Competitive advantages of the company. Competitive advantage of firms globally

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Firm competitiveness

External competitive advantage

External competitive advantage is based on the distinctive qualities of the product, which are of value to the buyer by either increasing the efficiency of his work, or reducing his costs, or higher emotional and aesthetic satisfaction. External competitive advantage strengthens the firm's position in the market, since the firm can force the market to buy its product at a price higher than that of the main competitor, which does not provide a corresponding difference. Thus, the external competitive advantage rests on the strategy of differentiation (difference).

Internal competitive advantage

Internal competitive advantage is based on the superiority of the company in costs and in management, which create value for the seller, which makes it possible to obtain the cost of production less than that of competitors. Internal competitive advantage enables a firm to be more profitable and more resilient to price cuts that the market may impose. In addition, the firm may have advantages in the distribution and promotion of its products.

A firm's ability to realize and protect its competitive advantage depends on how successfully it can withstand the pressure of competitive forces operating in the market. According to the known model M. Porter:

Every firm in the market is subjected to five competitive forces:

industry competition;
the threat of new competitors;
the threat of substituting a product or service;
dependence on consumers;
dependence on suppliers.

Industry competition

In order to compete with existing competitors in the industry, product differentiation and strengthening of the brand image is necessary. Differentiation reduces the consumer's sensitivity to price and partially neutralizes the firm's dependence on it, that is, reduces the consumer's ability to bargain. In addition, the presence of an element of differentiation reduces the pressure on the firm from other competitive forces.

To ensure successful differentiation, it must be of real value to the buyer, which would be high enough for him to agree to pay an increased price for it; so that this price covers costs and provides the company with the necessary profit. In addition, the firm must protect the element of differentiation from competitors so that they cannot quickly replicate it. The firm must make the element of differentiation known, control its lifespan, and monitor how its value changes in the eyes of consumers.

The threat of new competitors

The threat of the entry of new competitors depends on the height of the barriers to protection against them and the strength of the reaction that a potential competitor can expect.

Possible barriers to protection against the arrival of new competitors

cost savings due to economies of scale if the firm has a large market share;
initial costs when entering the market - patent, know-how, access to raw materials, etc.;
government policy - licensing, quality, safety requirements, etc.;
differentiation of a product or service that creates a consumer commitment to a particular product or service;
consumer costs in the event of a change of supplier - retraining of personnel, new auxiliary equipment, etc.;
difficulty in accessing distribution channels.

The existence of barriers to entry and the firm's ability to fight back deter potential competitors from entering the market.

Threat to substitute a product or service

In effect, the prices of substitute goods determine the price ceiling that firms in the market for the good can charge. The more attractive a substitute product is to users, the more limited are the possibilities of price increases for the product itself. For example, rising oil prices have contributed to the development of nuclear and solar energy. It is clear that substitute products that show a tendency to improve the quality-price ratio should be the object of constant monitoring. Particular attention should be paid to the costs of producing an existing product (it is desirable to reduce them), as well as the costs of switching the buyer to a substitute product, which it is desirable to increase.

Dependence on consumers

Buyers, playing on the existing competition, can put some pressure on the firm, i.e. they can force the firm to reduce the price, provide more services for the same price or more favorable payment terms, etc. Clients are able to achieve more profitable for themselves conditions if:

the volume of purchases of a group of clients makes up a significant proportion of the firm's sales;
the company's products are poorly differentiated, that is, they differ little from competitors' products, and customers are confident that they can easily change suppliers;
transition costs associated with changing suppliers are insignificant for the client;
the goods purchased are an important part of the client's costs, which encourages him to bargain especially hard;
the client has comprehensive information about the demand in the market and about the costs of the supplier.

Thus, the firm should try to select clients in such a way as to avoid any form of dependence on them. This is where ABC consumer analysis can help.

Dependency on suppliers

The conditions under which supplier firms have the opportunity to put pressure on customers are similar to those that were considered in relation to customers:

the group of suppliers is more concentrated than the group of their customers;
suppliers are not threatened by substitute products;
the firm is not an important customer for the supplier;
the product is an important means of production for the client;
the supplier has differentiated its products or created high switching costs that have tied the client to it.

Summarizing the consideration of the five main competitive forces acting on any firm operating in the market, we can say that, depending on the market situation, the competitiveness of the firm and its potential profit can vary significantly between two extreme cases.

