• Ешқандай Нәтиже Табылған Жоқ

University of International Business, Vice Rector for Educational Affairs, PhD, Associate Professor of Economics

and Management Department the FACtORs FORMInG InteRnAtIOnAL


In the given article the factors forming international hypercompetitive environment in the information economy are considered. The definition of the term ‘hypercompetition’ as the ability to capture the maximum competitive advantage among its competitors as a result of strategic management and dynamic maneuvering is given. As the main factors the author identifies the economic processes of globalization and modern innovation and technological changes. Globalization refers to the process of economic interdependence, reflecting the totality of the national economies, linked to each other by the system of international division of labor, economic and political relations in the world market and intertwining their economies on the basis of transnationalization and regionalization. On this basis, there is a formation of a single global economy and its infrastructure. The author gives some interesting examples of international multinational companies in Europe and Asia , their competitive advantages in competitive markets. Among them, the BRIC countries – a group of five fast developing countries – Brazil, Russia, India, China, South Africa and Indonesia, Malaysia, Germany, etc. Along with globalization processes there is an urgent need for technological development and, as a result, the ubiquitous diffusion of technologies and innovations among the world’s population. Information economy experienced high rates of technological changes and their diffusion, as well as the necessity of ownership of the appropriate information, intelligence and expertise – as knowledge is an important intangible resource and a key aspect of the modern economic system.

Key words: hypercompetition, competitive landscape, information economy, globalization, technological chan- ges, knowledge intensity, strategic flexibility.

In the modern economic times conditioned the information age the fundamental nature of competition in many of the world’s industries is chang ing. Reasons for this include the realities that financial capital is scarce and markets are increasingly volatile. Because of this, the pace of change in the nature of competition is relentless and is increasing.

Moreover, conventional sources of competitive advantage such as economies of scale and huge ad- vertising budgets are not as effective as they once were. Moreover, the traditional managerial mindset is unlikely to lead a firm to strategic competitiveness. Managers must adopt a new mindset that values flexibility, speed, innovation, integration and the challenges that evolve from constantly changing conditions. The conditions of the competitive landscape result in a perilous business world, one where the invest ments that are required to compete on a global scale are enormous and the conse quences of failure are severe. Increasingly, governments take a more active stance and have begun to interfere with markets where they perceive them to fail, as has happened in industries such as banking, IT and oil. This influence of governments is particularly important when firms are active in many countries.

Facing the need to negotiate with politicians in different countries complicates the challenge of build- ing competitive advantage. Effective use of the strategic management process re duces the likelihood of failure for firms as they encounter the conditions of today’s competitive landscape.

Hypercompetition is a term often used to capture the realities of the competitive landscape.

It is the ability to take the maximum competitive advantage among its competitors as a result of strategic management and dynamic maneuvering. Under conditions of hypercompetition, assumptions of market stability are replaced by notions of inherent instability and change. Hypercompetition re- sults from the dynamics of strategic maneuvering among global and innovative combatants. It is a condition of rapidly escalating competition based on price- quality positioning, competition to create new know-how and establish first-mover advantage, and competition to protect or invade established product or geographic markets. In a hypercompetitive market, firms often aggressively challenge their competitors in the hopes of improving their competitive position and ultimately their performance [1].

Several factors create international hypercompetitive environments and influence the nature of the current competitive landscape in the information economy. The emergence of a global economy and

technological innovations, specifically rapid technological change in our information age are the two primary drivers of international hypercompetitive environments and the nature of today’s competitive landscape.

A global economy is one in which goods, services, people, skills and ideas move freely across geographic borders. Relatively unfettered by artificial constraints, such as tariffs, the global economy significantly expands and complicates a firm’s competitive environment [2].

Interesting opportunities and challenges are associated with the emergence of the global economy.

For example, Europe, instead of the United States, is today the world’s largest single market, with 700 million potential customers. The European Union and the other Western European countries also have a gross domestic prod uct that is more than 35% higher than the GDP of the United States [3].

