Advantage of Globalization

Introduction

The globalization process and the model of knowledge management are linked in a dynamic environment that constantly competes to invent and develop new complex products and services for worldwide demand. Corporations comprehend that the benefits for improving materials, while lowering risks, and creating strategies to excel in providing customer satisfaction in today’s global market, will lead to success. The strategic use of knowledge management plays a very important role for business success in the increasingly competitive global market. Intellectual resources enhances innovation ability and capacity for the competitive advantage, to conquer and maintain the level in which a business can dominate the global market.

Therefore, business corporations need to implement knowledge management as the strategy for competitive advantage and success in globalization.

Global markets are very competitive and their demand for innovations is always increasing at a fast pace, reducing the opportunity to compete if knowledge and expertise are not ahead of the curve. For instance, the complexity of products and services related to technology innovation requires constant research and intellectual improvement. The persistent challenging and changeable environment, drives the role of knowledge management to influence changing factors for successful inventions in various markets. This paper is structured as follows: in the second section, literature review of globalization, knowledge management, and competitive advantage in global markets. The third section describes my findings of the relationship between globalization, knowledge management, and competitive advantage, based on the researched literature. The fourth section discuss recommendations, followed by my conclusion to depict why business must implement knowledge management as the strategy for competitive advantage and success in globalization.

?Globalization is the process that contains a social-economic framework that eliminates barriers for improving the procurement of services and products from businesses, governments, and people around the world. It includes trade, investments, technology, cultural and political economic aspects. (Gaspar, Arreola-Risa, Bierman, Hise, Kolari, Smith, 2014). International trading has been utilized since ancient times. For example, in Iraq when Sumerian farmers exchanged their produce with foreign traders for copper to purchase armaments to repel the Nomads. Before year 2000 only the most powerful developed or industrialized countries were the main players in globalization, while the third world countries were depending on products and services for the developing or emerging economies. (Gaspar et al., 2014).

Today new developments in technology, transportation, communications, infrastructure, etc., allows most countries to be engaged and benefit from the global market. Therefore, governments have regulate and control the imports and exports of goods. Currently, the World Trading Organization (WTO) is the organization that governs and control trading worldwide. Despite its regulations the WTO is unable to entirely control the global market, due to dishonest and corrupt organizations or regimes that maintain labor oppression to intentionally lower costs for products and services in the markets.

Globalization has its benefits and disadvantages. Worldwide trade generates jobs, raises living standards, improves access to products and services that were perhaps inaccessible two decades ago. Globalization promotes learning and stimulates world progress. However, there are negatives to globalization as well. Companies are looking for cheaper labor and material costs globally to increase their profits. China and Mexico are two of the many countries where manufacturing companies established their production factories, due to their low labor and material costs. In India, information technology businesses outsource professional services jobs, such as call centers, medical and engineering services, which can be provided at a very low price compared to standard prices in developed countries. (Gaspar et al., 2014).

Globalization has been blamed for the loss of several million jobs in America. (Appelbaum, 2016). Trade policies such as tariffs, non-tariffs, preferential duties, subsidies, helps regulate and control trade. Recently, the United States Government (USG) imposed new tariffs to China as a mechanism to reduce the impacts caused by the devaluation of China’s currency, the Yuan. The outcome from depreciating the Yuan is the reduction of labor and materials costs, which increases the opportunity to export Chinese products worldwide. The USG also utilizes embargoes to various countries to restrict trade. (Gasper et. al., 2014.).

The global financial system has also expanded from their incipient gold standard years between 1876 and 1913, when currencies were based on gold’s weight. Some countries like Panama, Ecuador, and East Timor still use the US dollar as their currencies. In today’s financial market most currencies have either a fixed or flexible exchange rate in the global financial system. (Eiteman, Stonehill, & Moffett, 2016). The Euro has relinquished monetary policy decisions to the European Central Bank (ECB), placing evident risks as a failing member in a special situation of monetary policy integration. The European Union States may need to be bailout by other States, just like the sovereign debt financial crisis of Greece in 2007 and 2008, when their government had to impose harsh reforms and measures, which caused financial failure, the loss of property and peoples’ income, causing a financial humanitarian crisis. (The New York Times, 2016).

