Of the main advantages of the company is. Competitive advantages of the company

In the international market, firms compete, not countries. It is necessary to understand how a firm creates and maintains a competitive advantage in order to understand the role of the country in this process. At the present stage, the competitive capabilities of firms are not limited to the borders of their home country. The role of global strategies in creating competitive advantage should be addressed Special attention as these strategies completely change the role of the home country.

Let's start with the basic principles of competitive strategy. In competition in the domestic and international markets, many principles coincide. We then look at ways to enhance competitive advantage through global rivalry.

Competitive strategy

To understand the nature of competition, the basic unit is an industry (it does not matter whether it is processing or from the service sector), that is, a group of competitors producing goods or services and directly competing with each other. A strategically significant industry includes products with similar sources of competitive advantage. Examples include the manufacture of facsimile equipment, polyethylene, heavy-haul trucks and plastic injection molding equipment. In addition, there may be related industries, whose products - the same customers, production technology or distribution channels, but they have their own requirements for competitive advantage. In practice, the boundaries between industries are always very vague.

Many discussions about trade and competition use too much general definitions industries such as "banking", "chemical industry" or "mechanical engineering". This is a very broad approach, since both the nature of competition and the sources of competitive advantage vary significantly within each such group. For example, mechanical engineering is not a single industry, but dozens of industries with different strategies, for example, the production of equipment for the weaving industry, for the manufacture of industrial rubber goods or for printing, and each has its own special requirements to achieve a competitive advantage.

In developing a competitive strategy, firms strive to find and implement a way to profitably and lastingly compete in their industry. There is no universal competitive strategy; only a strategy that is consistent with the conditions of a particular industry, the skills and capital that a particular firm possesses can be successful.

The choice of a competitive strategy is determined by two main points. The first is the structure of the industry in which the firm operates. The nature of competition varies widely across industries, and the likelihood of long-term profitability varies across industries. For example, the average profitability in the pharmaceutical and cosmetics industries is very high, but not in the production of steel and many types of clothing. The second major point is the position that the firm occupies within the industry. Some positions are more profitable than others, regardless of the industry's average profitability per se.

Each of these points alone is not sufficient for choosing a strategy. Thus, a firm in a very profitable industry may not make a lot of profit if it chooses the wrong position in the industry. Both the structure of the industry and the position in it can change. An industry may become more (or less) “attractive” over time as the conditions for the creation of this industry or other elements of the structure of the industry change in the country. Position in the industry is a reflection of the never-ending war of competitors.

A firm can influence both the structure of the industry and the position in its "table of rank". Firms that are doing well not only respond to changes in the "environment", but also try to change it themselves to their advantage. A significant change in position in the competitive race entails changes in the structure of the industry or the emergence of new foundations for competitive advantage. So, Japanese firms that produce TVs have become world leaders due to the trend of transition to compact, portable TVs and the replacement of a semiconductor lamp element base. Firms in one country take over leadership from firms in another country if they are more capable of responding to such changes.

Structural analysis of industries

Competitive strategy should be based on a comprehensive understanding of the structure of the industry and the process of its change. In any branch of the economy - it does not matter whether it acts only on the internal market or on the external one too - the essence of competition is expressed by five forces: 1) the threat of the emergence of new competitors; 2) the threat of the appearance of goods or services - substitutes; 3) the ability of suppliers of components, etc. to bargain; 4) the ability of buyers to bargain; 5) the rivalry of existing competitors among themselves (see Figure 1).

Picture 1. Five forces driving industry competition

The significance of each of the five forces varies from industry to industry and ultimately determines the profitability of industries. In industries where the actions of these forces develop favorably (for example, in the production of soft drinks, industrial computers, in the software trade, in the production of medicines or cosmetics), numerous competitors can receive high returns on their capital invested. In the same industries where one or more forces are acting unfavorably (for example, in the production of rubber, aluminum, many metal products, semiconductor devices and personal computers), very few firms manage to maintain high profits for a long time.

The five forces of competition determine the profitability of an industry because they affect the prices that firms can dictate, the costs they have to incur, and the investment required to compete in the industry. The threat of new competitors diminishes the overall profitability of the industry because they bring new production capacity to the industry and seek to gain market share, thereby reducing positional profit. Powerful buyers or suppliers, when bargaining, benefit and reduce the firm's profits. Fierce competition in the industry diminishes profitability because it has to pay to stay competitive (advertising, sales, research and development (R&D) costs), or profits flow to the buyer through lower prices.

The availability of substitute products limits the price that firms competing in the industry can charge; higher prices will induce buyers to turn to substitutes and reduce industry output.

The importance of each of the five forces of competition is determined by the structure of the industry, that is, its main economic and technical characteristics. For example, the impact of the buyer is a reflection of such questions: how many buyers the firm has; what part of the sales volume falls on one customer; Is the price of the item a significant part of the total buyer's costs (this makes the item “price sensitive”)? The threat of the emergence of new competitors depends on how difficult it is for a new competitor to "penetrate" into the industry (this is determined by such indicators as the loyalty of buyers to any brand, the scale of the economy and the need to connect to a network of intermediaries).

Each sector of the economy is unique and has a structure inherent only to it. For example, it is difficult for a new competitor to enter the pharmaceutical industry, since it requires huge R&D costs and a large-scale economy when selling products to doctors. It takes a long time to develop a substitute for an effective drug, and buyers are not afraid of high prices at any time. The influence of suppliers is not significant. Finally, rivalry between competitors has been and remains moderate and is not focused on price knocks that reduce profits across the industry, but on other variables, such as R&D, that drive increased output across the industry. The presence of patents also discourages those who intend to compete by copying someone else's product. The structure of the pharmaceutical industry provides some of the highest return on investment in major industries.

The structure of the industry is relatively stable, but can still change over time. For example, the consolidation of distribution channels for goods, taking place in several European countries, increases the influence of the buyer. Through their strategy, firms can also change all five forces in one direction or another. For example, the introduction of computer information systems in airlines makes it difficult for new competitors to emerge, since such a system costs hundreds of millions of dollars.

Industry structure is important to international competition for a number of reasons. First, given the different structure in different industries, different requirements must be met to compete successfully. Competition in an industry as fragmented as apparel requires very different resources and skills than aircraft manufacturing. The conditions in the country for competition are more favorable in some industries than in others.

Secondly, the industries that are important for a high standard of living are often those that have an attractive structure. Industries with an attractive structure and a feasible environment for new competitors (in terms of technology, specialized skills, access to distribution channels, brand reputation, etc.) are often associated with high labor productivity and generate a large return on investment. The standard of living depends to a large extent on the ability of the country's firms to successfully enter industries with profitable structures. Reliable indicators of the “attractiveness” of an industry may not be the scale, rapidity of growth, or the novelty of technology (which are often highlighted by businessmen or government planners), but the structure of the industry. By targeting structurally disadvantaged industries, developing countries often misuse resources that they do not have much.

Finally, another reason for the importance of industry structure in international competition is that restructuring creates real opportunities for a country to enter new industries. So, Japanese companies producing copying equipment began to successfully compete with American leaders in this area (specifically - Xerox and IBM) due to the fact that they turned to a market sector that was almost ignored (small-sized copiers), used new approach to the buyer (selling through dealers instead of direct selling), changed the production (mass production instead of small-scale production) and the approach to pricing (selling instead of renting, which is expensive for the customer). This new strategy made it easier to penetrate the industry and negated the advantage of the former leader. How domestic conditions guide or force firms to recognize and respond to structural changes is critical to understanding “patterns of success” in international competition.

Position in the industry

Firms must not only respond to changes in the structure of the industry and try to change it in their favor, but also choose a position within the industry. This concept includes the approach of the firm as a whole to competition. For example, in the production of chocolate, American firms (Hershey, M&M "s / Mars, etc.) compete by producing and selling a relatively small range of chocolate varieties in huge quantities. On the other hand, Swiss firms (Lindt, Sprungli, Tobler / Jacobs, etc.) and others) trade mainly fine and expensive products through narrower and specialized distribution channels. They produce hundreds of products, use the highest quality components and a longer production process. As this example shows, position in the industry is the firm's approach to competition. , and not just its products or whoever it is intended for.

