As the world catapults into the 21st century, companies are drastically altering their business and marketing strategies to get closer to their customers, cc-under competitive threats, and strengthen competitive advantages. While changes confronting managers in the 1980 were unprecedented, the 1990 display even greater diversity and turbulence.2 Challenges to management include escalating international competition, political and economic upheaval, the dominance of the customer, and increasing market complexity.

Successful managers recognize the mandate for adapting to the turbulent and rapidly changing global environment. They seek to reduce costs, create more flexible organizational designs, and build competitive advantage around the core competencies of the organization. Core competencies are what a company does best, as illustrated by Gillette's skills in developing shaving products. Gaining competitive advantage often requires cooperation because a single organization may need to draw from the skills and resources of other organizations.The global business challenge centers on two important competitive issues. First, companies with the skills and resources for competing beyond their domestic markets have major opportunities for growth. And these opportunities are not restricted to industry giants. Second, maintaining a competitive position in the domestic market requires knowledge of key competitors in the global marketplace. The successful competitor in domestic markets keeps informed of foreign competitors' strategies and strengths. New market arenas are rapidly developing through the world. The Pacific Rim countries, western Europe, eastern Europe, and other regions offer promising markets and new sources of competition as they change and develop. An interesting illustration of the global competitive challenge is shown in Exhibit 2-2. Note the huge differences in wage rates (including benefits). Moreover, several of the countries with very low wages, like China , also have the skills to produce high-quality products.

The competitive pressures are particularly acute for the countries at the top of the wage rankings:

Western Europeans on average work fewer hours, earn more pay, take longer vacations, and enjoy far more social entitlements and job protection than their chief competitors in North America and Asia . An average Western German worker, the best paid in Europe, earned $24.87 an hour in wages and benefits in 1993, compared with between $16 and $17'an hour for the average American and Japanese and $4.93 an hour for a South Korean. It is a lifestyle that few Europeans are willing to abandon.'

One consequence of these competitive realities is the movement of manufacturing, distribution, and marketing operations to countries which offer comparable labor skills at lower wage rates. For example, Siemens AG of Germany moved its semiconductor assembly to southeast Asia.4 Siemens workers at its Singapore plant earn $4.40 per hour for the same work previously performed in Germany at $25 per hour.

Requirements for competing globally are both different and more demanding than competing domestically. Differences in customs, languages, currency, and trade practices create risks and uncertainty for new market entrants. The social and political changes that occurred in eastern Europe in '989 are illustrative. Almost overnight, access to these countries was possible and major social, political, and economic reforms were initiated.