1. The competitiveness of the firm is low, the potential profit is minimal when:

entry to the market is free;
the company does not have the opportunity to bargain with either its customers or suppliers;
competition in the market is great;
The firm's products are not differentiated or poorly differentiated.

2. The competitiveness of the firm is high and the potential profit is maximum when:

there are barriers blocking the entry of new competitors;
competitors in the industry are absent or weak and few in number;
buyers cannot turn to substitute products;
buyers are deprived of the possibility of pressure to achieve the possibility of lower prices;
suppliers do not have the ability to pressure to increase prices.

Real market situations lie between these extreme cases.

An example of a firm's competitiveness analysis

Let us consider how a real analysis of the competitiveness of the Russian concern Trikotazh, which manufactures and sells outerwear, was carried out. The analysis of competitiveness was carried out by the analytical group of the concern and consisted of the following steps:

1. For light industry enterprises in Moscow and the Moscow region (i.e., the region for which the Knitwear concern operates), a sample of firms was made:

producing similar products, i.e. knitwear firms;
satisfying the same need of buyers, but working on a different technology, i.e., sewing firms.

In total, there were 13 knitwear and 35 sewing firms.

2. Taking into account the fact that the market share of imported goods was 80% in the market of Moscow and the Moscow region, the market shares occupied by firms in the sample in paragraph 1 were calculated. The results of the calculation were presented in the form shown in the form tab. one.

Table 1. Calculation of market shares of competitors

No. p / p	Company name	Output volume (thousand pieces)	Sales volume (million rubles)	Share in total output (%)	Share in total turnover

3. Using the data of the table and industry directories, the closest competitors to the concern were identified according to the following parameters:

product similarity;
market share;
rates of growth.

Got 6 closest competitors. Two of them are knitwear enterprises: AOZT Krasnaya Zarya (1) and JSC Moskvichka (2); three - sewing: Raduga LLP (3), Start JSC (4), Sewing Fashion CJSC (5). The sixth competitor was the imported clothing market (see Table 2).

table 2. Analysis of the competitiveness of the concern "Knitwear"

Factors of competitiveness	Knitwear	Competitors
Factors of competitiveness	Knitwear	1	2	3	4	5	6
1. Enterprise management
Entrepreneurial culture and philosophy	4	2	3	3	2	3	2
Goals	5	1	2	5	2	4	2
Strategies	3	0	2	2	1	2	5
2. Production
Equipment	4	2	2	3	4	4	5
Flexibility of production lines	5	1	2	2	4	4	5
Dependency on suppliers	4	1	1	2	3	2	-
Product quality	4	2	2	3	3	4	4
3. Research and development
Intensity and results	3	0	1	3	2	2	5
know-how	3	0	1	3	1	1	5
Use of new information technologies	3	0	1	2	2	3	5
4. Marketing
Retail	5	1	2	3	2	2	5
Wholesale	1	3	3	2	2	3	5
Variety of assortment	4	1	2	3	2	2	5
Prices	4	3	3	2	3	3	5
Advertising	3	0	0	0	2	2	5
Firm fame	3	4	3	2	3	4	5
Own trading network	5	2	2	3	2	3	3
Quick response to changes in demand	3	0	1	1	2	3	5
fashion following	3	1	2	2	2	4	5
Total:	69	24	35	46	44	55	81

4. The analysis of the competitiveness of the concern "Knitwear" was carried out on the basis of an assessment on a five-point scale of the factors of competitiveness of this concern and its closest competitors, as shown in Table. 2. The analysis showed that the concern "Knitwear" has a fairly strong position compared to its closest competitors. The Russian consumer was no longer satisfied with the rather poor quality of goods imported from Turkey, China, India, Thailand and other countries of the East. At the same time, the average Russian could not afford to buy expensive European-made goods and American goods. Thus, a part of the market niche was identified, which could be filled if a replacement was found for a cheap but rather low quality product from the East and an expensive high-quality product from Europe and the USA. Necessary conditions: quality, reasonable prices, following the latest fashion, using natural materials.

The high performance of the Trikotazh concern in subsequent years confirmed the correctness of the analysis carried out and the strategy chosen on its basis.