Competitive advantage determines position in the industry. Ultimately, firms outperform their rivals if they have a solid competitive advantage. Competitive advantage is divided into two main types: lower costs and product differentiation. Low cost reflects a firm's ability to design, manufacture, and sell a comparable product at less cost than its competitors. Selling a product at the same (or approximately the same) price as competitors, the firm in this case makes a large profit. Thus, Korean firms producing steel and semiconductor devices defeated foreign competitors in this way. They produce comparable goods at very low costs using a low-wage but highly productive labor force and modern technology and equipment purchased abroad or manufactured under license.

Differentiation is the ability to provide a customer with a unique and greater value in the form of a new product quality, special consumer properties or after-sales service. For example, German machine tool firms compete using a differentiation strategy based on high product performance, reliability and fast maintenance. Differentiation allows the firm to dictate high prices, which, at equal costs with competitors, again gives a large profit.

Any type of competitive advantage gives you higher productivity than the competition. A firm with a low production cost produces this value at a lower cost than competitors; a differentiated firm has a higher unit profit than its competitors. Thus, competitive advantage is directly related to the formation of national income.

It is difficult, but still possible to obtain a competitive advantage based on both lower costs and differentiation6. It is difficult to do this because the provision of very high consumer properties, quality or excellent service delivery inevitably leads to an increase in the price of the product; it will cost more than trying to just be on par with the competition. Of course, firms can improve technology or production methods so as to simultaneously reduce costs and increase differentiation, but ultimately competitors will do the same and force them to decide on what type of competitive advantage to focus on.

However, any effective strategy must address both types of competitive advantage, albeit strictly adhering to one of them. A firm focused on low costs must still provide acceptable quality and service. Likewise, the product of a firm producing differentiated products should not be so much more expensive than competitors' products that it would be to the detriment of the firm.

Another important variable in determining an industry's position is the scope of competition, or breadth of purpose, towards which a firm is oriented within its industry. The firm must decide for itself how many varieties of goods it will produce, which distribution channels to use, which customer base to serve, in which parts of the world to sell its products and in which related industries it will compete.

One of the reasons the area of ​​competition is important is that industries are segmented. Almost every industry has well-defined product varieties, multiple distribution and distribution channels, and several types of buyers. Segmentation is important because different market sectors have different needs: a regular men's shirt, sold without any advertising, and a shirt created by a famous fashion designer, are designed for buyers with very different needs and criteria. In both cases, we have shirts, but each has its own type of buyer. Different market sectors require different strategies and different abilities; accordingly, the sources of competitive advantage in different market sectors are also very different, although these sectors are “served” by the same industry. And a situation where firms from one country are successful in one sector of the market (for example, Taiwanese firms - in producing cheap leather shoes), while firms from another country in the same industry are in another sector (Italian firms in the production of fashionable leather shoes) are not uncommon.

The area of ​​competition is also important because firms can sometimes gain a competitive advantage through the scale of their goals, competing around the world, or by exploiting linkages between industries, competing in related industries. For example, Sony is greatly benefiting from the fact that a wide variety of electronic products with its brand, using its technology, and distributed through its channels are produced around the world. Interrelationships between clearly delineated industries arise from the commonality of important activities or skills among firms competing in these industries. The sources of competitive advantage around the world will be discussed below.

Firms in the same industry can choose different areas competition. Moreover, it is typical that firms from different countries in the same industry choose different areas of competition. Basically, the choice is this: to compete on a "wide front" or to target one sector of the market. Thus, in the production of packaging equipment, German firms offer lines of equipment for a wide range of purposes, while Italian ones tend to focus on highly specialized equipment used only in certain market sectors. In the automotive industry, leading American and Japanese firms produce a whole range of cars of different classes, while BMW and Daimler-Benz (Germany) primarily produce powerful, high-speed and expensive luxury cars and sports cars, and Korean firms Hyundai and Daewoo focused on on machines of small and ultra-small class.

The type of competitive advantage and the area in which it is achieved can be combined into the concept of typical strategies, that is, completely different approaches to what high performance in the industry is. Each of these archetypal strategies, depicted in Figure 2, represents a fundamentally different concept of how to compete and succeed in competition. For example, in shipbuilding, Japanese firms have adopted a strategy of differentiation and offer a wide variety of high quality vessels at high prices. Korean shipbuilding firms have adopted a cost leadership strategy and also offer a variety of types of ships, but not of the highest, but simply of good quality; however, the cost of Korean vessels is less than that of Japanese vessels. The strategy of successful Scandinavian shipyards is focused differentiation: they build mainly specialized types of ships, such as icebreakers or cruise ships. They use specialized technology and sell these vessels at a very high price to justify the labor costs, which are highly valued in the Scandinavian countries. Finally, Chinese shipbuilders, which recently began to actively compete in the global market (strategy - focus on the level of costs), offer relatively simple and standard ships at even lower costs and at even lower prices than Korean ones.

Figure 2. Typical strategies

Using the example of typical strategies, it becomes clear that no strategy is suitable for absolutely all industries. In contrast, many industries combine several strategies perfectly. Moreover, the structure of the industry limits the choice of possible strategy options, but you will not find an industry in which only one strategy can bring success. In addition, variants of typical strategies with different methods of differentiation or focusing are possible.

The concept of generic strategies is based on the idea that each of them is based on competitive advantage and that in order to achieve it, the firm must choose its own strategy. The firm must decide what type of competitive advantage it wants and in what area it is possible.

The biggest strategic mistake is the desire to “chase all the rabbits,” that is, to use all competitive strategies at the same time. This is a sure way to strategic mediocrity and lousy performance, because a firm trying to use all strategies at the same time will not be able to properly use any of them due to their built-in contradictions. An example of this is the same shipbuilding: Spanish and British shipbuilding companies are declining, because their production costs are higher than those of the Koreans, they have no basis for differentiation compared to the Japanese (that is, they do not produce anything that the Japanese would not ), but they could not find any market segments where they could get a competitive advantage (like, for example, Finland in the icebreaker market). Thus, they do not have a competitive advantage, and they are held mainly by government orders.

Sources of competitive advantage

Competitive advantage is achieved in terms of how a firm organizes and carries out individual activities. The actions of any company are divided into different types... For example, salespeople conduct telephone calls, service technicians perform repairs at the request of the buyer, scientists in the laboratory develop new products or processes, and financiers build up capital.

Through these activities, firms create specific values ​​for their customers. The ultimate value created by a firm is determined by how much customers are willing to pay for the goods or services offered by the firm. If this amount exceeds the total cost of all necessary activities, the firm is profitable. To gain a competitive advantage, a firm must either provide customers with about the same value as its competitors, but produce a product at a lower cost (lower cost strategy), or act to provide customers with a higher value product for which a higher price can be obtained ( differentiation strategy).

Competitive activities in a given industry can be categorized as shown in Figure 3. They are grouped together in a so-called value chain. All activities in the value chain contribute to use value. They can be roughly divided into two categories: primary activity (permanent production, marketing, delivery and service of goods) and secondary (providing production components, such as: technology, human resources, etc., or providing infrastructure functions to support other activities ), that is, supporting activities. Each activity requires purchased “components”, human resources, a combination of technologies, and is based on the infrastructure of the firm, such as management and financial activities.

The competitive strategy chosen by the firm determines the way in which the firm performs individual activities and the entire value chain. In different industries, specific activities have different implications for achieving a competitive advantage. Thus, in the production of printing presses, the development of technology, quality of assembly and after-sales service are indispensable for success; in the production of detergents, advertising plays the main role, since the manufacturing process is simple here, and there is no question of after-sales service.

Firms gain a competitive advantage by developing new ways of doing business, by introducing new technologies or initial components of production. For example, the Japanese firm Makita has become a leader in power tool manufacturing by using newer, cheaper materials and selling standard tool models from a single factory worldwide. Swiss chocolate companies have achieved worldwide recognition, as they were the first to introduce a number of new recipes (including creamy chocolate) and apply new technologies (for example, continuous mixing of chocolate mass), which significantly improved the quality finished products.

Figure 3. Value chain

But a firm is not only the sum of all its activities. A firm's value chain is a system of interdependent activities, between which there are links (linkages). These linkages arise when the method of an activity affects the cost or effectiveness of others. Relationships often lead to the fact that the additional costs of "adjusting" individual activities to each other pay off in the future. For example, more expensive design and components, or more rigorous quality control can help lower your after-sales service costs. Firms must incur such costs in line with their strategy in the name of competitive advantage.

