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Introduction to Business 2e

3.9 Trends in Global Competition

Introduction to Business 2e3.9 Trends in Global Competition

3.9 Trends in Global Competition

  1. What are the trends in the global marketplace?

In this section, we will examine several underlying trends that will continue to propel growth in world trade. These trends are market expansion, resource acquisition, and growth in China and India.

Market Expansion

The need for businesses to expand their markets is perhaps the most fundamental reason for the growth in world trade. The limited size of domestic markets often motivates corporations to seek markets beyond their national borders. The economies of large-scale manufacturing demand big markets. Domestic markets, particularly in small markets such as Denmark and the Netherlands, simply can’t generate enough demand. Nestlé is a good example of a business expanding globally because of the limited size of its home country market, Switzerland. Nestlé was shipping milk to nearly 20 different countries as early as 1875. Today, hundreds of thousands of businesses are recognizing the potential rich rewards to be found in international markets.

Resource Acquisition

More and more companies are going to the global marketplace to acquire the resources they need to operate efficiently. These resources may be skilled and unskilled labor, scarce raw materials, technology, or capital. Nike, for example, has manufacturing facilities in many Asian countries in order to use cheaper labor. Honda opened a design studio in southern California to put that “California flair” into the design of some of its vehicles. Large multinational banks such as Bank of New York and Citigroup have offices in Geneva, Switzerland. Geneva is the private banking center of Europe and attracts capital from around the globe.

The Emergence of China and India

China and India—two fast-growing economies—are impacting businesses around the globe, in very different ways. The boom in China’s worldwide exports has left few sectors unaffected, be they produce growers in California, apparel makers in Mexico, or plastics manufacturers in South Korea. India’s impact has altered how hundreds of service companies worldwide compete for billions of dollars in contracts.

The causes and consequences of each nation’s growth are somewhat different. China’s exports have boomed largely thanks to foreign investment: lured by low labor costs, big manufacturers have surged into China to expand their production base and push down prices globally. Manufacturers of all sizes, making everything from household supplies to automotive goods to clothing, are evaluating their processes either to reduce costs domestically or to outsource more of what they make to locations in China and India.37

Indians are playing invaluable roles in the global innovation chain. Hewlett-Packard, Cisco Systems, and other tech giants now rely on their Indian teams to devise software platforms and multimedia features for next-generation devices. Google distinguished research scientist Krishna Bharat set up the Google Bangalore lab complete with colorful furniture, exercise balls, and a Yamaha organ—like Google’s Mountain View, California, headquarters—to work on core search-engine technology. Firms in India utilize new technologies, such as AI and machine learning, to optimize designs of everything from car engines to forklifts to aircraft wings for clients such as General Motors and Boeing. India has the potential to vault over Japan as the world's fourth-biggest economy, and China is poised to move into the number one spot.38

Globally, AI integration is at the forefront. Firms are heavily investing in this technology, and new firms are emerging to support AI growth. According to Stanford University, private investment in the United States in AI was over $105 billion in 2024, which was twelve-fold higher than China's investment at $9.3 billion. Morgan Stanley reports that firms that adopt AI are seeing cash-flow margins that are twice that of the global average. Data also suggests nearly two-thirds of firms using AI indicate that the technology is fostering innovation in their organization, which is a key component of competing in the global marketplace. Additionally, governments are evaluating existing infrastructures (such as electricity grids) to determine if they are positioned to handle AI needs. According to the Federal Reserve, the United States, Canada, and France are at the top of the list in terms of the Global Innovation Index (WIPO GII). This index measures a country's capacity and preparedness for AI technology in terms of investment conditions, infrastructure requirements, and computing capacity.39

Ethics in Practice

The United Nations Sustainable Development Goals

Corporations like Albertson’s, Unilever, Kimberly Clark, and Siemens are starting to take action on the United Nations Sustainability Development Goals. For many years, through corporate social responsibility (CSR) programs, corporations have donated money and employee time to address various social and environmental problems, both globally and in their own backyards. The Carnegie Foundation and the Bill and Melinda Gates Foundation are examples of this commitment. While these efforts have achieved some progress in environmental protection, ethical business practices, building sustainable positive impacts, and economic development by organizations, they require deeper and longer engagement. Because the benefits to corporations’ profitability are mostly peripheral, short-term impacts such as a drop in demand often mean that attention is drawn away from CSR programs to attending to immediate bottom-line issues.

