trend toward the globalization of production and markets has several important

implications for competition within an industry.

1. Industry boundaries do not stop at national borders. Because many industries are

becoming global in scope, actual and potential competitors exist not only in a

company’s home market but also in other national markets. Managers who analyse

only their home market can be caught unprepared by the entry of efficient foreign

competitors. The globalization of markets and production implies that companies

around the globe are finding their home markets under attack from foreign

competitors.

2. Shift from national to global markets has intensified competitive rivalry in industry

after industry. National markets that once were consolidated oligopolies, dominated

by three or four companies and subjected to relatively little foreign competition, have

been transformed into segments of fragmented global industries where a large

number of company’s battle each other for market share in country after country.

This rivalry has threatened to drive down profitability and made it all the more critical

for companies to maximize their efficiency, quality, customer responsiveness, and

innovative ability.

3. Although globalization has increased both the threat of entry and the intensity of

rivalry within many formerly protected national markets, it has also created

enormous opportunities for companies based in those markets. The steady decline

in barriers to cross- border trade and investment has opened up many once

protected markets to companies based outside them.