Connections also require the alignment of different activities. In order not to disrupt the delivery time, for example, it is necessary that production, ensuring the supply of raw materials and components, auxiliary activities (for example, commissioning) are well coordinated. A clear agreement ensures timely delivery of the goods to the customer without the need to have expensive delivery vehicles (that is, a large fleet of cars, when you can get by with a small one, etc.). Aligning related activities reduces transaction costs, provides clearer information (making management easier), and replaces expensive transactions in one activity with cheaper transactions in another. It is also a powerful way to reduce the total time it takes to complete different activities, which is increasingly important for competitive advantage. For example, such an agreement significantly reduces the development and launch time of new products, as well as the acceptance of orders and delivery of goods.

Careful communication management can be a critical source of competitive advantage. Many of these connections are subtle and may be overlooked by competing firms. Benefiting from these connections requires both complex organizational procedures and trade-off decisions for the sake of profit later, including in cases where organizational lines do not intersect (such cases are rare). Japanese firms are particularly adept at managing communications. With their submission, the practice of overlapping new product development stages has become popular in order to simplify their release and reduce development time, as well as enhanced quality control “on-line” to reduce after-sales service costs.

To achieve a competitive advantage, you must approach the value chain as a system and not as a collection of components. Changing the value chain by rearranging, regrouping or even excluding certain activities from it often leads to a significant improvement in the competitive position. An example of this is the production of electrical appliances. Italian firms in this area completely changed the manufacturing process and used a completely new distribution channel, which made them the world's export leaders in the 1960s and 1970s. Japanese companies in the production of photographic equipment have become world leaders by putting single-lens reflex cameras on stream, introducing automated mass production and for the first time in the world organizing the mass sale of such cameras.

The individual firm's value chain, as it competes in a given industry, is part of a larger system of activities that can be called a value system (see Figure 4). It includes suppliers of raw materials, components, equipment and services. On the way to the final consumer, the product of a given firm often passes through the value chains of sales channels. Ultimately, the product becomes an aggregate element in the customer's value chain, who uses it in the performance of their activities.

Figure 4. Value system

Competitive advantage is increasingly determined by how well the firm can organize the entire system. The aforementioned links not only connect different types of activities of the company, but also determine the mutual dependence of the company, subcontractors and distribution channels. A firm can gain a competitive advantage by better organizing these relationships. Regular and on-time deliveries (a practice pioneered in Japan and known there as "kenban") can reduce a firm's operating costs and reduce inventory requirements. However, opportunities to save money by coordinating relationships are by no means limited to securing supplies and taking orders; it also includes R&D, after-sales service and many other activities. The firm itself, and its subcontractors, and the distribution network can benefit from being able to recognize and exploit such connections. The ability of firms in a given country to use links with suppliers and buyers in their home country largely explains the country's competitive position in the relevant industry.

The value chain provides a better understanding of the sources of cost benefit. The cost gain is determined by the amount of costs in all the required activity (in comparison with competitors) and can occur at any stage of it. Many managers view costs too narrowly, focusing on the production process. However, firms leading the way by reducing costs also benefit from developing new, cheaper products, using less expensive marketing, and lowering maintenance costs, that is, gaining cost benefits from all links in the value chain. In addition, to obtain a cost benefit often requires careful "adjustment" not only of relationships with suppliers and the distribution network, but also within the company.

The value chain also helps to understand the differentiation reserves. A firm creates special value for the buyer (and this is the point of differentiation) if it provides the buyer with such savings or such consumer properties that he cannot get by buying a competitor's product. In essence, differentiation is the result of how a product, ancillary services, or other firm's activities affect the buyer's activities. The firm and its customers have many points of contact, each of which can be a source of differentiation. The most obvious of these is how a product affects the customer's activities in which the product is used (say, a computer used to receive orders, or a laundry detergent). Value creation at this level can be called first-order differentiation. But virtually all products have a much more complex impact on buyers. Thus, a structural element included in a product purchased by a customer must be capitalized and - in the event of a failure in the entire product - repaired as part of the product sold to the end customer. At each stage of such an indirect influence of the product on the buyer's activities, new opportunities for differentiation open up. In addition, almost all of the company's activities in one way or another affect the buyer. For example, the contractor's developers can help integrate the component into the final product. These high-order connections between the firm and customers are another potential source of differentiation.

The basis for differentiation is different in different industries, and this is of great importance for the competitive advantage of countries. There are several distinct types of firm-client relationships, and firms from different countries are taking different approaches to improve them. Swedish, German and Swiss firms are often successful in industries that require close cooperation with customers and high demands on after-sales service. In contrast, Japanese and American firms thrive where the product is more standardized.

The value chain concept provides a better understanding of not only the types of competitive advantage, but also the role of competition in achieving it. The scope of competition is important because it determines the direction of the firm's activities, how the activity is carried out, and the configuration of the value chain. Thus, by choosing a narrow target market segment, a firm can fine-tune its activities to the requirements of that segment and, as a result, potentially gain a cost or differentiation benefit over competitors working for a wider market. However, targeting the broad market can provide a competitive advantage if the firm is able to operate in different segments of the industry or even in several interconnected industries. For example, German chemical companies (BASF, Bayer, Hoechst, etc.) compete in the production of a wide variety of chemical products, but individual product groups are produced at the same factories and have common distribution channels. Likewise, Japanese consumer electronics firms such as Sony, Matsushita, and Toshiba benefit from related industries such as televisions, audio equipment, and VCRs. They use the same brands, worldwide distribution channels, common technology and joint purchasing for these products.

An important reason for the competitive advantage is that the company chooses a sphere of competition that is different from the one chosen by competitors (other market segment, region of the world), or by combining the products of related industries. For example, Swiss hearing aid firms have focused on high-powered hearing aids for the severely hearing impaired, outperforming American and Danish competitors on a broader front. Another common technique for enhancing competitive advantage is to be among the first firms to move to global competition, while other domestic firms are still confined to the domestic market. Home country plays important role how these differences manifest themselves in the area of ​​competition.

Firms gain competitive advantage by finding new ways to compete in their industry and entering the market with them, which can be summed up as “innovation”. Innovation in the broadest sense includes both improved technology and improved ways and methods of doing business. Specifically, renewal can be expressed in a change in a product or production process, new approaches to marketing, new ways of distributing a product, and new concepts of the sphere of competition. Innovative firms not only grasp the possibility of change, but they also force the change to happen faster. Strictly speaking, most of the changes are evolutionary, not radical; often the accumulation of small changes gives more than a major technological breakthrough. Moreover, the truth is often confirmed that “the new is the well-forgotten old”: many new ideas, in fact, are not so new, they just have not been properly developed. Innovation is equally the result of organizational improvement and R&D. It always involves an investment in skills and knowledge, and most often in fixed assets and additional marketing efforts.

An innovation leads to a change of leadership in competition if other competitors either have not yet recognized a new way of doing business, or are unable or unwilling to change their approach. There are a lot of reasons for this: complacency and complacency, inertia of thinking (a wary attitude towards new things), funds invested in specialized funds and equipment (this “ties hands”), and, finally, there may be “mixed” motives. Such "mixed" motives were, for example, at the Swiss watch firms, when the American firm Timex threw into the market cheap watches that could not be repaired, and the Swiss were all afraid to undermine the image of their watches as an equivalent of quality and reliability. In addition, their factories turned out to be completely unsuitable for the mass production of cheap products. However, without a new approach to competition, the challenger rarely succeeds (unless he changes the very nature of competition). Recognized leaders will more often than not immediately take decisive retaliatory actions and "avenge themselves."

On the international market, innovations that provide a competitive advantage anticipate new needs both in the home country and abroad. So, with the growing global concern for the safety of goods, Swedish firms Volvo, Atlas Copco, AGA and others have succeeded because they had foreseen this development in advance. However, innovations undertaken in response to a situation specific to the domestic market can achieve the opposite effect of the desired one - to postpone the country's success in the international market!

Opportunities for new ways of competing to emerge usually stem from some kind of “gap” or change in the structure of the industry. And it so happened that the opportunities that arose with such changes went unnoticed for a long time.

