Why Is the TRIAD at the Threat of Losing Its Dominance on World Business - Term Paper Example

? TRIAD vs emerging economies in world business Introduction The dominance of the world’s trade business is held closely by the three major economies of the world namely USA, Japan and Germany. The bigger the size of the economy of a nation, the better placed the nation becomes in the negotiation for world business. In other words, the bigger the economy, the higher the competitive advantage that the country has over other nations (Akroush, 2012, p.365). It is important to have an edge in international business as the country will enjoy more development and growth prospects. The three major economies of the world have enjoyed massive benefits just for the basic fact of their great economic prosperity. However, it has not gone unnoticed that there are other economies of the world which are rapidly positioning themselves as new economic superpowers. These countries are posing as a serious threat to the dominance of the three major economies known as the TRIAD. This paper will discuss how the TRIAD economies have evolved and dominated patterns of international business. It will also illuminate on the evolution of these TRIAD economies as well as how TRIAD economies have sustained their dominance in increasingly global markets. On the other hand, the paper will also look upon how emerging economies have evolved and are now challenging TRIAD dominance. The concentration will also be on the characterization of the current international business dynamics resulting from the rapid growth of global supply chains as well as looking into the factors which could impact future patterns of international business. The TRIAD economies The economies which compose of the TRIAD are the economies of USA, Japan and Germany (Srivastava et al 2012, p.321). These economies have been placed in this bracket for being the best performing economies in the world for a substantial period of time. The measurement of the performance of the world economies led to the isolation of these world economies into clusters of super powers and super performers such as the three countries in the TRIAD and others in the categories of average performers and low performing economies. The evolution of the TRIAD economies It would be imperative to note here that the three economies of the world, famously referred to as the TRIAD in the economic circles have evolved independently and in different phases. This is more so because of the adversity and diversity of the setup of the countries economical as well as political systems. USA was the first country to become a super power after the country displayed a massive economic growth and development. The USA started attaining economic dominance soon after the world war one after it decided not to take sides in the war and concentrate on building itself up as a nation. When other powers such as Germany were busy in war, USA was busy remodeling itself as a world superpower. By the time the country decided to get into the world war after world war two and take side on the allies, the nation boasted of a strong economic base backed by a strong growth domestic product (GDP) of the nation. Japan could have easily topped over the USA as a super power but its involvement in the war which prompted a counter attack by the USA curtailed this development (Waheeduzzaman 2011, p. 111). Germany underwent a massive economic recession in the year 1939 during the great depression forcing it to devalue its currency. This somehow retarded its economy. Later on however, with the assistance of the USA and other nations, Germany regained its economic strength and even went further to overtake most nations so that it could claim its place among the three greatest economies of the world (Akroush, 2012, p. 345). The same case goes for Japan. After the bombing of Hiroshima and Nagasaki, the economy of Japan was disoriented (Sardy et al 2010, p. 12). The USA assisted the nation in the process of rebuilding itself. With a robust, huge and hardworking population of this nation, the economy of the country has rapidly evolved to become one of the major economies of the world, earning itself a place among the three economies forming the TRIAD. How TRIAD economies have sustained dominance The TRIAD economies have contributed massively to the designing, growth and development of the world international business in the world. The mode of conducting business in this level involves the use of multinational enterprises (MNEs). Countries who have a higher economic leverage such as the TRIAD command a major stake holding in this area. To be able to establish and maintain a strong business network spanning over the nations of the world, one has to make sure that the baseline and the foundation is well covered (Waheeduzzaman, 2011, p.110). The best way to do this is by ensuring that the economy of the nation is well stabilized. One of the ways TRIAD economies have managed to remain at the top is by having strong MNEs operating in different developing. This is one of the way through which nations invest in other nations. The TRIAD has successfully adopted this policy and that has contributed massively to the growth of the economies of the TRIAD nations. For instance, in USA, there exist number huge multinational firms whose scope of operations spans over many nations (Chang, 2011, p.175). The likes of general electric, coca cola Company amongst other large companies form just a few of these MNEs. In Japan, Toyota Company has managed to break up ground as being one of the biggest and far reaching MNEs in the world today while Germany has Buyer, Tetra, and Mercedeze-Benze among others. These businesses are built upon solid ground backed with massive resources. TRIAD has also promoted trade between themselves and decreased trade with less powerful economies. The classical theory of trade has evolved to be referred to as neoclassical theory of international trade (Haberler 1954 P.544). According to these theory countries with similar preferences in terms of goods, services and technology enjoys benefits of exchange of skilled labor such as higher production, high wages and employment opportunities, stable prices, proper allocation of resources and increase in gross domestic products (Stojanov and Jakovac 2012 P.22). Increased trade between these economies suppressed the growth