Pavlovna N., Candidate of Technical Sciences, Professor of the Higher Commercial School of the Ministry of Economic Development and Trade of the Russian Federation.
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Strategic management is designed to ensure the survival of the company in the long term. Of course, when it comes to survival in a competitive market environment, there is no question that the company can drag out a miserable existence. It is very important to understand that as soon as someone from those who are associated with the company, this connection becomes not a joy, he moves away from the company, and after a while it dies. Therefore, survival in the long term automatically means that the company is quite successfully coping with its tasks, bringing satisfaction to those who enter the sphere of its business interaction with its activities. First of all, this applies to customers, employees of the company and its owners.

The concept of competitive advantage

How can an organization ensure its long-term survival, which must be inherent in it so that it can cope with its tasks? The answer to this question is quite obvious: the organization must produce a product that will consistently find buyers. This means that the product must be, firstly, so interesting to the buyer that he is ready to give money for it, and, secondly, more interesting to the buyer than a product similar or similar in consumer qualities produced by other firms. If a product has these two properties, then the product is said to have competitive advantages.

Therefore, a firm can successfully exist and develop only if its product has competitive advantages. Strategic management is called upon to create competitive advantages.

Consideration of the issue of creating and maintaining competitive advantages involves an analysis of the relationship and, accordingly, the interaction of three subjects of the market environment. The first subject is “our” company that produces a certain product. ect is a buyer who may or may not buy this product. The third killer is competitors who are ready to sell their products to the buyer that can satisfy the same need that and a product manufactured by "our" firm. The main thing in this market "love" triangle is the buyer. Therefore, the competitive advantages of a product are the value for the buyer contained in the product, which encourages him to buy this product. Competitive advantage does not necessarily arise from comparing "our" firm's product with competitors' products. It may be that there are no firms on the market offering a competitive product, yet the product of “our” firm is not for sale. This means that it does not have sufficient value for the buyer or competitive advantages.

Types of competitive advantages

What creates competitive advantage? It is believed that there are two possibilities for this. First, the product itself can have competitive advantages. One kind of competitive advantage of a product is its price feature. Very often, the buyer purchases a product only because it is cheaper than other products with similar consumer properties. Sometimes a product is bought just because it is very cheap. Such purchases can occur even if the product has no utility for the buyer.

The second type of competitive advantage is differentiation. In this case, we are talking about the fact that the product has distinctive features that make it attractive to the buyer. Differentiation is not necessarily related to the consumer (utilitarian) qualities of the product (reliability, ease of use, good functional characteristics, etc.). It can be achieved at the expense of such characteristics that have nothing to do with its utilitarian consumer properties, for example, at the expense of the brand.

Second, in addition to creating a competitive advantage in a product, a firm may be trying to create a competitive advantage in its product. market position. This is achieved by securing the buyer, or, in other words, by monopolizing part of the market. In principle, this situation is contrary to market relations, since in it the buyer is deprived of the opportunity to choose. However, in real practice, many firms manage not only to create such a competitive advantage for their product, but also to maintain it for a long time.

Strategy for creating competitive advantage

There are three strategies for creating competitive advantage. The first strategy is price leadership. With this strategy, the focus of the firm in the development and production of the product is cost. The main sources of creating price advantages are:

Rational business management based on accumulated experience;

Economies of scale by reducing costs per unit of output with an increase in production volume;

Savings on diversity as a result of cost reduction due to the synergistic effect that occurs in the production of various products;

Optimization of intra-company communications, contributing to the reduction of company-wide costs;

Integration of distribution networks and supply systems;

Optimization of the company's activities in time;

The geographic location of the company's activities, which allows to achieve cost reduction through the use of local features.

Bringing to life pricing strategy To create a competitive advantage for a product, a firm should not forget that its product must at the same time meet a certain level of differentiation. Only in this case, price leadership can bring a significant effect. If the quality of the price leader's product is significantly lower than the quality of similar products, then creating a price competitive advantage may require such a strong price reduction that it can lead to negative consequences for the firm. However, it should be borne in mind that the price leadership strategy and the differentiation strategy should not be mixed, and even more so, one should not try to implement them at the same time.

Differentiationis the second strategy for creating competitive advantage. With this strategy, the company tries to give the product something distinctive, unusual, that the buyer may like and for which the buyer is willing to pay. A differentiation strategy aims to make a product different from what competitors do. To achieve this, the firm has to go beyond the functional properties of the product.

Firms do not necessarily use differentiation to gain a price premium. Differentiation can help expand sales by increasing the number of products sold, or by stabilizing consumption, regardless of fluctuations in market demand.