Some of the most common reasons for innovation that provide a competitive advantage are:

1. New technologies. Changes in technology can create new opportunities for product development, new ways of marketing, manufacturing or delivering, and improving related services. It is this that most often precedes strategically important innovations. New industries emerge when a change in technology makes it possible for a new product to emerge. Thus, German firms became the first in the X-ray equipment market, because X-rays were discovered in Germany. Leadership changes are likely to occur in industries where a dramatic change in technology is making the knowledge and assets of former industry leaders obsolete. For example, in the same X-ray and other types of medical equipment for this purpose (tomographs, etc.), Japanese firms have overtaken German and American competitors due to the emergence of new technologies based on electronics that have made it possible to replace traditional X-rays.

Firms "embedded" in old technology find it difficult to understand the meaning of a new technology that has just appeared, and it is even more difficult to respond to it. So, the leading American companies that produced radio tubes - RCA, General Electric, GTE-Sylvania - got involved in the production of semiconductor devices, and all to no avail! The same firms that started building semiconductor devices from scratch (for example, Texas Instruments) were more committed to the new technology, better adapted to it in terms of personnel and management, had the right approach to how to develop this technology.

1. New or changed customer requests. Competitive advantage often arises or changes hands when buyers have completely new needs or their views on "what is good and what is bad" change dramatically. Those firms that are already entrenched in the market may not notice or be unable to respond appropriately, because in order to respond to these requests, a new value chain must be created. For example, American fast food companies have achieved an advantage in many countries because customers needed cheap and always available food, and restaurants were slow to respond to this demand, because the fast food chain operates in a completely different way than a traditional restaurant.
2. The emergence of a new segment of the industry. Another opportunity to gain a competitive advantage arises when an entirely new segment of the industry is formed or when existing segments are regrouped. Here there is an opportunity not only to reach a new group of buyers, but also to find a new, more efficient way to produce certain types of products or new approaches to a certain group of buyers. A striking example of this is the production of forklift trucks. Japanese firms have spotted a neglected segment - small multipurpose forklift trucks - and tackled it. At the same time, they achieved the unification of models and highly automated production. This example shows how, by taking on a new segment, you can greatly change the value chain, which can be a very difficult task for competitors already established in the market.
3. Changes in the cost or availability of production components. Competitive advantage often changes hands due to changes in the absolute or relative costs of components such as labor, raw materials, energy, transportation, communications, media, or equipment. This indicates a change in the conditions of suppliers or the possibility of using new or different components in terms of their qualities. The firm achieves a competitive advantage by adapting to new conditions, while competitors are tied hand and foot by investments and tactics adapted to old conditions.

A classic example is the change in the ratio of the cost of labor between countries. Thus, Korea, and now other Asian countries have become strong competitors in relatively simple projects of international construction, when in more developed countries ah salary has risen sharply. Recently, the sharp drop in the prices of transport and communications opens up opportunities to reorganize the management of firms and thus gain a competitive advantage, for example, the ability to rely on specialized suppliers or expand production around the world.

1. Changes in government regulation. Changes in government policies in areas such as standards, the environment, new industry requirements, and trade restrictions are another common incentive for innovation that brings competitive advantage. Existing market leaders have adapted to certain "rules of the game" from the government, and when these rules suddenly change, they may not be able to respond to these changes. American exchanges benefited from reduced regulation of securities markets in other countries because the US was the first to introduce the practice, and by the time it spread throughout the world, American firms had already adapted to it.

It is important to react quickly to changes in the structure of the industry

The above can give firms a competitive edge if firms understand their importance in time and take a decisive offensive. In many industries, these early movers have held the lead for decades. So, German and Swiss companies that produce dyes - Bayer, Hoechst, BASF, Sandoz, Ciba and Geigy (later merged into Ciba-Geigy) - took the lead even before the First World War and have not surrendered their positions so far. Procter & Gamble, Unilever and Colgate have been world leaders in detergents since the 1930s.

Early birds gain the advantage of being the first to capitalize on economies of scale, lowering costs through intensive training, building brand image and customer relationships at a time when competition is not yet fierce, choosing distribution channels, or gaining the best plant locations and the best profitable sources of raw materials and other factors of production. A quick reaction to a new situation can give the firm a different kind of advantage that it may be easier to retain. The innovation itself may be copied by competitors, but the benefits gained from it often remain with the innovator.

Early birds benefit the most in industries where economies of scale are important and where customers have a strong hold on their subcontractors. In such circumstances, it is very difficult for a well-established competitor to challenge. How long an early riser can maintain an advantage depends on how soon there are changes in the industry structure that negate that advantage. For example, in the manufacture of consumer packaged goods, customer loyalty to a given brand of product is very strong and changes in the situation are minor. Firms such as Ivory Soap, M&M "s / Mars, Lindt, Nestle and Persil have held their ground for generations.

Every major change in the structure of the industry creates the opportunity for new early birds. For example, in watchmaking, the emergence of new distribution channels, mass marketing and mass production in the 1950s and 1960s allowed the American firms Timex and Bulova to surpass their Swiss competitors in terms of sales. Later, the transition from mechanical to electronic watches created a "breakthrough" that allowed the Japanese firms Seiko, Citizen, and then Casio to get ahead. That is, the "early birds" who win in one generation of technology or product may well be the losers when changing generations, since their investments and skills are specialized in nature.

But the above example with the watch industry reveals another important principle: "early birds" will succeed only if they can correctly predict changes in technology. American firms (for example, Pulsar, Fairchild and Texas Instruments) were among the first to take up the production of electronic watches, based on their position in the production of semiconductors. But they relied on watches with LED indicators (LEDs), and LEDs were inferior to liquid crystal indicators (LCDs) in cheaper watch models, and traditional hand indication in combination with quartz movement in more expensive and prestigious models. Seiko, on the other hand, decided not to produce watches with LEDs, but from the very beginning focused on watches with LCD and quartz analogue watches. The introduction of LCD and quartz watch movements ensured Japan's leadership in mass watch sales, and Seiko's world leadership in the industry.

Notice what is new and implement it

Information plays an important role in the updating process: information that competitors are not looking for; information not available to them; information available to everyone, but processed in a new way. Sometimes it is obtained by investing in market research or R&D. And yet, strikingly often, innovators are firms that simply look for the right place, without complicating their lives with unnecessary reasoning.

Often, innovation comes from outsiders in the industry. The innovator can be a new firm whose founder entered the industry in an unusual way, or simply was not appreciated in an old firm with a traditional mindset. Or, managers and directors who have not previously worked in the industry, and therefore are more able to see the opportunity for innovation and more actively implement these innovations, can act as innovators. In addition, innovation can occur when a firm expands its business and brings new resources, skills, or perspectives to another industry. Another country with different conditions or methods of competition can serve as a source of innovation.

“Outside” people or firms are often more likely to see new opportunities or have different skills and resources than those of long-standing competitors — just those that are needed to compete in a new way. Leaders of innovative firms are often outsiders in a latent, social sense (not in the sense that they are the dregs of society), they just do not belong to the industrial elite, they are not even recognized as full competitors, and therefore they will not stop before to violate established norms or even use not very fair methods of competition.

With rare exceptions, innovations come at the cost of tremendous effort. Success in applying new or improved methods of competition is achieved by the firm that stubbornly sticks to its line, despite all the difficulties. The strategy of the "lone wolf" or a small group works here. As a result, innovation is often the result of necessity, if not the threat of failure: fear of failure is far more stimulating than hope of victory.

For the reasons listed above, innovations often do not come from recognized leaders or even from large companies. The economies of scale in the performance of R&D, which play into the hands of large firms, are not so important, since many innovations do not require complex technology, and large companies, for various reasons, are often unable to see a change in the situation and respond quickly to it. In our study, along with large firms, we also analyzed smaller ones. Where large firms have found themselves in the role of innovators, they have often emerged as newcomers in one industry, with strong positions in another.

Why are some firms able to recognize new ways of competing and others not? Why do some firms guess such methods earlier than others? Why are some companies more likely to guess the direction in which the technology will develop? Why are there such tremendous efforts to find new ways? These intriguing questions will be central to subsequent chapters. The answers lie in terms such as the choice of direction for the firm's core efforts, the availability of the necessary resources and skills, and the forces that influenced the change. In all this, the national environment plays an important role. In addition, the extent to which conditions in a country are conducive to the emergence of the aforementioned domestic outsiders, and thus prevent foreign firms from taking over the country's leadership in existing or new industries, largely determines national prosperity.

