of marketing and reaching customers (Abdow & Ariri, 2018). This globalization of markets increases competition, many companies are offering similar goods and services to consumers, and this presents continual challenges as well as opportunities for these firms. The challenge relates to the issue of saturation in the market, making the survival of companies to become difficult, while the opportunities related to the pool of potential customers that firms can draw from a globalized market (Abdow & Ariri, 2018). Bilas and Sopta (2021) assert that in a market with thousands of competitors, it becomes more difficult for companies to make a mark that will impact the target customers they aim for. This firm needs to develop a strategy that will provide them with an edge over its competitors in the market. Immawati and Nugroho (2020 add that firms have to develop the right strategy to deal with the increasingly competitive market. Therefore, they are demanded to have uniqueness, advantages, or differences that competing companies cannot own, which can be done by creating a competitive advantage. According to Farida and Setiawan (2022), businesses can still become profitable only if they make their value proposition known to the target customers in such a striking manner that it profoundly resonates with them. Therefore, businesses need to adopt strategies that can help them stand out in the saturated global market. This paper discusses these strategies and how each is linked to the competitive advantage that helps businesses compete effectively in the global market.  

The strategies that businesses use to stay competitive in the global market

The increasingly competitive business landscape facilitated by globalization and the integration of markets calls for businesses to capitalize on their competitive advantage. Competitive advantage refers to the extent to which a firm is able to build and maintain a position above its competitors or have superior capabilities over competing firms by performing innovative actions (Immawati & Nugroho, 2020). This competitive advantage can be developed through new marketing approaches, new products, and new processes of production, among others. Competitive advantage also relates to the dynamic capabilities of a company realized through accumulating marketing capabilities and research and development (Bilas & Sopta, 2021). Notably, companies in today’s increasingly competitive business world have to develop many strategies that result in their competitive advantages to be able to compete favourably in the market. These are some of the business strategies that companies apply to stay competitive in the global market. 

Offering superior value than competitors 

Another way businesses use to remain competitive in the global market that is very competitive is by offering superior value to their customers. Value refers to what buyers are willing to pay, and superior value comes from offering unique benefits in terms of product quality or services than the competitors in the market (Bilas & Sopta, 2021). Due to demanding customers, slow growth of economies, and global competition, the value addition concept to products offered for sale has become a new norm for businesses to stay ahead of the competition (a source of competitive advantage) in the market today (Nasır, 2019). Creating and delivering superior customer value is considered a critical source of competitive advantage in the 21st century, helping businesses thrive and survive in turbulent and competitive markets. This strategy enhances customer satisfaction (Bilas & Sopta, 2021). 

Forbes Councils Member (2021) supports that businesses that choose to offer the most value win in this competitive global market. One way businesses use to increase more value of their products or services is through offering better services and better products in terms of quality. For market-oriented firms that want to compete effectively in the global market, delivering superior value to their customers is vital. Accordingly, businesses need to understand the value requirements of customers as this helps them create an outstanding customer experience and build a long-term relationship with them. As a result, they can show customers that they care about them by delivering quality products or better services. This can help them stand out amongst their competitors in the market (Nasır, 2019). Some businesses are bringing value by niching down to serve a subcategory of the saturated market when they notice the subset is underserved and competition is minimal. Eventually, by doing the right thing, these businesses grow to take over the bigger piece of the market (Bilas & Sopta, 2021)

Adopting distinctive marketing strategies            

Another approach that businesses are using to remain competitive in the global market is through adopting distinctive marketing strategies. Supporting this point, Nasır (2019) asserts that people do not want to do business with a company; instead, they want to do business with real caring humans. The author further notes that in the social media age of today, it has become easier than ever for businesses to set themselves apart from the stiff competition with marketing tactics that demonstrate that the individuals behind the scenes are individuals who care. This strategy has been perfectly exemplified and has worked for the late Tony Hsieh, former Zappos CEO, who is an excellent example of a person who built a firm that stood out in a flooded market. This strategy worked well for the company, and people preferred to buy shoes from Zappos (real people) out of the millions of places available for buying shoes. Zappos is an amazingly customer-focused brand that markets the individuals who work there as heroes. This strategy left a significant impact on the company and increased its market share in the global market (Forbes Councils Member, 2021). 

Green marketing strategy 

Another marketing strategy firms adopt to increase their competitive advantage is the green marketing concept. According to Immawati and Nugroho (2020), green marketing refers to the marketing activities of a company that associates sustainable development with opportunities for business growth. Moravcikova et al. (2017) assert that organizations and companies are today in a business landscape that has more commitment to the issues of the environment; this is because the expectation of stakeholders concerning environmental protection and sustainability are increasing. Consequently, the wants of consumers are more oriented to eco-friendly and sustainable products. Workers’ management style of environmental companies is spread and acclaimed. International and national legislations are getting tougher on the issue of environmental care. Immawati and Nugroho (2020) claim that companies are now integrating environmental care as part of their operations because they are operating in a competitive and global setting business landscape. As a result, organizations are now considering that they impact in the long and short term on the environment and its resources, and hence are adapting their processes and businesses to the legislations and demands of consumers to stay competitive (Moravcikova et al., 2017). This has made the natural environment turn into a vital arena for competition and economy, as ecological issues concerning natural resources, waste, energy, and pollution provide both competitive constraints and opportunities for businesses. In several industries, ecological issues are changing the competitive landscape (Papadas et al., 2017).

