Good Essay On Competitiveness In Small Open Economies

What is competition between small businesses? Developing a competitive edge as a small business presents several adversaries and challenges if the small business owner does not conduct the proper research and analysis of the industry that he or se intends to enter. Cited by Enz(2010), Michael Porter (1985), states that “to have a competitive advantage a firm must create superior value for buyers by offering lower prices than competitors for equivalent services or by providing unique services that a buyer is willing to pay for at a premium price”(p 297). Offering unique products and services to customer is detrimental to business operation and success because it places a heavy emphasis on an organization’s brand, customer relations, and ability to sustain against larger organizations. It is also very important to consider the location of the business as part of a competitive strategy. A competitive strategy uses several components relate to an organizations business to create a method that makes that organization more attractive to customers within a specific market or industry. Without a strong competitive strategy and the lack of strategic planning business increase their failure rate and reduce their success rate substantially. For this reason, it is also very significant and detrimental to business succession for part of strategic planning to include a thorough SWOT analysis to analyze potential risks that may threaten the business. Another important aspect is to determine the type of strategy tat should be applied to the business. More specifically, is it local or international? In this paper two case studies on Ireland and Singapore will be examined to determine how the international management theory is applied in referencing both country’s attractive elements to foreign investors; the suitability of each country as a place to invest; and the dynamic nature of each countries ability to be competitive.

International Management Theory

The international management theory focuses on comprehending diverse cultures, having a competitive and leading advantage and creating business strategies that can be managed in more than one country. In the countries of Ireland and Singapore both countries offer several attractive time elements that invite foreign investors.

Ireland

Though Ireland is a small country it is enriched with culture, and offers an abundance of resources. Some of those resources and unique characteristics that have made Ireland an attraction for knowledge based industries are a diverse employee base, education, tax structure, intellectual property, and logistics. There are several challenges faced by Ireland when managing business relations with a variety of other countries, but Ireland has a diverse and highly skilled workforce that is bilingual, and knowledgeable about the benefits of cultural awareness. According to Chowdury (n.d.) Ireland’s workforce is fueled by talented people that are capable of speaking multiple languages, and are “talented pool of educated, skilled young and English speaking employees” (p 5). When conducting business internationally it is very important to have a working knowledge of other countries culture. In addition, having a diverse workforce can display cultural sensitivity and acceptance of other countries business practices. Unlike the United States of America, Ireland offers secondary education for free. This is a strategy that attracts foreign investors and fuels small country revenue because people will consider populating Ireland to benefit from this perk. The tax structure for Ireland is one of the lowest international tax rates with 12.5% across all industries. This alluring tax advantage made it possible for many companies to use transfer pricing as a strategic method to maximize profits in Ireland’s service sectors (Camps and Cull. 2013 p 2). As a result, competition in this open economy continued to flourish. Intellectual property are another attractive quality of Ireland because it gives investing companies the opportunity patent and copyright their head and products. This has been especially beneficial for the pharmaceutical and electronic industry. Lastly, in logistics exporting and importing goods and services is very convenient in Ireland due to the accessibility of the ports, three airports, and road transportation that is within 2 to 3 days of product delivery for surrounding cities and simplifying the exchange of goods on a global level also.

Singapore

Singapore has taken an innovative approach to remaining competitive in the industrial and technological industries. An innovative strategy that has fueled the economy in Singapore is biotechnology, pharmaceuticals, and the health care industry. This has been achievable through a heavy investment in research and development. According to the Singapore Economic Development Board (n.d) “Presently, 30 of the world’s top pharmaceutical, biotechnology and medical technology companies have their regional and international headquarters in Singapore” (p 16). This places Singapore and Asia in one of the leading positions in the aforementioned fields. This is significant because the fact that there are so many top pharmaceutical companies that have their headquarters in Singapore gives Singapore a competitive advantage in the biotechnological , pharmaceutical, and medical technology industries. Another component that Singapore has incorporated into the international management theory strategy is creating encouraging and creating partnerships with biotechnology organizations and academic institutions. By doing so Singapore’s research and development strategy can continue to promote expansion in Asia and a competitive edge in a growing industry. In addition, the alliances between universities and the various organizations is part of a threefold strategic plan that was originally implemented by the Singapore government. The government is a string supporter of entrenuershup and strong business relationships. The goal is to have a dominant system that can use academic research and experience that is gained from exposure in the biotechnology fields to gain a stronger position in the biotechnology industry. Enhancing and adding programs to university curriculum such as engineering, and other occupational fields to increase and add to Singapore’s economy. Due to Singapore supportive government and advanced competitive edge in several blossoming fields it has become a popular place for foreign investment and tourism. Hence, Singapore has a strategy that interconnects several industries within the country that add a competitive edge to technological, education, and industrial industries; while simultaneously creating alliances that will continue to fuel the economy.