Maintain the advantage

How long you can maintain a competitive advantage depends on three factors. The first factor is determined by what the source of the advantage is. There is a whole hierarchy of sources of competitive advantage in terms of their retention. Low-ranked benefits, such as cheap labor or raw materials, can be obtained fairly easily by competitors. They can copy these advantages by finding another source of cheap labor or raw materials, or they can negate them by producing their products or drawing resources from the same place as the leader. For example, in the production of consumer electronics, Japan's labor price advantage has long since ceded to Korea and Hong Kong. In turn, their firms are already threatened by even cheaper labor costs in Malaysia and Thailand. Therefore, Japanese electronic firms are transferring production overseas. Also at the bottom of the hierarchy is an advantage based solely on the scale factor from the use of technology, equipment, or techniques borrowed from (or available to) competitors. Such economies of scale disappear when new technology or methods make old ones obsolete (similarly, when there is the new kind goods).

Higher-order benefits (proprietary technology, differentiation based on unique products or services, a firm's reputation based on enhanced marketing efforts, or close customer relationships reinforced by the cost to change suppliers) can be retained for longer. They have certain characteristics.

First, achieving these benefits requires greater skill and ability — specialized and more trained personnel, appropriate technical equipment, and, in many cases, close relationships with key customers.

Second, higher-order benefits are usually possible with long-term and intensive investments in manufacturing facilities, in specialized training of personnel, often fraught with risks, in R&D or in marketing. Certain activities (advertising, sales of products, R&D) create tangible and intangible values ​​- a firm's reputation, good customer relationships and a knowledge base. Often the first to react to a changed situation is the firm that has been investing in these activities longer than its competitors. Competitors will have to invest as much, if not more, to reap the same benefits, or invent ways to achieve them without spending so much. Finally, the longest-lasting benefits are the combination of high capital investment with better performance, which makes the benefits dynamic. Constant investments in new technologies, marketing, development of a branded service network around the world or in the rapid development of new products further complicate the task for competitors. Higher-order benefits not only last longer but are associated with higher levels of productivity.

Benefits based on cost level alone are generally not as persistent as based on differentiation. One reason for this is that any new source of cost reduction, however simple it may be, can overwhelm the firm in a cost advantage. So, if labor is cheap, you can bypass a firm with much higher labor productivity, while in the case of differentiation, in order to bypass a competitor, you usually need to offer the same range of products, if not more. In addition, cost-only advantages are more vulnerable because the emergence of new products or other forms of differentiation can destroy the advantage gained from the production of old products.

The second determinant of competitive advantage retention is the number of clear sources of competitive advantage available to firms. If a firm relies on only one advantage (say, less expensive design or access to cheaper raw materials), competitors will try to take that advantage away from it or find a way to get around it by gaining on something else. Firms that have been in the lead for many years strive to provide themselves with as many advantages as possible at all levels of the value chain. So, Japanese small-sized copiers have modern design features that increase ease of use, they are cheap to manufacture due to a high degree of flexible automation, they are sold through a wide network of agents (dealers) - this provides a larger clientele than traditional direct sales. In addition, they are highly reliable, which reduces after-sales service costs. The fact that the company has a large number of advantages over competitors significantly complicates the latter's task.

The third and most important reason for maintaining a competitive advantage is the constant modernization of production and other activities. If a leader, having achieved an advantage, rests on its laurels, virtually any advantage will be copied over time by competitors. If you want to maintain an advantage, you cannot stand still: the firm must create new advantages, at least as fast as competitors can copy existing ones.

The main challenge is to relentlessly improve the firm's performance in order to leverage existing benefits, such as operating capacity more efficiently or providing more flexible customer service. Then it will be even more difficult for competitors to bypass it, because for this they will urgently need to improve their own indicators, for which they may simply not have enough strength.

Nevertheless, in the final analysis, in order to maintain a competitive advantage, it is necessary to expand the set of its sources and improve them, to move to higher-order advantages that last longer. This is exactly what Japanese car firms did: initially, they entered overseas markets with low-cost, small-class cars of reasonably high quality, succeeding at the expense of cheap labor. But even then, while still having this advantage, Japanese car manufacturers began to improve their strategy. They began to invest heavily in the construction of large factories with modern equipment and benefit from economies of scale, then they began to update the technology, being the first to implement the "just in time" system and a number of other methods to improve quality and efficiency. This gave a higher quality than that of foreign competitors, and, as a result, reliability and customer satisfaction with the product. Recently, Japanese automobile firms have become the technology leaders and are introducing new brands with enhanced consumer properties.

Changes are needed to maintain the advantage; firms must capitalize on industry trends without ignoring them in any way. Firms must also invest to protect sites that are vulnerable to competitors. Thus, if biotechnology threatens to change the direction of research in the pharmaceutical industry, a pharmaceutical company seeking to maintain a competitive advantage must immediately create a biotechnology base that surpasses that of its competitors. Hope that a competitor's new technology will fail, or ignore a new market segment or distribution channel are clear signs that a competitive advantage is slipping away. And such a reaction, alas, is common!

In order to maintain positions, firms sometimes have to give up existing advantages in order to gain new ones. For example, Korean shipbuilding firms became world leaders only when they dramatically increased the capacity of shipyards, significantly increased efficiency through new technologies, while reducing the need for labor, and mastered the production of more complex types of ships. All of these measures reduced the importance of labor costs, although Korea still had an edge in this regard at the time. The seeming paradox of giving up previous advantages is often scary. However, if the firm does not take this step, however difficult and counterintuitive it may seem, competitors will do it for it and ultimately win. How the “environment” in a country encourages firms to take such steps will be discussed later.

The reason that few firms manage to maintain leadership is because it is extremely difficult and frustrating for any successful organization to change strategy. Success breeds complacency; a successful strategy becomes routine; search and analysis of information that could change it stop. The old strategy takes on an aura of holiness and infallibility and is deeply rooted in the mindset of the firm. Any proposal to make a change is regarded as almost a betrayal of the interests of the firm. Successful firms often seek predictability and stability; they are overwhelmingly preserving the positions they have achieved, and changes are held back by the fact that the firm has something to lose. They think about replacing old advantages or adding new ones only when there is nothing left of the old advantages. And the old strategy is already ossified, and when the structure of the industry changes, the leadership changes. The innovators and new leaders are small firms, whose hands are not tied by history and previous investments.

In addition, the change in strategy is also blocked by the fact that the old strategy of the company is embodied in skills, organizational structures, specialized equipment and the reputation of the company, and with the new strategy they may not work. This is not surprising, because it is precisely on this specialization that the advantage is based. Rebuilding the value chain is difficult and costly. In large companies, moreover, the sheer size of the firm makes it difficult to change strategy. The process of changing strategy often requires financial sacrifices and troublesome, often painful changes in the organizational structure of the firm. Firms unencumbered by the old strategy and previous investments are likely to be cheaper to adopt a new strategy (purely financially, not to mention fewer organizational problems). This is one of the reasons the outsiders mentioned above are innovators.

Further, tactics to maintain a competitive advantage are in many ways unnatural for established firms in the industry. Most often, companies overcome the inertia of thinking and obstacles to the development of an advantage under pressure from competitors, the influence of buyers or difficulties of a purely technical nature. Few firms make significant improvements or change strategies voluntarily; most do this out of necessity, and this happens mainly under pressure from the outside (that is, the external environment), and not from the inside.

The management of companies that maintain a competitive advantage are always in a somewhat alarming state. It acutely senses the threat of its firm's leadership position from the outside and takes action in response. The influence of the situation in the country on the actions of the management of firms is an important issue that will be discussed in detail in subsequent chapters.

Competing in the global market

The above basic principles of competitive strategy exist regardless of whether the company operates in the domestic or international market. But when analyzing the role of the country in the formation of a competitive advantage, the interest is primarily represented by those industries where competition is international in nature. It is necessary to understand how firms achieve a competitive advantage through a strategy of acting in the international market and how this enhances the advantages gained in the domestic market.

The forms of international competition in different industries differ significantly. At one end of the spectrum of forms of competition is what might be called “multidomestic”. Competition in each country or small group of countries is essentially independent; The industry in question is present in many countries (for example, there are savings banks in Korea, Italy and the United States), but in each of them the competition is different. The reputation, circle of clients and capital of a bank in one country do not (or hardly affect) the success of its operations in other countries. MNCs may also be competitors, but the effect of their competitive advantages in most cases is limited to the borders of the country in which these companies operate. Thus, the international industry is, as it were, a set of industries (each within its own country). Hence the term - "multiple-national" competition. Industries where competition has traditionally been in this form include many types of trade, food manufacturing, wholesale, life insurance, savings banks, basic metal goods and corrosive chemicals.