Accordingly, companies are implementing changes called green marketing tools and theories to successfully answer the switched demands and compete effectively in the global market (Crassous & Gassmann, 2022). The incorporation of this green concept was earlier done to respect the environment rather than with growth ambition. However, over time, when more businesses started implementing it, they aimed at gaining a competitive advantage over their competitors, claiming that their services and products were less damaging to the environment compared to those of their competitors. Thus, the green marketing concept has become an essential strategy that businesses adopt to attain a competitive advantage to help them stand out in the global competitive market (Immawati & Nugroho, 2020). Crassous and Gassmann (2022) affirm that green marketing has played a significant role in satisfying customers’ desires and needs and keeping firms accountable for preserving the long-term environmental and social benefits they can obtain through effective green marketing. Businesses are now using the concept as a promotional tool to build the trust of consumers and achieve better performance. Green marketing has been proven to increase competitive advantage (Papadas et al., 2017).

However, there is an issue with green marketing called greenwashing. Moravcikova et al. (2017) define greenwashing as a form of marketing or advertising sin in which green marketing and green PR are deceptively used by organizations to persuade consumers that their product policies and aims are environmentally friendly. It is designed to make consumers believe that an organization is doing more to conserve or protect the environment than it really is. This is happening because many companies are under pressure to conform to green product demands to consumers and make them stand out from the competition. However, this has dire consequences, and businesses are discouraged to restrain from greenwashing as it can have a negative consequence on the reputation and image of a firm and, consequently, its competitive advantage (Crassous & Gassmann, 2022). 

Developing and managing innovations (innovation strategy)

Innovation is the third strategy businesses use to remain competitive in the global market. According to Bilas and Sopta (2021), there has been a change in the factors determining competitiveness over time, with low production cost and quality that were important about 20 years ago diminishing in impact today. Accordingly, today, companies are considered to acquire competitive power by their ability to innovate and bring improved services or products to the market before competitors. Farida and Setiawan (2022) emphasize that firms that want to be distinctive and remain competitive need to make innovation part of every business aspect. The key to innovation is developing a strategy that harnesses the trends in the market rather than reacting to these trends. Terming innovation as the primary source of competitive advantage, Adhikari (2021) argues that innovation brings new novel concepts for a company to grow and become a leader in the industry. Adopting innovative ideas can be the boosting factor for price cutting and improving the quality of services and products a firm offers. Businesses can use it to bring a pattern shift in any market by modifying traditional practices or even creating effective and new markets (Adhikari (2021). Reguia (2018) accentuates that innovation is necessary for companies to maintain profitability and sales, hence the high chances that their competitors may outperform them. Farida and Setiawan (2022) further add that companies in the global market can use innovation as a strategy to enhance their performance. Since customers are always interested in innovative products and with high competition levels, companies need to continuously innovate products by utilizing the rapid advances in technology, which ultimately increases their competitive advantage. These firms operating in the global market must be creative with the products or services they market regularly to enable them to compete effectively and not lose to their competitors.  

Reguia (2018) considers that technological innovation is the primary source of gaining a competitive advantage, helping organizations stay ahead of the competition in the saturated global market. Adhikari (2021) stresses that the key to successfully gaining and maintaining competitiveness in the global market, where there are many challenges, and attaining sustainability is certainly through innovation. Thus, innovation openness, capacity, specialization, and diversification are vital tools for attaining competitiveness in the continuously changing and complex globalization conditions (Reguia, 2018). This innovation encompasses four main dimensions, including product innovation (improved or new products generation), process innovation (new or improved processes introduction), marketing innovation (new sales market or new supply market development), and organization innovation (restructuring and reorganization of companies) (Adhikari, 2021).   

Concurring with this point, Dereli (2015) argues that succeeding in global competition requires companies to create new products and new ideas and the need to manage innovative strategies correctly. The development and management of these creative and innovative abilities in a systematic manner raise the competitiveness of the companies and the countries they operate (Dereli, 2015). To develop and manage innovation, companies have to align their innovation strategy to their culture to make it a culture of innovation. With the culture of innovation, companies encourage entrepreneurship, running risks, intelligence, and experimentation among their staff. This supports the innovation strategy that enables the company to continuously innovate and keep up with the competitive pressures of the market (Reguia, 2018).  

