Globalization of Competition: The Global Rule of Three and the New Triad Power

Abstract

In this article, the authors provide an overview of the Global Rule of Three. Competitive markets grow, consolidate, and mature, ultimately leading to the emergence of three full-line generalists. The financial performance of full-line generalists gradually improves with greater market share, while the performance of specialists drops off rapidly as their market share increases. Businesses that lack the scale and scope advantages of generalists, and the focus and service advantages of specialists get stuck in between—in the ditch range. The Rule of Three structure generates optimal operational efficiency in competitive markets and positive impact on all stakeholders. It represents an empirical reality that must be factored into the strategy of businesses of all sizes. Competitive markets evolve in a predictable fashion across industries, and they go through similar lifecycles. Many generalists that are dominant in their countries or regions are unable to exert the same leadership when the market globalizes. Each century has been marked by the successes of different regions and cultures. The old triad power which consisted of Western Europe, North America, and Japan is being replaced by America, China, and India. The new triad power comes with possible problems, especially between China and the US. Their differences will inevitably create tensions, and India will increasingly become a more strategic partner to both. Increasing demand for the world’s limited resources will necessitate resource-driven global expansion for enterprises and nations, further transforming the way business is conducted in the 21st century.