At the opposite end of the spectrum are global industries in which the competitive position of a firm in one country significantly affects its position in other countries. Here the competition is on a truly global basis, with competing firms relying on the advantages that come from their operations around the world. Firms combine advantages gained in their home country with those gained through a presence in other countries, such as economies of scale, the ability to serve customers in many countries, or a reputation that can be established in another country. Global competition takes place in industries such as civil aircraft, televisions, semiconductors, copiers, automobiles and watches. The globalization of industries intensified especially after the Second World War.

With the extreme expression of the "plural-national" industry, achieving national advantage or competitiveness in the international market is not even a question. Almost every country has such industries. Most (if not all) of the firms competing in these industries are local, because when competition in each country follows its own rules, it is very difficult for foreign firms to achieve a competitive advantage. International trade in such industries is modest, if not absent altogether. If the firm is owned by a foreign company (which is rare), there is very little control by the foreign owner from its headquarters. Securing jobs in an overseas branch, being a “local corporate citizen” and where the necessary research is carried out (domestically or abroad) is not his concern: the national branch oversees all or almost all of the activities necessary to ensure competitive status. In industries such as trade or hardware manufacturing, there is usually no heated debate about trade issues.

In contrast, global industries are an arena for firms from different countries, where competition is fought in ways that significantly affect the economic prosperity of countries. The ability of a country's firms to gain a competitive advantage in global industries bodes well for both trade and overseas investment.

In global industries, firms have to compete in the international market willy-nilly to gain or not lose a competitive advantage in critical industry segments. True, in such industries there may well be purely national segments, due to the unique needs in such segments, only firms of this country can flourish. But focusing primarily on the domestic market, operating in a global industry, is a dangerous business, regardless of which country the firm is based in.

Achieve Competitive Advantage Through a Global Strategy

A global strategy can be called a strategy in which a firm sells its products in many countries, while applying a unified approach. The mere fact of transnationality does not automatically mean that there is a global strategy; if MNCs have branches that operate independently and each in their own country, this is not yet a global strategy. For example, many European MNCs, such as Brown Boveri (now Asea-Brown Boveri) and Phillips, and some American ones, such as General Motors and ITT, have always competed in this way, and yet this weakened their competitive advantage, giving competitors the opportunity to get ahead of them.

With a global strategy, the firm sells its goods in all countries (or at least in most countries) that are an important market for its products. This creates economies of scale that reduce the burden of R&D spending and enable the use of advanced manufacturing technology. The main issue is the placement of different links in the value chain and ensuring its work, so that the firm's goods can be sold around the world.

In a global strategy, there are two well-defined methods by which a firm can achieve a competitive advantage or offset various disadvantages due to country conditions. The first is the most advantageous location of various activities in different countries in order to best serve the global market. The second is the ability of a global firm to coordinate the activities of branches scattered around the world. The placement of the links in the value chain that are directly related to the buyer (marketing, product distribution and after-sales services) are usually tied to the buyer's placement. So, in order to sell its product in Japan, a firm usually needs to have sales agents or distributors there and provide after-sales service on site. In addition, the location of other activities may be tied to the location of the buyer due to high transport costs or the need for close interaction with the buyer. So, in many industries, production, delivery and marketing should be carried out as close to the buyer as possible. Most often, such a physical linkage of activities to the client is required in all countries where the firm operates.

In contrast, activities such as manufacturing and securing the supply of raw materials, etc., as well as ancillary activities (development or acquisition of technology, etc.) can be located regardless of the location of the client - such activities can be performed anywhere. As part of its global strategy, the firm locates such activities with the benefit of lower cost or worldwide differentiation. It could, for example, build one large factory for the global market, reaping the benefits of economies of scale. As such, very few activities are required to be performed only in the home country of the firm.

Decisions inherent only to a global strategy can be divided into two essential areas:

1. Configuration. In which and in how many countries is each activity in the value chain performed? For example, do Sony and Matsushita build VCRs at the same major plant in Japan, or are they building additional plants in the US and UK?
2. Coordination. How are dispersed activities (i.e. activities carried out in different countries) coordinated? For example, do different countries use the same brand and marketing tactics, or does each branch use a different brand and tactic that is tailored to local conditions?

In multinational competition, MNCs have autonomous branches in each country and operate them in much the same way that a bank manages securities. In the face of global competition, firms are trying to gain a much greater competitive advantage from their presence in different countries, locating their activities with a global focus and clearly coordinating them.

Configuration of activities in the global strategy

When planning its activities around the world in the framework of this industry, the firm is faced with the need to choose in two directions. First, should activities be concentrated in one or two countries, or scattered over many countries? Second: in which countries should this or that activity be located?

Concentration of activities. In some industries, a competitive advantage is obtained by concentrating activities in any one country and exporting finished products or parts abroad. This takes place in the following cases: when there is a large scale effect in the performance of a particular activity; when there is a sharp drop in production costs as a new product is mastered, due to which it is profitable to release products at one plant; when it is beneficial to place related activities in the same location, making it easier to reconcile. A focused, or export-driven, global strategy is typical of industries such as aircraft, heavy engineering, structural materials or products for Agriculture... As a rule, the activities of the firm are concentrated in the country of their home.

A focused global strategy is especially common in some countries. It is common in Korea and Italy. Today, in these countries, most of the goods are developed and produced within the country, and only marketing falls on foreign countries. In Japan, this strategy is followed by most of the industries in which the country is successful internationally, although Japanese firms are now rapidly dispersing activities such as purchasing raw materials or assembling operations for various reasons. The type of international competitive strategy encouraged and developed in a country determines the nature of the industries in which that country competes successfully in the international market.

Dispersal of activity. In other industries, they gain a competitive advantage or neutralize disadvantages from the conditions in the home country by dispersing their activities. Dispersal requires foreign direct investment. It is preferable in industries in which high transportation, communication or storage costs make concentration unprofitable or risky for various reasons (political reasons, unfavorable exchange rates or the danger of supply interruptions).

Dispersal is also preferable where local needs for different products vary greatly. The resulting need to carefully tailor products to local markets mitigates the economies of scale or falling costs as they are developed from using one large plant or laboratory to develop new products. Another important reason for dispersal is the desire to improve marketing in a foreign country; in this way the firm emphasizes its commitment to the interests of its customers and / or provides a faster and more flexible response to changing local conditions. In addition, the dispersal of activities across many countries also provides the firm with valuable experience and professionalism obtained through the analysis of information from different parts of the world (although the firm must be able to coordinate the activities of its branches).

In some industries, the government can very effectively induce a firm to choose a dispersal strategy through tariffs, non-tariff barriers, and national procurement. Very often, the government wants the firm to place the entire value chain in its country (they say, this will give the country additional benefits). Finally, the dispersal of certain activities sometimes allows gains at the expense of the concentration of others. Thus, by performing final assembly in your home country, you can “appease” your government and get freer import of components from large-scale centralized component factories located abroad.

Ultimately, the choice between concentration and dispersal depends on the type of activity being performed. In truck manufacturing, leaders such as Daimler-Benz, Volvo and Saab-Scania do most of their R&D at home and assemble in other countries. Best options concentration-dispersal in different industries are different, they can be different even in different segments of the same industry.

Here is an illustration of the above reasoning. Swedish firms in a number of mining-related industries use a highly dispersed strategy, as customers in this industry value close collaboration with equipment suppliers providing service and technical assistance. In addition, the mining industry is almost everywhere state-owned or heavily influenced by the public sector. Therefore, for political reasons, the firm needs to have branches abroad, since other governments prefer to have an equipment supplier in the country rather than import equipment. Swedish firms such as SKF (ball bearings) or Electrolux (electrical appliances) tend to adopt a strong dispersion strategy with large foreign direct investment and essentially autonomous subsidiaries; it is a result of the existing differences in the needs for certain products between countries, the need for close interaction with customers in marketing and service, as well as pressure from the governments of the countries where the firm operates. Swiss firms also tend to be dispersed across many industries, including trade, pharmaceuticals, food and dyes.

A global dispersal strategy with large foreign investment also applies to industries such as consumer packaged goods, healthcare, telecommunications and many services.