Tomorrow may look different. Especially, large emerging markets such as Brazil, China, India, Russia, Turkey, Indonesia, Malaysia, South Africa and others have growing populations and economies that outperform industrialized economies on growth. The gross domestic product (GDP) of Brazil, Russia, India and China (BRIC) is expected to be greater than that of the G6 countries by 2040. Since the first estimates about how these countries will exert decisive influence on the global economy in the future have been disseminated, emerging markets have come to redefine the strategic context. “In the past, China was generally seen as a low-competition market and a low-cost land. Today, China is an extremely compet itive market in which local market-seeking MNCs (multinational corporations) must fiercely compete against other MNCs and against those local companies that are more cost effective and faster in product development. While it is true that China has been viewed as a country from which to source low-cost goods, lately many MNCs are actually net exporters of local management talent. They have been dispatching more Chinese abroad than bringing foreign expatriates to China” [3, p. 45–49].

India, the world’s largest democracy, has an economy that also is grow ing rapidly and now ranks as the fourth largest in the world. Consider the oppor tunities not only within such countries but related to them. Hong Kong, Taiwan and Singapore have benefited through their cultural proximity to mainland China. Now the Gulf region, an emerging area of economic activity in its own right, has built the hubs that India lacks and the regions’ airlines successfully exploit them. These hubs effectively link the East and West. Not exactly a copy of the ancient Silk Road that connected the rich East with the emerging West, but the analogy is intriguing. Many large multinational companies are also starting as significant global competitors from these emerging economies. Consider how the Mexican cement manufacturer, Cemex, has flawlessly executed an internationalization strat egy that was heavily leveraged, fueled by low interest rates, and turned itself into a top three global player before 2008. One more example can be rapid rise of Tata Group, a diversified Indian conglomerate.

The statistics detailing the nature of the global economy reflect the realities of a hypercompetitive business environment, and challenge individual firms to think seriously about the markets in which they will compete. Consider how Volkswagen AG spotted opportunities in the Chinese market as early as 1984. Today 18 per cent of the sales of the whole Volkswagen group, which includes Volkswagen, Audi, Skoda, Bentley and Lamborghini, come from the Chinese market. Having set up a wholly- owned subsidiary, the group is still capitalizing on the soaring growth of the Chinese market and is planning to invest a further €4 billion in in creasing its production capacity there [4]. This is just one example of how companies are making strategic decisions today, such as investing significantly in BRIC coun tries, Africa or other emerging markets, in order to improve their competitive posi tion in what they believe are becoming vital sources of revenue and profitability.

Globalization is the increasing economic interdependence among countries and their organizations as reflected in the flow of goods and services, financial capital and knowledge across country borders.

Globalization is a product of a large num ber of firms competing against one another in an increasing number of global economies [5].

In globalized markets and industries, financial capital might be obtained in one national market and used to buy raw materials in another one. Manufacturing equipment bought from a third national market can then be used to produce pro ducts that are sold in yet a fourth market. Thus, globalization increases the range of opportunities for companies competing in the current competitive landscape.

For instance, the German-based discount supermarket chain Aldi is growing in ternationally through replicating its low-cost business model throughout the world. By offering deeply discounted prices on about 1400 popular food items (a typical grocery store has 30000), Aldi buys cheap land

mostly on city outskirts, builds cheap warehouses, employs a tiny staff and carries mostly private- label items, dis playing them on pallets rather than shelves. Starting its international expansion in 1968 with Austria, the company has been growing on an evolutionary basis. For example, after Austria, most of Aldi’s original international investments were in neighbouring Belgium, the Netherlands and Denmark because it was easier for the firm to apply its global practices in the countries that are geographically close to its home base. Because of the success it had in the proximate international markets, Aldi is now pursuing further retailing opportunities in countries such as USA, Australia and Ireland. A new store opens every week in Britain alone and there are around 1000 Aldi stores in 30 US states. Firms experiencing and engaging in globalization to the degree Aldi is, must make culturally sensitive decisions when using the strategic management process. Additionally, highly globalized firms must anticipate ever-increasing complexity in their operations as goods, services and people move freely across geographic borders and throughout different economic markets [6].

Overall, it is also important for firms to understand that globalization has led to higher levels of performance standards in many competitive dimensions, including those of quality, cost, productivity, product introduction time and operational efficiency. In addition to firms competing in the global economy, these standards affect firms competing on a domestic-only basis. The reason is that customers will pur chase from a global competitor rather than a domestic firm when the global company’s good or service is superior. Because workers now flow rather freely among global economies, and because employees are a key source of competitive advan tage, firms must understand that increasingly, “the best people will come from ... anywhere” [7]. Thus, firms must understand that in the competitive landscape of the twenty-first century, only companies capable of meeting, if not exceeding global standards, typically have the capability to earn above-average returns.