Suitability of Ireland and Singapore as Places to Invest

Both Ireland and Singapore have several advantages to attract foreign investors, but what are the factors that make them suitable to invest in?
Ireland
There are three areas that make Ireland a suitable place to invest in. The first is the education system. It was previously mentioned that Ireland offers free secondary education, but there are several reasons why. Free education trained the workforce in skills that not only will make Ireland more marketable and attractive to foreign investment; but will also create a skilled workforce that will drive innovative economy. The second reason to invest in Ireland is the positive consequences of open policies. Open policies that attracted and encouraged free trade are tax exemptions of all revenue generated by export goods, and the introduction of low cost and efficient English speaking labor (Lam, 2015). Other policies that are also attractive stem from the role that Industrial Development Authority played in investing in. This includes investing in rapid growing industries such as technology, and agriculture. Other areas that Ireland excelled in attracting foreign markets in real estate. In 2005 Ireland was voted one of the best places to live due to the education perks, efficient work force, and abundance of opportunities. Ireland is a suitable place to invest because it offers educational and affordable opportunities that foreign organizations can invest in. It also offers cost efficient opportunities to capitalize and generate a substantial amount of revenue without having to invest a great amount of revenue. Hence, Ireland is an ideal country that foreign investors can invest for low cost and efficient results.

Singapore

There are several reasons that make Singapore a suitable place to invest buy for the sake of this paper the focus will be place on Singapore’s government and their education system. The government in many Asian countries places a heavy emphasis on strong beliefs and values in community and togetherness. This provides a rationale for why the government is playing such an active role in finding inventive and new methods for bringing revenue to Singapore. After several challenges and downfalls Singapore leaders decided to focus on using foreign investors and investments to boost Singapore’s economy. “The foreign companies not only brought in investment and entrepreneurship they also brought with them the markets for their products” (Abeysinghe, 2007). Singapore was offered investment and entrepreneurship opportunities, and in response they gave foreign investors tax breaks, accelerated depreciation, and also a skilled and cordial workforce. Another reason that Singapore is a suitability to invest in is the ability to independently make decisions by branching out and exploring new methods of revamping old systems. This kept Singapore’s traditional ideals as the foundation for innovative business practices. Hence, through direct investments Singapore has been able to enter into markets that are generally non penetrable or difficult to penetrate when a new country is trying to invest; therefore allowing Singapore to expand into new markets without so many barriers and challenges.

