Differentiate between natural and strategic competition. Give examples.
What will be an ideal response?
Natural competition refers to the survival of the fittest in a given environment. It is an evolutionary process that weeds out the weaker of the two rivals. Strategic competition may be defined as “studied deployment of resources based on a high degree of insight into the systematic cause and effect in the business ecological system.” The following example comparing Japan and the U.S. illustrates the difference between natural and strategic competition.
Japan is a small group of islands whose total land area is smaller than a number of our 50 states. The U.S., by comparison, is a vast land.
Japan is mountainous with very little arable land. The U.S. is the world’s largest and most fertile agricultural area in a single country.
Japan has virtually no energy or natural resources. The U.S. is richly endowed with energy, minerals, and other vital resources.
Japan has one of the oldest, most homogeneous, stable cultures. For 2,000 years or more, there was virtually no immigration, dilution of culture, or foreign invasion. The U.S. has been a melting pot of immigrants from many cultures speaking many languages over one-tenth of that time span. For most of our history, the U.S. has been an agrarian society and a frontier society.
The Japanese developed a high order of skill in living together in cooperation over many centuries. Americans developed a frontier mentality of self-reliance and every man for himself.
The evolution of the U.S. into a vast industrial society was a classic example of natural competition in a rich environment with no constraints or artificial barriers.
This option was not open to Japan. It had been in self-imposed isolation from the rest of the world for several hundred years until Commodore Perry sailed into Tokyo harbor and forced the signing of a navigation and trade treaty. Japan had been unaware of the industrial revolution already well underway in the West. It decided to compete in that world. But it had no resources.
To rise above a medieval economy, Japan had to obtain foreign materials. To obtain foreign materials, it had to buy them. To buy abroad required foreign exchange. To obtain foreign exchange, exports were required. Exports became Japan’s lifeline.
But effective exports meant the maximum value added, first with minimum material and then with minimum direct labor. Eventually this led Japan from labor-intensive to capital-intensive and then to technology-intensive businesses. Japan was forced to develop strategic business competition as part of the national policy.
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