Why is cost containment and technological improvement said to be the basis for competition?
To remain profitable when global competition intensifies, companies seek ways to keep costs within a range that permits competitive pricing. The major driving force behind companies producing across the world is global sourcing, which is used to minimise costs and risks. Flexibility and dependability are two other benefits from global sourcing, since worldwide sourcing strengthens the reliability of quality and supply.
The uniqueness of a company's needs and its availability motivates it to source globally. Technological progress, market demand created by global industrialisation and creation of new middle classes will have a significant effect on the potential in global markets. Technology and management capabilities spread around the globe and new competition arises in Asia, Europe and Latin America.
Thus, companies who are looking to remain competitive must focus on staying on top of new technology as well as restructure, reorganise and downsize its avenues to strengthen competitive positions.