Question

Discuss the major environmental factors driving increased global competition today?
(20Marks)

Answer 1

I am assuming that here environment is not used in the literal sense but as a general term for business, social, political, legal & economical environment.

I think following are the major factors that are driving increased global competition today :

1. Trump Government - Trump administration is putting a lot of emphasis on American companies to do business in America and not in India and China and other countries. They have even imposed import duties on various Chinese products and also cut down on H1B Visas for Indian IT Professionals. This has triggered a trade war with China also imposing similar tariffs on US Products. This will not only result in increasing the number of jobs in US but also result in increasing the inflation as the costs of products made in US would be much higher than that in developing countries like India and China. Also, shifting of business to America will result in lot of spare capacity in countries where these products are currently being sourced from.

2. Oil Prices - As we know that economies of most of Middle Eastern countries is completely run by their oil reserves. However, recentlly there has been a major drop in crude oil prices - from $120/barrel it came down to $40/barrel and is now around $60/barrel. OPEC countries purposefully increased production so that oil rates would come down. They did this so that the shale gas producers of America will not be able to compete and will shut their shops. This however was not successful as now the oil prices have started to increase. Oil, being one of the largest traded commodity in the world plays a vital role in determining the competetiveness of industries.

3. Climate Control - With global warming reaching alarming levels, countries have become very sensitive to protecting the environment. Every country wants to wash its hand off traditionally more polluting industries. In this respect, lot of industries have moved from America and Europe to developing coutries of Asia and South America. Lot of change in technology is also planned with focus on Electric mobility. Countries which will be able to embrace electric technology faster will be better placed in the competition

There can be many more. If you want more points, please write in comments and I will revert.