Avoiding Complacency at the Highest Level of Global Competition

Competition and Complacency in Global Business

Maja Zelihic, PhD, program chair for the Master of Arts in Organizational Management, provides an analysis of a global business arena with some of the most powerful players emerging as creative powerhouses and outcompeting each other; the competitive cycle creates a sense of perceived uncertainty as to who the all-time ruler of the emerging global business empire is going to end up being. Dr. Zelihic warns of the dangers of creative fatigue and complacency among companies who are seemingly unchallenged by others in the field. 

Historical Impact of Creative Fatigue 

As WWII was nearing its climactic end, one of its last casualties, the British Empire, was slowly dying. Long gone were the days, beautifully depicted by George Macartney, of the “vast empire on which the sun never sets, and whose bounds nature has not yet ascertained” (as cited in Kenny, 2016). Britain’s famous East India Company was no longer monopolizing the world trade, losing the throne it held ever since its creation in December 1600. 

Disruptive companies are not only competing but leaping ahead in the race.

At its peak, the company was incomparable in its mighty power to any of the business giants of today, venturing out of its designed core competencies into an entity that controlled Britain’s political scene and serving as its imperialistic agent (Our Heritage, 2017). Some of its lessons remained in place for the world of business to follow up to the present day. As history's first joint stock operation and limited liability organization, the East India Company left us management concepts such as merit-based appointments and expectation-setting contracts; seemingly simple on the surface but pivotal for the operations of a modern global service.

Despite its former glory, as the last celebratory dances of post-WWII Europe were dying out, the British Empire was too fatigued to keep up with the world around it—exhausted from the war operations and loss of its colonies in Asia. The aging empire finally gave up its power, paying a high price for complacency in the years between the two wars when the US slowly started taking over through its investment in technology and innovative spirit. If we learned anything from Britain, it is this: complacency and creative fatigue can cost any nation dearly.

Tech Giants & Competition 

In considering the current landscape of business, particularly Amazon, it is this author’s opinion that the Chinese tech giant Alibaba, emerging as the world’s largest e-commerce company, threatens Amazon’s current position. The market's trust in Alibaba is explained clearly by Ray (2017). "Yahoo's 15% stake, totaling 384 million of Alibaba's common shares, are worth $53.7 billion,” the author explains (para.4). Yahoo’s co-founder Jerry Yang bought the stake for $1 billion in 2005, in exchange for a 30% ownership of Alibaba (Olson, 2014). The tables have turned significantly with Alibaba’s consideration to acquire Yahoo in recent years. Yang had a tremendous vision recognizing Alibaba's worth, but other Yahoo executives did not. In 2012, "Yahoo's board agreed to sell 523 million Alibaba shares, half of its stake, back to Alibaba at $13 apiece" (Olson, 2014). While Yang had enough sense to walk away with his shares, the same cannot be said for the other executives in the boardroom that day.

No Longer Competing but Leaping Ahead 

Alibaba is an e-commerce giant that uses China’s biggest obstacle, the lack of retail infrastructure, to its advantage by offering B2C, C2C, and B2B platforms for a one-stop shopping experience (Hiner, 2016). Any resemblance to Amazon is not coincidental. Alibaba’s increasing presence in the marketplace gives credence to warning Amazon of Alibaba’s journey, encouraging Amazon to fight complacency at each level of its operation.

Alibaba is not the only Chinese “trailblazer” on the global business scene. We can observe that “disruptive companies that are not only competing but leaping ahead in the race,” as Baidu, Tencent, JD.Com, and Huawei carve out bigger stakes (Hiner, 2016). One theme emerges: China is not aiming to imitate the US business model when it comes to some of its signature products. Chinese companies are not venturing to make existing platforms better; on the contrary, their "no excuse approach" to innovation and disruptive creativity forges new product offerings fitted for their market needs. 

If the US doesn't want to lose the superpower status in global business, we cannot help but note that Chinese products often exhibit superiority in scope and effectiveness. It seems that it is just a matter of time before those products replace some "powerhouses" of the Western hemisphere. 

Is Chinese Momentum Going to Continue?

Lingling Wei and Chao Deng (2017) raise some concerns about President Xi’s firm decision to “clamp down” on China’s top four largest companies due to their tendency to borrow "too much" to buy Western enterprises that are not appropriately priced (Wei & Deng, 2017, para. 3). Some of the companies whose “creative borrowing” may cease or be significantly reduced because of this initiative are Wanda, HNA Group, Anyang, and Fosun International, the country’s top overseas deal makers (Wei & Deng, 2017). This move is an example of the Chinese government doing what it does best (or worst, depending who you ask).

Empires Come and Go

What I found fascinating is that the top 10 Chinese companies per the Global 500 ranking are not included in the discussion at all. The reason is because the companies already competing and at times out-competing US businesses are quite well known for their approach and strategies. Their "secret game" is not that secret anymore. It is the newcomers that are not going to compete with the Western businesses; they may end up out-competing some right out of the gate. These companies are done observing and are now ready not only to play ball in the big leagues, but they are also aiming to win at each round.

As the global business landscape changes at a drastic speed, Amazon must ensure its vision is not too skewed due to its recent growth and successes. Its innovators will have to operate two steps ahead of China’s tech giants. Empires come and go, and there is no such a thing as consumer loyalty to any business empire in today's unpredictable markets. The company that sails best in unchartered waters will win the ultimate global business game.

As this article comes to a close, we encourage you to explore the foundations of organizational management and international business.

 

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Written by Dr. Maja Zelihic, Program Chair for the Master of Arts in Organizational Management in the Forbes School of Business & Technology™

References

Macartney, G. (1773). An Account of Ireland in 1773 by a Late Chief Secretary of that Kingdom. p. 55.; cited in Kenny, Kevin (2006). Ireland and the British Empire. Oxford University Press. p. 72,fn.22. ISBN 0-19-925184-3. Retrieved 2016-02-23.

Ray, T. (2017). Yahoo! Closes at Near-17-Year High on Alibaba Outlook. Retrieved from http://www.barrons.com/articles/yahoo-closes-in-on-17-year-high-close-on-alibaba-outlook-1496947836.
 
Olson, P. (2014). Finding Alibaba: How Jerry Yang Made The Most Lucrative Bet In Silicon Valley History. Retrieved from https://www.forbes.com/sites/parmyolson/2014/09/30/how-jerry-yang-made-the-most-lucrative-bet-in-tech-history/#588bfb9c22f3

Our Heritage (2017). The East India Company. Retrieved from http://www.theeastindiacompany.com/

Wei, L. & Deng, C. (2017). Xi’s Sign-Off Deals Blow to China Inc.’s Global Spending Spree. Wall Street Journal. Retrieved from https://www.wsj.com/articles/chinas-latest-clampdown-on-overseas-investing-has-president-xis-approval-1500802203
 

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