In the case of implementing a strategy for creating competitive advantages through differentiation, it is very important to focus on consumer priorities and the interests of the buyer. Earlier it was said that the differentiation strategy involves creating a product that is unique in its own way, different from the products of competitors. But it is important to remember that in order to have a competitive advantage, it is necessary that the unusualness of the product, its novelty or uniqueness have value for the buyer. Therefore, the strategy of differentiation assumes, as a starting point, the study of the interests of the consumer. For this you need:

It is enough to clearly present not just who the buyer is, but who makes the decision on the purchase;

To study consumer criteria by which a choice is made when purchasing a product (price, functional properties, guarantees, delivery time, etc.);

Determine the factors that form the buyer's idea of the product (sources of information about the properties of the product, image, etc.).

After that, based on the ability to create a product of an appropriate degree of differentiation and an appropriate price (the price should allow the buyer to purchase a differentiated product), the company can begin to develop and manufacture this product.

A third strategy that a firm can use to create competitive advantage in its product is focus on the interests of specific consumers. In this case, the company creates its product specifically for specific customers. The concentrated creation of a product is connected with the fact that either some unusual need of a certain group of people is satisfied (in this case, the company's product is very specialized), or a specific system of access to the product is created (the system for selling and delivering the product). By pursuing a strategy of concentrated creation of competitive advantages, a firm can use both price attraction of buyers and differentiation at the same time.

As can be seen, all three strategies for creating competitive advantages have significant distinctive features that allow us to conclude that the company must clearly define for itself what strategy it is going to implement, and in no case mix these strategies. At the same time, it should be noted that there is a certain relationship between these strategies, and this should also be taken into account by firms when creating competitive advantages.

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As the world practice of market relations shows, the interconnected solution of these problems and the use of these principles guarantees an increase in the competitiveness of enterprises. The main directions for ensuring the competitive advantage of the organization are: the concentration of the company's resources to forestall the actions of competitors, keeping the initiative in the competition, providing resource potential to achieve the set goals, developing a flexible system for planning the company's activities in the market by substantiating an effective strategy for interacting with competitors.

The competitive advantage that various rivals (competitors) have in specific markets is an essential factor in the climate, or competitive situation, in the product market. Competitive advantage is determined by a set of characteristics, properties of a product or brand, which creates a certain superiority for the company over its direct competitors. Superiority is assessed by the relative, comparative state, position of the organization in relation to a competitor that occupies the best position in the product market or in a market segment. It can be external and internal.

Competitive advantage is extrinsic if it is based on the distinctive qualities of a product that constitute "customer value" in terms of cost reduction or efficiency gains. External competitive advantage increases the firm's market power, i.e., the firm's ability to force the market to accept a product price that is higher than that of priority (most dangerous) competitors that do not provide an appropriate distinctive quality. Internal competitive advantage is based on the superiority of the firm in terms of production costs, management of the firm or product, which creates "value for the manufacturer" and lower cost than a competitor. This advantage can be created by pursuing a strategy of cost dominance through the introduction of organizational and production innovation of the firm. Thus, the ratio of "market power" and "productivity" can characterize the level of competitive superiority of the firm over its competitors.

Diagnostics of the competitive environment requires not only an analysis of the state of various methods of competition, but also a study of the image of the product and the image of the organization. Indeed, by reducing the price of its product or service, the organization acquires the opportunity to strengthen its position in comparison with competitors. An increase in the price of a good or service leads to a decrease in the level of its competitive advantage. By improving the quality characteristics of the product, the company gains a significant advantage over its competitors, which, in turn, may be the basis for setting a higher price. If the organization keeps the price of its goods at the level of prices of competitive goods, then higher quality creates a leading position in the market for it, allows it to increase the number of consumers and, accordingly, the size of the market share occupied by the company.

Thus, the methodology for assessing competitive advantage is based on the essence of value, which is the source of obtaining an advantage (material, intangible, monetary, social and other values), and depends on its content, source of origin, dynamics of manifestation, scale of distribution and other conditions.

Consider the main factors of competitive advantage of organizations. Factors of competitive advantage of the organization are divided into external and internal.

The manifestation of external factors to a small extent depends on the organization, they are mainly formed from the level of competitiveness of the country. The factors that are achieved and implemented by the staff, where managers play a special role, are called internal.

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