Activity placement. In addition to choosing places where this or that type of activity will be carried out, it is also necessary to select a country (or countries) for this. Usually all activities are initially concentrated in the home country. However, with a global strategy, a firm can perform assembly operations, manufacture assemblies and parts, or even carry out R&D in any country at its discretion - where it is most profitable.

The benefits of accommodation often manifest themselves in well-defined activities. One of the major advantages that a global firm possesses is the ability to distribute different types of activity between countries, depending on where it is preferable to produce one or another type of it. Thus, it is possible, for example, to produce computer components in Taiwan, write programs in India, and produce basic R&D in Silicon Valley in California.

The classic reason for the location of an activity in a particular country is the lower cost of factors of production. For example, assembly operations are carried out in Taiwan or Singapore in order to benefit from a well-trained, motivated, but cheap labor force. Capital is accumulated wherever possible, on the most favorable terms. For example, the Japanese company NEC, in order to expand its production capacity for the production of semiconductor devices, financed convertible debt not in Japan, where this practice is not common, but in Europe. It should be noted that global competition is causing an increasing dispersal of activities based on just such considerations. Many American firms are transferring production to the Far East (for example, almost all disc drives of American firms are produced there), and Japanese manufacturers of sewing machines, sporting goods, radio components and some other goods are actively investing in Korea, Hong Kong, Taiwan, and now in Thailand by locating production there.

Recently, there has been a tendency to move activities overseas, not only to take advantage of production costs there, but also to conduct R&D, gain access to specialized skills available in these countries, or develop relationships with key customers.

For example, German firms producing equipment for the manufacture of plastics and Swiss firms producing geodetic equipment have located design bureaus in the United States for the development of electronic control units. SKF (Sweden), the world leader in the production of ball bearings, now has a production and design base in Germany in close proximity to many German factories - leaders in various fields of mechanical engineering and from the automotive industry, which consumes ball bearings on a large scale.

Firms also locate their activities abroad if this is a prerequisite for their business operations in the respective countries. In some industries, the assembly, marketing, or service performed by a firm in a given country is critical to the sale of its products and services to consumers in that country. High-tech industrial air conditioners are a good example: industry leaders (American firms such as Carrier and Trane) are active in many countries to best suit local conditions and meet demanding service requirements.

Government directives also affect the location of the activity. Thus, many Japanese investments in the United States and Europe (in such industries as the production of cars and spare parts for them, consumer electronics, etc.) are caused by existing or possible restrictions on imports to Japan. Likewise, many Swedish, Swiss and American firms moved overseas before World War II because trade restrictions were more important then and transportation costs were higher (which is why their activities are often more dispersed than Japanese or German firms at that time.) the same industry). The once dispersed firm is difficult to bring under one control, as branch managers in different countries try to maintain the power and autonomy of their branches. The resulting inability of the firm to move to the more focused and coherent strategies needed to gain competitive advantage is one of the reasons for the loss of the latter in some industries.

However, this is not all the reasoning about the best location for this or that type of activity. After all, choosing the best location to locate the activities that determine the country where the firm is based (primarily strategy development, R&D and the most complex production processes) is one of the main issues discussed in this book. Suffice it to say that the motives for choosing countries to carry out a particular activity are by no means limited to the classical explanations given here.

Global coordination

Another important means of achieving competitive advantage through a global strategy is the coordination of the firm's activities in different countries. Coordination (coordination) of activities includes the exchange of information, distribution of responsibility and coordination of efforts of the firm. It can provide some benefits; one of them is the accumulation of knowledge and experience gained in different places. If the firm learns to better organize production in Germany, the transfer of this experience may come in handy at the factories of this firm in the USA and Japan. Conditions in different countries are always different, and this provides a basis for comparison and an opportunity to assess the knowledge gained in different countries.

Data from different countries provide information not only about a product or its production technology, but also about customer requests and marketing methods. By aligning the marketing activities of all its divisions, a firm with a truly global strategy can be alerted in advance of anticipated changes in the structure of the industry, see the dotted lines in the industry before they become obvious to everyone. Coordination of types of activities when it is dispersed can give a scale effect due to the division of the task into separate tasks for the branches, which determine their specialization. For example, SKF (Sweden) at each of its foreign factories produces different sets of ball bearings and, organizing mutual deliveries between countries, ensures that each of them has the entire range of products.

Diffusion of activities, if agreed, can enable the firm to react quickly to changes in exchange rates or the cost of factors. Thus, a gradual increase in production in a country with a favorable exchange rate can reduce overall costs; This tactic was used by Japanese firms in a number of industries in the late 1980s, as the Japanese yen was then strong.

In addition, coordination can enhance product differentiation in a firm whose customers are mobile or multinational. Consistency in the location of production of a particular product and in the approach to doing business on a worldwide scale strengthens the brand's reputation. The ability to serve multinational or mobile customers wherever they want is often critical. Coordinating the activities of subsidiaries in different countries can make it easier for a firm to influence the governments of those countries if the firm has the ability to expand or curtail its activities in one country at the expense of others.

Finally, the coordination of activities in different countries allows you to flexibly respond to the actions of competitors. A global firm can choose where and how to fight a competitor. She can, for example, give him a decisive battle where he has the largest production or influx Money, and thereby reduce the resources of the rival, which he needs to compete in other countries. IBM and Caterpillar used this defensive tactic in Japan. A firm that focuses only on the domestic market does not have this flexibility.

The sharply differing needs of buyers and local conditions from country to country make it difficult to harmonize activities in different countries, making the experience gained in one country not applicable in others. In such conditions, the industry becomes multinational.

However, while coordination has significant advantages, achieving it in the implementation of a global strategy is organizationally difficult due to its scale, language barriers, cultural differences and the need to exchange open and reliable information at a high level. Another serious difficulty is reconciling the interests of the managers of the branches of the firm with the interests of the firm as a whole. For example, the German subsidiary of a firm does not want to inform the US subsidiary of its latest advances in technology for fear that the American subsidiary will, by all means, bypass it in the annual debriefing. In other words, branches of a firm in different countries often see each other not as allies, but as competitors. Such annoying organizational problems lead to the fact that full coordination in global firms is the exception rather than the rule.

Benefits due to location and structure of the company

It is useful to divide the competitive advantage of a global firm into two types: resulting from the location of the activity (in which country it is located) and not depending on the location (based on the system of the firm's activities around the world). Country-based benefits derive either from the firm's home country or from other countries in which the firm operates. A global firm seeks to use the advantages gained in the home country to penetrate foreign markets, and can also use the benefits gained from performing certain activities abroad to enhance the advantages or compensate for disadvantages in the home country.

Benefits based on the firm's structure, however, result from the firm's total trade, the speed of product development in all of the firm's factories around the world, and the firm's ability to coordinate activities “at home” and abroad. Economies of scale in manufacturing or R&D are not in themselves tied to a country - a large plant or research center can be located anywhere.

To start global competition, it is necessary that some firms achieve an advantage in their countries that allows them to enter foreign markets. The competitive advantage achieved exclusively in the country where the firm is based is sufficient to trigger global competition. However, over time, successful global firms begin to combine the advantages achieved “at home” with the benefits of locating certain activities in other countries and from the firm's system of operations around the world. These additional advantages, combined with those achieved “at home”, make the latter more persistent, and at the same time compensate for the disadvantageous moments of the situation in the home country. Thus, the advantages of different sources are mutually reinforced. The overall economies of scale due to their worldwide location have allowed, for example, the German firms Zeiss (optics) and Schott (glass) to devote more R&D funds and better take advantage of the technology and demand in the home country.

Practice shows that firms that do not exploit and develop the advantages of their home country through a global strategy are vulnerable to competitors. It is the combination of advantages from the conditions in the home country, from the location of certain activities abroad and from the system of the global activities of the firm, and not each separately, that creates international success.

Now that the globalization of competition has become an established fact, the focus is on the benefits of firm structure and the location of activities in other countries. In fact, the benefits of home country conditions are usually more important than others (we will return to this topic in later chapters).

Choosing a global strategy

There is no single type of global strategy. There are many ways to compete, and each requires a choice of where to place the activity and how to coordinate it. Each industry has its own optimal mix. Most global strategies are an inextricable mix of trade and foreign direct investment. Finished products are exported from countries importing components and vice versa. Foreign investment reflects the location of production and marketing activities. Trade and foreign investment complement rather than replace each other.