In 2015, the United Nations member-nations adopted 17 resolutions aimed at ending poverty, ensuring sustainability, and ensuring prosperity for all. The aggressive goals were set to be met over the next 15 years in order to achieve the UN's 2030 Agenda for Sustainable Development.

  1. End poverty in all its forms everywhere.
  2. End hunger, achieve food security and improved nutrition, and promote sustainable agriculture.
  3. Ensure healthy lives and promote well-being for all at all ages.
  4. Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all.
  5. Achieve gender equality and empower all women and girls.
  6. Ensure availability and sustainable management of water and sanitation for all.
  7. Ensure access to affordable, reliable, sustainable, and modern energy for all.
  8. Promote sustained, inclusive, and sustainable economic growth; full and productive employment; and decent work for all.
  9. Build resilient infrastructure, promote inclusive and sustainable industrialization, and foster innovation.
  10. Reduce inequality within and among countries.
  11. Make cities and human settlements inclusive, safe, resilient, and sustainable.
  12. Ensure sustainable consumption and production patterns.
  13. Take urgent action to combat climate change and its impacts.
  14. Conserve and sustainably use the oceans, seas, and marine resources for sustainable development.
  15. Protect, restore, and promote sustainable use of terrestrial ecosystems; sustainably manage forests; combat desertification; and halt and reverse land degradation; and halt biodiversity loss.
  16. Promote peaceful and inclusive societies for sustainable development; provide access to justice for all; and build effective, accountable, inclusive institutions at all levels.
  17. Strengthen the means of implementation and revitalize the Global Partnership for Sustainable Development.

Companies like Albertson’s recognize that a robust CSR program can enhance a corporation’s reputation, which can indirectly boost the bottom line. They used number 14 on the United Nations Sustainability Development list in concert with World Oceans Day to announce that they as a company pledged to meet the U.N. goals. “We recognize that the wellbeing of people and the sustainability of our oceans are interdependent. As one of the largest U.S. retailers of seafood, we are committed to protecting the world’s oceans so they can remain a bountiful natural resource that contributes to global food security, the livelihoods of hard-working fishermen and the global economy,” said Buster Houston, VP of national merchandising at Albertson’s Companies. The company is also committed to the concept of fair trade and was the first retailer to sell tuna with the fair trade seal.

Siemens, the German-based multinational company, also supported the adoption of meeting the United Nations Sustainability Development goals, which they believe aligns with their company values—responsibility, excellence, innovation. They define sustainable development as the means to achieve profitable and long-term growth. In doing so, they align themselves with the goals of the UN’s 2030 Agenda for Sustainable Development.

Critical Thinking Questions
  1. Why would companies pledge to meet the United Nations Sustainability Development goals when their competitors could ignore them in the name of greater, perhaps short-term, profits?
  2. Are you as a consumer more likely to purchase products from Albertson’s rather than another grocery chain that did not agree to the United Nations sustainability program? If you were working for a company deciding to purchase a large industrial component that was 10% more expensive than a competing product, would Siemens’s affirmation of meeting the United Nations Sustainability Development goals sway your decision? How would you explain the rationale for your decision?

Sources: Thane Kreiner, “Corporations and Social Entrepreneurship: A Shift?” https://www.scu.edu, accessed June 30, 2017; United Nations Sustainable Development website: https://www.un.org, accessed June 30, 2017; “Practicing Sustainability—in the Interest of Future Generations,” https://www.siemens.com, accessed June 30, 2017; “Albertsons Companies Commits to United Nations Sustainable Development Goals, Joins Influential Seafood Task Force,” Cision PR Newswire, https://www.prnewswire.com, June 6, 2017; Ingrid Embree, “How 17 Companies Are Tackling Sustainable Development Goals (and Your Company Can, Too),” Huffington Post, https://www.huffingtonpost.com, September 14, 2016; "The 17 Goals," https://sdgs.un.org, accessed March 10, 2026.

An emerging and growing trend is that technical and managerial skills in both China and India are becoming more critical. China's focus remains on mass manufacturing and building their capacity for both electronics and heavy industrial plants. India is taking a lead in software design and services and precision engineering.

Concept Check

  1. What trends will foster continued growth in world trade?
  2. Describe some of the ways businesses can take advantage of these trends to “go global.”
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