Many firms operating in the global market have adopted the innovation strategy and proven an effective strategy to remain competitive. This strategy has been exemplified by big global tech firms such as Tesla. Tesla has dominated the automotive industry, becoming the leader in electric car manufacturing and launching in the market due to its innovative strategy. The company has been able to overtake even automotive industry giants such as Toyota, among others, when it comes to EVs, for instance, with the launch of its Model 3 EV brand (Kim, 2020). According to Qin (2022), Tesla’s innovation strategy has enabled the company to outperform competitors, which is evident in its excellent performance in the industry through its sales. In 2015, it was to achieve the position of one of the top Forbes Most Innovative Companies list, and it has been able to maintain this position due to its innovation premium. Overall, this demonstrates that Tesla’s innovative strategies contribute to its excellent performance, as it not only maintains the leading position in the electric vehicle market but also records increasing sales of its products (Qin, 2022). 

Creating and managing the digital economy 

Developing a digital economy is another strategy businesses utilize to gain and maintain competitiveness in the fourth industrial revolution (industry 4.0). Industry 4.0 is characterized by intelligent production systems, vertical networking, horizontal integration (new global value chain generation), through-engineering all through the entire product life cycle period, and acceleration by exponential technologies (Bilas & Sopta, 2021). Creating and managing a digital economy is gaining more importance as firms believe that the digital transformation brought by Industry 4.0 enables them to achieve higher competitiveness levels. This has been revealed by research showing that the successful creation of the digital economy is becoming the leading determinant of developing and maintaining global competitiveness (Instomina et al., 2020). Bilas and Sopta (2021) add that Industry 4.0 will alter the global competitive environment and businesses that want to stay competitive need to analyze the potential merits and demerits of Industry 4.0 within their countries of operation, as well as prepare novel business models, digital innovations and endorse close cooperation of all national stakeholders since it is the collaborative advantage that makes the primary competitive advantage sources today (Bilas & Sopta, 2021). Philbeck et al. (2018) further claim that technologies are part of the solution to many complicated worldwide challenges of the 21st century. This is because technologies are capable of moving society forward in a sustainable, positive, and inclusive way when businesses adopt the right approach to their development. 

Sustainability conformance 

Implementing corporate social responsibility (CSR) and positioning as a sustainable business is another strategy businesses use to compete effectively in the global market. According to Melo et al. (2022), CSR was a voluntary initiative in which firms engaged in discretionary actions to promote particular social good that extends beyond the company’s interests and legal requirements. However, this has changed over time, and in the current global competition, businesses are regarding CSR as part of building a competitive advantage. The concept has become the strength of enterprises. It is now not only about the prices of services and goods but also the condition under which these goods are made that differentiate a company from its competitors (Marakova et al., 2019). Businesses realize that introducing CSR principles contribute to the enhancement of relations with local communities, customers, local authorities, and partners, which in turn, enhances their diversity and distinguishes them from the competition. CSR helps to enhance the reputation and image of a company, facilitates capital access, enhances the potential for attracting the best employees, cuts cooperation costs with customers, minimizes business risks, and upsurges stability and development opportunities (Melo et al., 2022). 

Accordingly, businesses try to build their positive reputation through instruments and methods to make them stand out from the competition (Shah & Khan, 2020). Today, companies are increasingly incorporating CSR to help them humanize their operations by steering away from merely concentrating on profits towards a concern for all their stakeholders (Marakova et al., 2019). In this case, CSR serves as emotionally binding workers to their company, acting as a source of competitive advantage. In the global market today, CSR is treated as a competitive advantage source, where employees, investors, and customers attach great significance to many factors other than economic value (Shah & Khan, 2020). Marakova et al. (2021) add that challenges of climate change, global warming, and environmental pollution are increasingly gaining attention among consumers. Businesses are compelled to address these issues in their operations to help them remain competitive in the global market (Marakova et al., 2021). Thus, many businesses are responding by adopting CSR principles in their various dimensions, such as marketing, production, ethics, and stakeholder satisfaction. In terms of production, many businesses are now considering the strategy of sustainability by producing green products (sustainable quality products that cause less damage to the environment) or by marketing themselves as green companies that take sustainability at the core of their business (Gupta & Benson, 2021). 

Conclusion 

Globalization of markets has increased company companies offering similar goods and services to consumers, and this presents continual challenges as well as opportunities for these firms. Due to thousands of competitors, it becomes more difficult for companies to make a mark that will impact the target customers that they aim for. a firm needs to develop a strategy that will provide them with an edge over its competitors in the market. Accordingly, this paper has identified six main strategies: offering superior value over competitors, adopting distinctive marketing strategies, green marketing strategy, sustainability demands conformance, developing and managing innovations (innovation strategy), and creating and managing a digital economy. Companies have adopted these strategies to stay competitive in a global market that is highly competitive. However, it is essential to note that it is not all about gaining a competitive advantage through strategies that matter. What matters, and businesses have to take it seriously, is to make a competitive advantage sustainable to make the business remain competitive in the market for a longer term. 

 

References

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