Although globalization does offer potential benefits to firms, it is not without risks. However, managers in a given firm or country who decide not to benefit from all that globalization offers, may take the highest risk as the competitors that they are already know, and new competitors, will seize the opportunity and put the firm at a disadvantage. Research shows that firms in industries with open mar kets see the opportunities and the threats and are more likely to have both a higher degree and a greater scope of international diversification. Collectively, the risks of participating outside a firm’s domestic country in the global economy are labeled a ‘liability of foreignness’ [7, p. 38].

One risk of entering the global market is the amount of time typically required for firms to learn how to compete in markets that are new to them. A firm’s performance can suffer until this knowledge is either developed locally or transferred from the home market to the newly established global location. Additionally, a firm’s performance may suffer with substantial amounts of globalization. In this instance, firms may overdiversify internationally beyond their ability to manage these extended operations. The result of over diversification can have strong negative effects on a firm’s overall performance.

Thus, entry into international markets, even for firms with substantial experience in the global economy, requires effective use of the strategic management process. It is also important to note that even though global markets are an attractive strategic option for some companies, they are not the only source of strategic competitive ness. In fact, for most companies, even for those capable of competing successfully in global markets, it is critical to remain committed to and strategically competitive in both domestic and international markets by staying attuned to technological op portunities and potential competitive disruptions that result from innovations.

Technology-related trends and conditions can be placed into two categories: tech nology diffusion and disruptive technologies, the information age and increasing knowledge intensity. Through these categories, technology is significantly altering the nature of competition and contributing to unstable competitive environments as a result of doing so.

The rate of technology diffusion, which is the speed at which new technologies be come available and are used, has increased substantially over the last 15 to 20 years.

With the term of technology diffusion is closely connected another term -perpetual innovation – that is used to describe how rapidly and consistently new information-intensive technologies replace older ones. The shorter product life cycles resulting from these rapid diffusions of new technologies place a competitive premium on being able to quickly introduce new, innovative goods arid services into the marketplace [8].

In fact, when products become somewhat indistinguishable because of the wide spread and rapid diffusion of technologies, speed to market with innovative pro ducts may be the primary source of competitive advantage. Indeed, some argue that increasingly the global economy is driven by or revolves around constant innovations. Not surprisingly, such innovations must be derived from an understanding of global standards and global expectations in terms of product functionality.

Another indicator of rapid technology diffusion is that it now may take only 12 to 18 months for firms to gather information about their competitors’ research and development and product decisions [9]. In the global economy, competitors can sometimes imitate or circumvent a firm’s successful competitive actions within a few days. In this sense, the rate of technological diffusion has reduced the competitive benefits of patents. Today, patents may be an effective way of protecting proprie tary technology in a small number of industries such as pharmaceuticals. Indeed, many firms competing in the electronics industry often do not apply for patents to prevent competitors from gaining access to the technological knowledge included in the patent application.

Both the pace of change in information technology and its diffusion will continue to increase. The declining costs of information technologies and the increased acces sibility to them are also evident in the current competitive landscape. The global proliferation of relatively inexpensive computing power, and its linkage on a global scale via computer networks, combine to increase the speed and diffusion of infor mation technologies. Thus, the competitive potential of information technologies is now available to companies of all sizes that are located in countries throughout the world including those in emerging as well as developed economies.

The Internet is another technological invention contributing to hypercompetition. Available to an increasing number of people throughout the world, the Inter net provides an infrastructure that allows the delivery of information to computers in any location. Access to the Internet on smaller devices such as mobile phones is having an ever-growing impact on competition in a number of industries.

Overall, however, possible changes to Internet Service Providers’ pricing structures could affect the rate of growth of Internet-based applications. In mid-2009, ISPs such as Vodafone, Time Warner Cable and Verizon were “trying to convince their customers that they should pay for their service based on how much data they download in a month” [9, p. 115–122]. Users downloading or streamlining high- definition movies, playing video games online and so forth would be affected the most if ISPs were to base their pricing structure around total usage. In comparison, today in the Republic of Kazakhstan the most widespread system is the unlimited tariff using of the Internet provided by Beeline, Megaline and others where the customers pay for speed only but not how much data they download in a month.

Nowadays knowledge (information, intelligence, and expertise) became the basis of technology and its application. In the competitive landscape of the twenty-first century, knowledge is a critical organizational resource and an increasingly valuable source of competi tive advantage of the information economy.

