Globalization is a dynamic process that involves the integration of national markets through international trade, foreign direct investment and portfolio investment. Based on free-market capitalism and powered by advances in telecommunications, transportation and finance, globalization enables companies and individuals to establish relationships anywhere in the world. In addition, it provides billions of people worldwide the means to obtain a higher standard of living.

In their book "A Future Perfect," John Micklethwait and Adrian Wooldridge argue that globalization increases people’s freedom to shape their identities and sharpen their talents. It allows consumers to buy the best the world has to offer, while giving producers the tools to find buyers and partners worldwide. As a result, companies and individuals are empowered to generate new wealth in ways undreamed of just a few years ago. But it’s also creating much controversy.

Other trends already have changed the nature of competitive advantage. And in this period of great transformation from a familiar system to an unfamiliar one, new paradigms are emerging as old ones fade. For example, for centuries an abundance of natural resources was known to secure a nation’s competitive advantage. This is no longer the case. Japan, Hong Kong and other countries and regions of wealth with few natural resources clearly have disproved this. Today, knowledge and information have become the new generator of competitive advantage. This is becoming more evident in every industry.

Many of our largest corporations, that for decades dominated the economic landscape, are being pushed aside by leaner, more knowledge-intensive companies. And since knowledge and skill are infinite resources, obtainable by both large and small companies alike, smaller companies are not disadvantaged by their size. As a result, a real sustainable competitive advantage is the ability of a small company’s workforce to learn faster than the competition.

Change, which is often accompanied by fear and disorganization, is not easy. But with change come new challenges and exciting opportunities. For companies and their employees to succeed well into the future, it is necessary for them to grasp the new economic realities that globalization brings, and embrace—not reject—the challenges they present.

This appeared as the introduction to Part I: Understanding Today's Global Realities of the book Grasping Globalization: It Impact and Your Corporate Response, 2005.

John Manzella
About The Author John Manzella [Full Bio]
John Manzella, founder of the, is a world-recognized speaker, author of several books, and a nationally syndicated columnist on global business, trade policy, labor, and economic trends. His latest book is Global America: Understanding Global and Economic Trends and How To Ensure Competitiveness.

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