of other economies. Export helps to create employment, bring in foreign exchange and helps in national developments Another way that TRIAD economies have used is the application of the massive resources that the nations have from their wide reserves (Sardy et al 2010, p.8). The TRIAD has vast resources at their disposal due to their high Gross Domestic Product and they use these resources voluntarily and strategically to make sure that they attain a competitive advantage over their counterparts in the world business. Most of developing countries borrow money for infrastructure and economic development from the superpowers’ economies. And in turn the lending nations lobby for favors from borrowing nations. The emerging economies Among the emerging economies, China, India and Russia are listed as the most notable emerging economies in the modern world (Baum& Kabst, 2013, p. 176). The basic common factor between the three nations is presence of a large population which forms the market for the products of these nations. This large population has become the largest consumer of the products from these nations and with the great increases in the GDP levels; the countries in the emerging economies bracket could be poised for great economic prosperity. For example China and India boast of a population ranging a billion people. Most of the products manufactured locally by industries in these emerging nations have been consumed by the local population (Chang, 2011, p.171). However, with the emergence of new ways of doing things and the advancement of technology, these nations have increasingly found themselves in positions where they have the capacity to manufacture goods and products in excess forms allowing them to have the liberty to engage themselves in world commerce (Dowling&Donnelly, 2013, p. 173). For instance, amongst these countries, China, Russia and India, China has managed to place itself in a position where it is producing products in excess and thus exporting to other nations. Africa, for instance has been the greatest market for the commodities from the Chinese nation. India has been increasingly become a hub where ICT is developed and sold to other nations of the world (Alserhan, 2010, p.32). Russia is also becoming increasingly a parental nation for the development and production of many industrial and engineering products. Patterns of international business Borrowing the concept from the classical and contemporary theory, the three emerging economies have been proven to adhere to the models expressed in these theories. For instance, Russia ditched its communist policy in favor of the more contemporary capitalist policy. India is a purely capitalist nation whereas China is increasingly adopting the concepts of capitalism which embraces the values of payment for hard work earned and a collective bargain for the whole state (Momaya, 2011, p. 153). The emerging economies of the world pose as a threat to the business development of the TRIAD economies. One of the ways this is happening is through the massive expansions and investment, mostly foreign domestic investments (FDIs) that these nations are making in other nations, notably the African states (Parhizgar, 2010, p.75). China for instance has been very vocal and very instrumental in the investment in various states in the African continent (Sandy et al 2010, p.10). The country boasts of having large MNEs who compete for similar world contracts as other major companies in the TRIAD. This competition has led to the lowering of the market prices pushing profits to a low level. The countries have also been instrumental in the provision of qualified and cheaper labor to the world market. India for example has been noted for churning out workers who are well qualified and who possess the skills required for many other nations. This forces the prices of labor to decline thus low cost of production, low prices and higher profits. Therefore the products produced in these countries are priced at a lower rate as compared to those of the TRIAD. Pricing is one aspect of competitive advantages of an economy and for this reason people opt to go for the products from the emerging nations and ignore the highly priced products from TRIAD economies. In any economy chain of supply as stated by Porter’s Diamond theory is influenced by production factors, domestic demands of a product, sustaining industries, organizational structures and government (Amiri Aghdaie at el 2012, P.131). This theory supports that economies that depends on both local market and international markets are successful than economies that depends on exports. The Multinational companies should diversify their market to both developing and developed economies. Therefore the emerging market that trade in local market and international market are competing with TRIAD economies that for a long time have ignored other factors that influence trade. Conclusion TRIAD economies have been dominating world economies by having an upper hand in the global business and influencing import and export worldwide as well as the way multinational work across the globe. In most cases these economies have established strong ties amongst themselves, have reduced trade barriers thus easing movement of labor, capital goods and services. They had also reduced trade between them and the developing economies. However other countries have developed their economies by venturing into the markets that have been ignored by these super powers increasing their competitive advantages. The TRIAD is at the threat of losing its dominance on world business to the emerging nations. Their evolution on political, economic, cultural and social strategy and the threats they pose to the TRIAD in the world of business is real and there is need to address these issues to allow equal business environment for both emerging and developed economies. These nations which form the TRIAD should come up with new and clear cut strategies that are in alignment with current trade factors such as supply and demand, political and economic risks and pricing to increase their competitive advantages. References Akroush, M.N 2012. ‘Organizational capabilities and new product performance: The role of new product competitive advantage’, Competitiveness Review: An International Business Journal, Vol. 22, No.4, pp.343 – 365. 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