Knowledge is gained through experience, observation and inference and is an in tangible resource.

The probability of achieving strategic competitiveness is enhanced for the firm that realizes its survival depends on the ability to capture intelligence, transform it into usable knowledge, and diffuse it rapidly throughout the company. Therefore, firms must develop (e.g., through training programs I and acquire (e.g., by hiring educated and expe rienced employees) knowledge, integrate it into the organization to create capabili ties, and then apply it to gain a competitive advantage. In addition, firms must build routines that facilitate the diffusion of local knowledge throughout the orga nization for use where it has value. Firms are better able to do these things when they have strategic flexibility.

By the term of strategic flexibility it is understood a set of capabilities used to respond to various demands and opportunities existing in a dynamic and uncertain competitive environment [9, p. 128].

Thus, strategic flexibility involves coping with uncertainty and its accompanying risks. Firms should try to develop strategic flexibility in all areas of their operations. However, those working within firms to develop strategic flexibility should understand that the task is not an easy one, largely because of inertia that can build up over time. A firm’s focus and past core competencies may actually slow change and limit stra tegic flexibility.

To be strategically flexible on a continuing basis and to gain the competitive benefits, a firm has to develop the capacity to learn. In the words of John Browne, former CEO of British Petroleum:

“In order to generate extraordinary value for shareholders, a company has to learn better than its competitors and apply that knowledge throughout its businesses faster and more widely than they do” [10]. Continuous learning provides the firm with new and up-to-date sets of skills, which allow it to adapt to its environment as it encounters changes. Firms capable of rapidly and broadly applying what they have learned, exhibit the strategic flexibility and the capacity to change in ways that will increase the probability of successfully dealing with uncertain, hypercompetitive environments.

To sum up, in the given article is devoted to the formation of international hypercompetitive environment in the modern knowledge economy. It has been defined factors creating international hypercompetitive environments and influencing the nature of the current competitive landscape. It has been concluded that a global economy and technological innovations, specifically rapid technological change in our information age are the two main drivers of international hypercompetitive environments and the nature of today’s competitive landscape. To be hypercompetitive a firm should be extremely flexible in developing of its strategy according to the changing information age.


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Мақалада ақпараттық экономика жағдайында халықаралық аса күрделі бәсекелес ортаны қалыптастыратын факторлар жан-жақты қарастырылады. «Аса күрделі бәсекелестік» терминіне стратегиялық менеджмент пен динамикалық әрекеттену нәтижесіндегі бәсекелестердің арасындағы максималды бәсекелес артықшылықтарды игеру мүмкіндігі ретінде анықтама берілген. Негізгі факторлар ретінде автор жаһанданудың экономикалық процестері мен заманауи инновациялық-технологиялық өзгерістерді бөліп көрсетеді. Жаһандану деп бір- бірімен еңбектің халықаралық бөліну жүйесімен, экономикалық және саяси қатынастарымен әлемдік нарыққа байланысқан ұлттық шаруашылық жиынтығын және олардың экономикаларының трансұлттандыру мен аймақтандыру негізінде тығыз үйлесімділігін білдіретін экономикалық өзара үйлесімді үрдісті айтамыз.

Бұл базада бірыңғай ірі экономиканың және оның инфрақұрылымының қалыптасуы жүргізіледі. Автор Еуропа мен Азияның халықаралық көп ұлттық компанияларынан, бәсекелес нарықтағы олардың бәсекелес артықшылықтарын мысалға келтіреді. Олардың ішінде БРИК мемлекеттері – тез дамып жатқан бес мемлекет тобы – Бразилия, Ресей, Үндістан, Қытай, Оңтүстік-Африка Республикасы, сондай-ақ Индонезия, Малайзия, Германия және т.б. Жаһандану процестерімен қатар технологиялық даму қажеттілігі туындады, оның нәтижесі ретінде әлемдік тұрғындар арасында технологиялар мен инновацияларды жаппай тарату қажеттілігі пайда болады. Ақпараттық экономика бүгінгі күнгі экономикалық жүйесінің негізгі аспектісі және маңызды материалдық емес ресурсы болып табылатын қажетті ақпаратты, интеллектуалдық қабілеттіліктерді, тәжірибені – білімді игеру қажеттілігімен, сондай-ақ ақпараттық технологиялардың өзгеруінің жоғарғы жылдамдылығымен сипатталады.