Knowledge Management and Competitive Advantage:

Knowledge is defined as the reasonable combination of data and information, experience, skills, and professional opinion that amplifies the human capacity for competent action. Businesses’ knowledge includes skillful understanding, facts, principles, theories, values, models, ideas, experience, related information, and intuition to illustrate knowledge as a fluid mix of framed experiences, information, and expert insight that evaluates and integrates new experiences and information. (Sanders, D. January 01, 2005) Typically, organizations view and manage knowledge as a personal asset, which can give you status for exclusive data and information to achieve greater outcomes.

Knowledge Management is a conscious strategy of passing the right knowledge to the right people at the right time and helping people share and put information into action in ways that strive to improve organizational performance. (O’Dell & Grayson, 1998) Another definition of Knowledge Management is “an explicit and systematic management of processes enabling vital individual and collective knowledge resources to be identified, created, stored, shared, and used for benefit. Its practical expression is the fusion of information management and organizational learning” (Serrat, 2009). Knowledge Management maximizes the organizational understanding to identify key information and strengthening human and digital proficiencies, creating and processing the organization’s data and innovating expertise to advance globally.

Knowledge management is the base for organizational survival and its abilities are the most important possessions to avoid a clash with the fast transformations of the global market. Knowledge management clarifies the process when coordinating and interacting data and information to improve the human capacity to innovate services and products, vital to create better conditions for competitive advantage. (Serrat, 2009). Three decades ago knowledge management started to develop from an incipient concept into a conventional powerful tool to be used currently in organizations that compete globally. Today, the concept has evolved from the academics into knowledgeable experts. The latter have worked out the academic explanations to be passed onto specific individuals in their organizations, to guarantee progression of their innovation, creation, and improvement processes.

Knowledge management allows to obtain relevant information to be used during the decision-making process, providing the top managers the real picture of the organization’s performance to get ahead with competitive advantage. Managers are then able to handle unforeseen situations and easily adapt to resolve issues with more effectiveness. Unfortunately, human factors can bring negative impacts to the organization, because when knowledgeable employees decide to leave the organization, the knowledge leaves along with them. Therefore, the competitive advantage is also impacted significantly, and it becomes devastating if the employee joins the competition. This is why organizations must protect, value, and defend their knowledgeable human capital to gain competitive advantage. (Land, Nolas, Amjad, 2008)

Despite the costly investment for the knowledge management concept, organizations can benefit in a larger scale with higher productivity and profits. The benefits include reducing the decision-making time, problem solving, production costs, production time, innovation for competitive advantage, etc. This concept emboldens improvement and creativity of new products, which can result in an revolutionizing market with endless customers. Companies use knowledge sharing as the leveraging for collective wisdom to increase their potential in responsiveness and innovation, essential for the competitive advantage in global markets. (Bishop, 2012).

Findings

Knowledge Management as a strategy for the Competitive Advantage

I highlight the importance of knowledge management in relation to competitive advantage over market competitors to be at the top of the business strategies to reach success globally. Organizations have to respond quickly to the challenges and changes of the global business environment. The intellectual capital is the most important asset for the research and development used for competitive advantage. To protect knowledge management, individuals strategically encode their knowledge in a shared database, as the Codification approach for knowledge management. Another strategy involves the requests for knowledge from experts of an specific field to obtain the fundamental insights needed. This is the Personalization approach for knowledge management. (Azam, Khilji, Khan, 2016).

The future of global companies lies on their commitment for improving information technology and the codification and personalization of knowledge management. The success of companies like Apple, Microsoft, Google, and many others relies mainly on the superiority of innovating knowledge to provide high customer satisfaction in performance of their products. For instance, Apple computers and products are quite expensive and complex to use compared to other brands, but yet they continue selling them to an exclusive type of customers. Their knowledge management with innovation, new ideas, and exploiting intellectual strength, places Apple’s expertise in a well-defined competitive advantage globally. Without that knowledge management Apple’s inventions would not be successful, because other companies would get out products long before theirs become available. (Azam, Khilji, Khan, 2016).

Conclusion

The process of globalization imposed the need to adapt the organizational management system, which results with changing the management processes themselves. Namely, because of the free market and the dynamic market factors, which are constantly developing – change, strategic management necessitates new aspects and tools for achieving goals and successful work of the organization.

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