The barriers that have separated markets and protected businesses from outside competition are being dismantled by the following forces and creating a global marketplace:

  1. Technology is continuing to leap over barriers between labour markets enabling outsourcing and offshoring arrangements
  2. The growing prevalence of free trade agreements is liberating global trade
  3. Social media and internet marketing help businesses reach new markets
  4. Online sales are diminishing the significance of geographic position in retail (Australians spent a record $16.6 billion online in the year to January 2015, up 9 per cent year-on-year according to National Australia Bank’s latest Online Retail Sales Index)
  5. Emerging markets are gaining a growing number of overseas trained university graduates that can work across borders with ease
  6. Increasing market connectedness is creating unparalleled dependencies between markets and increasing volatility
  7. Government responses to climate change will drive structural changes in many industries.

What this Means for Businesses

The dismantling of trade barriers through technology and globalisation will further increase competition and disrupt industries as well as creating opportunities. Consequences for business include:

  1. Continual adaptation and innovation will need to become core competencies
  2. Cheap services (as well as cheap goods) from overseas will put pressure on low skilled labour prices, especially after the auto industry closures
  3. Tertiary educated workers in emerging markets will continue to build high-tech businesses that compete against the west
  4. B2C businesses will be forced to embrace new media or lose sales
  5. The growing partnership between online retailers and logistics will redefine the B2C supply chain
  6. Evasion of taxes by on-line sales will disadvantage traditional business
  7. Greater need to focus on risk management and managing in uncertainty.

What to Do to Stay Ahead

Creating and maintaining competitive advantage is the only thing that sustains businesses in the long term. Building competitive advantage should therefore be a key focus. Key initiatives to develop competitive advantage include:

  1. Build the best systems possible in your business
  2. Seek out new advancements proactively
  3. Create a strong online presence
  4. Be flexible and open to change
  5. Seek out mentors and others who will challenge your status quo
  6. Consider acquiring innovative businesses or other features that will build your competitive advantage
  7. Bring in fresh talent with new ideas
  8. If you cannot buy or recruit them, seek to collaborate with people or businesses that will build your competitive advantage.

Grant Kirby
Director
Cambian Corporate Advisory Pty Ltd