Environmental sustainability and maintaining an acceptable image in the minds of a public that is aware of what is happening in the business world, and adapting business organizational structures to the knowledge businesses created by modern technology are some of the other major issues.
When industrialization started, capital equipment was the major strategic asset of a business. The equipment enabled large volume production at costs much less than with manual labor, thus conferring a competitive advantage to businesses using them.
The situation is different for today’s businesses. Fast changing developments in modern technology result in new products that make traditional products obsolete. Additionally, businesses that know how to leverage the ever-changing information technology to improve customer relationships, supply chain management and business processes can reduce their operational costs and efficiencies. The increasingly complex business network of security markets, financing institutions, insurance options, government regulations and public relations also require knowledge and expertise to cope with.
The major strategic asset of modern businesses is the knowledge that resides in the minds of their people, in the patents they own and in their databases. It is the business intelligence gathered through analysis of business and market trends that underlie today’s strategic planning, unlike in earlier days when businesses were operating in a seller’s market and could just go ahead and set up their production facilities.
When technology, markets, economic conditions and competition are constantly changing, businesses find that old ways of doing things leave them at a competitive disadvantage. They have to change their approaches, business processes and operating procedures. Change always creates resistance from those who have become comfortable with existing ways of doing things. Change management is a major challenge that today’s businesses have to handle.
The critical factor in successful change management is getting people accept the change and this is a topic which has been the focus of considerable research. Management approaches such as constraints management and appreciative inquiry have change management as a core element. Constraints management, for example, focuses on cause and effect relationships and with this focus it becomes easier to explain why a change is necessary.
Globalization and International Business
Several developing economies of the world can undertake traditional labor focused manufacturing operations much more economically compared to developed countries where labor costs are high. These economies can even compete successfully in high-tech businesses such as software development. This new competition requires that businesses in developed nations adopt new competitive strategies.
One suggested competitive strategy is to focus on emerging technologies such as nanotechnology and biotechnology. With their advanced research facilities and greater availability of highly trained scientists and engineers, developed countries can do a better job of developing applications using these technologies.
In the area of traditional manufacturing, businesses have to carry globalization to its full extent by outsourcing those operations that are done more economically in other countries. Modern communication technology enables performance management of global supply chains almost as effective as managing local operations. Even small businesses can find competent and economic suppliers world over through Web resources.
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