Competitiveness

Literature
Competitive strategy Competitive advantage Competitive advantage of nations

Introduction
Competitiveness can be derived for companies, industries and economies (whether national, regional or local) Competitiveness is at the very hart of firms performance in competitive markets. However some firms lose this out of sight It gives an answer to the question of what is it that makes certain economic entities distinct from others in achieving success. When it comes to industries better competitor makes referring company a better one as well

Competitiveness
competitiveness - competitive advantage Competitive advantage helps make strategy more concrete and actionable. Activities provide the bridge between strategy and implementation Is a firm a collection of activities or a set of resources and capabilities?

Competitive advantage

??
Two questions underline the choice of competitive strategy: 1. Attractiveness of industries for long term profitability 2. Determinants of relative competitive position within an industry Firm has to resolve both

The structural analysis of industries

Industry's attractiveness depends on the rules of competition. Those rules are embodied in 5 competitive forces:

Elements of industry structure

Industry structure/buyer needs

Satisfying buyer needs is a necessary condition for profitability, but not sufficient for long term sustainability. The essential question is to capture the value for the buyer Threats: New entrants Buyers to powerful leaving firm with modest returns Substitutes, The power of suppliers Intensity of rivalry

Industry structure and supply /demand balance

How does supply/demand balance affect profitability? Entry barriers, exit barriers, intensity of rivalry

Relative position in an industry

Positioning determines firms position regarding average profitability of the industry Generic strategies are derived from two central distinctiveness a firm can have comparing to others: - Low costs - Differentiation

Generic strategies
1. 2. Low cost leadeership Differentiation Focus: Cost focus Differentiation focus

Three generic strategies

Generic strategies
Cost leadership: Broad scope of products, and serves a broad scope of industries, which results in economies of scale Differentiation: uniqueness in its industry along some dimensions widely valued by buyers Focus: focuser takes advantage of sub optimization in either direction by broadlytargeted competitors.

Stuck in the middle

Being all things to all people is a recipe for strategic mediocrity and below average performance, because it often means that firm has no competitive advantage at all. Who gets stuck in the middle- often focusers Firms stuck in the middle can also make certain profits if: Industry is highly attractive or Competitors are also stuck in the middle

Pursuing more than one generic strategy

Is possible but difficult because differentiation is usually costly When is it possible: 1. Competitors are stuck in the middle 2. Cost is strongly affected by share or interrelationships 3. A firm comes out with a major innovation

Sustainability

Other points
Industry evolution: changes in an industry can affect the bases on which generic strategies are built and thus alter the balance among them Organizational structure: generic strategy implies skills and requirements for success which translate into differences in organizational structure and culture. Planning needs to lean on generic strategy

Final thought
Industry leadership is not a cause but an effect of competitive advantage