Dynamic Nature of Ireland and Singapore Ability to be Competitive

Competitive advantage and strategies include planning to find the niche in marketing and methods to enter into new markets. Both Ireland and Singapore have similar industries that the display great strength in but also has individual strengths that make tem unique and dominant in diverse markets.
Ireland
When evaluating Ireland it is true that this country as adopted Michael Porter’s principle of competitive edge. This notion states that to adequately compete one has to find a cost efficient method of or unique strategy that differentiates it from its competitors, also known as a niche base strategy. Ireland not only as offers free secondary education to enhance skills but has also has engaged in globalization. According to O’Sullivan (2006) Ireland capital flows have been significantly driven by foreign investors (especially American) through the creation of value chains that outsource products, means, and services that can be sent to production firms in Ireland (p. 18). This is made clear and concise by the large amount of gross domestic product revenue that is generating from exported goods. Ireland competitive advantage is strongly influenced by foreign domestic investments. Though Ireland is one of the top places to invest the industrial and technological markets potential threats to the open economy in this country can point to the treat of new entrants entering into the market an offering better investment opportunities. On the other hand, Ireland has invested into research and development as a safeguard for this type of adverse outcome. Hence, Ireland’s competitive advantage stems from planning, business relationships, and perks that are offered to their investors.
Singapore
Singapore uses state planning and capitalism to remain competitive in various open market economies. Te adjustments and changes that Singapore has made to their technology, creative competitive measures and national competitiveness coincide with some of the competitive advantage ideals of Michael Porter. Cited by Parayil (2005), Michael Porter stated “in a world of increasingly global competition, nations have become more, not less important” (p.51).to remain competitive it is very significant for nations to constantly formulate innovative methods to stay ahead of their competitors. For Singapore this is done through direct investments, research and development, educational and workforce relationships, and more knowledge and industrial driven investments. Hence, adequate planning and research are two of the competitive advantages that Singapore has focused on to increase revenue in the country.

Conclusion

Ireland and Singapore are two countries that are enriched with culture and are extremely attractive two foreign countries because of their goods, location, the international management theory focuses on comprehending diverse cultures, having a competitive and leading advantage and creating business strategies that can be managed in more than one country. In the countries of Ireland and Singapore both countries offer several attractive time elements that invite foreign investors. Some of those resources and unique characteristics that have made Ireland an attraction for knowledge based industries are a diverse employee base, education, tax structure, intellectual property, and logistics. Singapore has taken an innovative approach to remaining competitive in the industrial and technological industries. An innovative strategy that has fueled the economy in Singapore is biotechnology, pharmaceuticals, and the health care industry. Both Ireland and Singapore have several advantages to attract foreign investors, but what are the factors that make them suitable to invest in. There are three areas that make Ireland a suitable place to invest in. The first is the education system. The second is open policies that attracted foreign investors with tax exemptions and flourishing market investments. Ireland also maximized the revenue that can be generated from real estate. There are several reasons that make Singapore a suitable place to invest buy for the sake of this paper the focus will be place on Singapore’s government and their education system. To attract and market Singapore capabilities the government focuses on foreign investors as a major pull of income into the economy. This strategy helped to increase Singapore’s revenue drastically. Competitive advantage and strategies include planning to find the niche in marketing and methods to enter into new markets. Both Ireland and Singapore have similar industries that the display great strength in but also has individual strengths that make tem unique and dominant in diverse markets. Singapore uses state planning and capitalism to remain competitive in various open market economies. Hence innovation and business alliances are two key methods to maintaining a competitive edge in open economies.

References

Abeysinghe, T., 2007. Singapore: Economy. [Online] Available at: http://courses.nus.edu.sg/course/ecstabey/singapore[Accessed 2 January 2016].
Board, S. E., 2013/2014. Overview of Singapore's Pharmaceutical an Birtechnology Industry. Singapore Biotech Guide, pp. 13-16.
Camps, D. & Cull, R., 2013. Ireland's Foreign Direct Investment Sector: The Impact of a hypothetical Irish Euro Zone Exit. Business and Economics Journal, 4(2), pp. 1-6.
Chowdury, A. R., n.d. Ireland:Destination for FDI. Centre for Financial and Management Studies, pp. 318-340.
Enz, C. A., 2010. Competitive Dynamics and Creating Sustainable Adavantage. School of Hotel Administration Collection at The Scholarly Commons, pp. 97-305.
Lam, A. W. K., 2015. Planet of the Celtic Tiger. Economc History Commons, Growth and Deveopment Commons, an the International Economic Commons, Volume Paper 832, pp. 1-35.
O'Sullivan, M. J. O., 2006. Ireland and the Global Question. Dublin, Ireland: Syracuse University Press.
Parayil, G., 2005. From the "Silicon Island" to "Biopolis of Asia": Innovation Policy an Shifting Competitive Strategy in Singapore. California Management Review, 47(02), pp. 50-73.