New Business Models, the Restructure of Competition and Implications on Business Management and Trade Statistics

By Margulescu, Serghei; Pospisil, Richard | Global Economic Observer, July 1, 2014 | Go to article overview

New Business Models, the Restructure of Competition and Implications on Business Management and Trade Statistics


Margulescu, Serghei, Pospisil, Richard, Global Economic Observer


1. Introduction

There are a lot of factors that contributed to the appearance of new types of business and new trade patterns on the international stage. We can structure them in the following three categories:

1. The Western factor - the implementation by Western compames of new strategies and business models.

We are referring to the "globally integrated businesses" which are stimulated by:

- the competitive advantages offered by the concentration of resources on a specific field of expertise or functions that enhance positioning on the market;

- the technical opportunities and economic efficiency enhancement resulting from the relocation of activities, and first of all of manufacturing, through offshoring and international outsourcing.

"The globally integrated compames" reflect the integration in a certain formula of the components of the "product" value chain and the distribution of their fulfilment in at least two countries. Integration also implies, on an ever larger scale, the functional inter-dependence of at least 2 independent companies which realize in conjunction the "product" global value chain, and through this symbiosis generate a "globally integrated business".

Under the category of "globally integrated companies" we have to define two types of companies:

a) "the functions outsourcers", which can be:

- big companies (national companies, multinational companies-MNC, transnational companies-TNC), which undergo a process of vertical disintegration, by retaining the basic function(s) (in which their competencies are maximal) and the distribution of other functions to third parties (outsourcing to functions integrators selected through the arbitrage of their competencies and advantages)

- new companies that design and structure from scratch a "globally integrated business" by assigning functions to "integrated" participants.

b. "the functions integrators", which can be:

- companies that directly perform the contractually undertaken function(s) (design, R@D, manufacturing, assembly, distribution, marketing, post-sales analyses or a combination of these)

- companies that build and use (orchestrate) supplier networks. This kind of integrator becomes in its turn a functions outsourcer, while the network itself becomes a "globally integrated business".

2. The emergent factor - the governmental policies and private initiatives of some emerging countries. These have facilitated:

- the foreign direct investments

- the set up and growth of a number of national companies meant to become partners to Western TNCs within the frame of certain "globally integrated businesses"

- building of national, regional or even international chains or networks

- the extension of functions within the global value chains, ready to be undertaken by emerging companies, from manufacturing to logistics, R@D and other business services.

3. The conjunction and evolution of the above mentioned factors - which created a new economic reality.

This new reality can be characterized by:

- the reshape of international inter-dependences between companies, countries and regions

- the reshape of trade and investments flows

- the review of the meaning of a country specialization, which is no longer based on the overall balance of comparative advantage of countries in producing a final good, but on the comparative advantage of producing components of final goods (the intra-product specialization) or on the comparative advantage of fulfilling certain tasks/functions along the global value chain of a product (the functional specialization).

The appearance of new types of business and new trade patterns on the international stage has led to the restructure of worldwide competition. This has a few implications on business management and on foreign trade statistics and analysis as well and we will that for make some remarks on these issues. …

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