The degree of globalization in different segments of the industry often differs, and the optimal global strategy is accordingly also different. For example, in the production of lubricating oils, there are two distinct strategies. In the production of automotive engine oils, competition is multinational in nature, that is, it is conducted separately in each country. Traffic patterns, climatic conditions and local legislation are different everywhere. During production, different brands of base oils and additives are mixed. Economies of scale are small and transport costs are high. Distribution and distribution channels, which are critical to competitive success, vary greatly from country to country. In most countries, the leaders are firms working for the domestic market (for example, Quaker State and Pennzoil in the US) or MNCs with autonomous subsidiaries (for example, Castrol in the UK). In the production of oils for marine engines, everything is different: here is a global strategy; ships move freely from country to country, and it is essential that every port they call in must have the right brand of oil in stock. Therefore, the reputation of the brand has become global, and successfully operating companies that produce oils for marine engines (Shell, Exxon, British Petroleum, etc.) are global companies.

Another example is the hospitality industry: competition in many segments is multinational, since most links in the value chain are tied to customer location, and differences in needs and conditions between countries reduce the benefits of coordination. However, if we consider high-class hotels or those designed primarily for businessmen, then the competition here is more global in nature. Global competitors such as Hilton, Marriott or Sheraton have properties scattered around the world, but use a single brand name, a single look, a single standard of service and a booking system from anywhere in the world, which gives them an advantage when serving business people, all the time. traveling around the world.

When the production process is broken down into stages, different degrees and patterns of globalization are also often observed. So, in the production of aluminum, the initial stages (enrichment and smelting of metal) are global industries. The next stage (production of semi-finished products, for example, castings or stampings from aluminum) is already a number of industries with multinational competition. Demand for different products varies from country to country, transportation costs are high, and so does the requirement for on-site customer service. The economies of scale throughout the value chain are very modest. In general, the production of raw materials and components is usually more global than the production of finished goods.

Differences in the types of globalization of different industry segments, stages of the production process and groups of countries create the possibility of drawing up focused global strategies aimed at a specific segment of the industry on a global scale. So, Daimler-Benz and BMW, having chosen this strategy, focused on high-performance and business-class cars with high technical performance, and the Japanese firms Toyota, Isuzu, Hino and others - on light trucks.

A firm with a focused global strategy focuses on a segment of the industry that is undeservedly forgotten by broad-based firms. Global competition can create entirely new segments of the industry, because a firm operating in a sector of its industry around the world can gain economies of scale on this basis. The reasons for this strategy can be different. For example, it is unprofitable to work in this segment of the industry in only one country because of the high costs. In some industries, this is the only correct strategy, since the benefits of globalization are achievable in only one segment (for example, expensive hotels for businessmen).

Global focus can be the first step towards a broader global strategy. A firm enters into global competition in this segment when it has unique advantages in its home country. For example, in industries such as automobiles, forklift trucks, and televisions, Japanese firms initially took hold of the foothold, focusing on an overlooked sector of the market — the most compact product of each of these industries. Then they expanded their product range and became world leaders in their industries.

Relatively small firms, not just large ones, can also compete globally. Small and medium-sized firms account for a large share of international trade, especially in countries such as Germany, Italy and Switzerland. They often focus on narrow segments of the industry or operate in relatively small-scale industries. A focused global strategy is also typical for MNEs from small countries such as Finland or Switzerland, and for small and medium-sized firms from all countries. For example, Montblanc (Germany) pursues such a policy in the production of expensive writing instruments, and most of the Italian companies producing footwear, clothing and furniture also compete around the world in a narrow segment of their industries.

Small and medium-sized firms tend to build their strategy primarily on exports - foreign direct investment is modest. Nevertheless, the number of medium-sized OLS is growing. For example, Denmark, Switzerland and Germany have many relatively modest MNEs that focus on certain segments of their industries. With limited resources, small firms find it difficult to enter foreign markets, identify needs in those markets, and provide after-sales services. These problems are handled differently in different industries. One way is to sell the goods through sales agents or their importers (typical for Italian firms), the other is to act through distributors or trading firms (typical for Japanese and Korean firms). Another way is to use industry associations to create a common distribution infrastructure, organize trade shows and trade fairs, and do market research. Thus, without cooperatives, the success of agricultural industries in Denmark would not have been possible. Recently, small firms have been forging alliances with foreign firms to compete globally.

Industry globalization process

The globalization of industries occurs because changes in technology, customer demands, government policies, or infrastructure within a country empower firms in some countries to “break away” from competitors in other countries or increase the value of the benefits that derive from global strategy. For example, in the automotive industry, globalization began when Japanese firms achieved a significant competitive advantage due to quality and productivity, the needs for cars in different countries became more similar (to a large extent due to the rise in fuel prices in the United States), and transportation costs for international transport fell ( and these are just some of the reasons).

Strategic innovation itself often opens up opportunities for industry globalization. International industry leadership is often the result of a firm discovering a way to make global strategy viable. For example, she might find a way to more cheaply adapt a product designed and manufactured in one location to different countries (say, modifying a standard product to a different voltage on a local power grid). Thus, in the production of intercom systems, computer and other systems used in telecommunications, Northern Telecom, NEC and Ericsson have benefited from the design of the manufactured equipment, which allows the use of modular software and requires only minor alterations to combine with the local telephone network. In addition, the firm may develop a new product that is popular with everyone, or a marketing method that makes the product popular. Finally, innovative solutions can be found to remove obstacles to a global strategy. For example, American firms were not only the first to produce plastic disposable syringes, which immediately gained widespread popularity, but also reduced transport costs compared to glass syringes and gained economies of scale by producing products at one global plant.

Emerging leaders in global industries always start with some advantage at home, be it a more promising design, better workmanship, a new marketing method, or a gain in factor costs. But as a rule, in order to maintain the advantage, the firm must go further: the advantage achieved “at home” must become a tool for entering the foreign market. Once established there, successful firms supplement their initial benefits with new ones - based on economies of scale or brand reputation gained from operations around the world. Over time, the competitive advantage is enhanced (or disadvantages are offset) by locating certain activities overseas.

While the advantages achieved in the home country are difficult to sustain, a global strategy can complement and enhance them. Consumer electronics are a good example. Matsushita, Sanyo, Sharp, and other Japanese firms initially focused on low cost with simple portable TVs. Having entered the foreign market, they received economies of scale and further reduced costs by cutting costs in the development of new models. Through worldwide trade, they were then able to invest very actively in marketing, new equipment and R&D, in technology ownership. Japanese firms have long since moved away from a cost-centered strategy and are now producing a wide range of increasingly differentiated TVs, VCRs, and more, using the highest quality materials and technology. And the strategy of focusing on costs has been adopted today by their Korean competitors - Samsung, Gold Star, etc. - and are producing simpler, standard models using cheap labor.

Factor cost is a low-order advantage and is also highly volatile for both a domestic and international competitor. This can be seen in industries such as tailoring or construction. By relocating activities abroad, a firm with a global strategy can neutralize or even exploit changes in the cost of factors that harm the interests of its country. For example, Swedish companies that produce heavy trucks (Volvo and Saab-Scania) have long since transferred part of their production to countries such as Brazil and Argentina. In addition, firms whose only advantage is factor cost gains rarely become the new leaders in the industry. Leadership imitation strategies are all too easily rendered ineffective by offshore production or offshore collateral. Firms with low factor costs will be able to become leaders only if they combine this advantage with a focus on some segment of the industry, ignored or not occupied by leaders, and / or with an investment in large factories equipped with the most modern this moment technology. And they will be able to retain their advantage only by competing globally and constantly increasing this advantage. The influence of domestic conditions on firms' initial advantage, the ability of firms to develop those advantages through global strategy, and the ability and will of firms to achieve new advantages over time is the focus of the chapters that follow.

Leading the way in global strategy

An immediate response to any change in industry structure is as important in global competition as it is in domestic competition, if not more. Ultimately, the leaders in many global industries are those firms that are the first to recognize a new strategy and apply it globally. For example, Boeing pioneered a global strategy for aircraft, Honda pioneered motorcycles, IBM pioneered computers, and Kodak pioneered film. American and British consumer packaged goods firms retain their leadership in no small part because they pioneered a global strategy.

Global competition amplifies the benefits of a quick response to change. The Early Birds are the first to spread their activities around the world; this additional advantage, in turn, leads to benefits in reputation, scale and speed of uptake. And already the positions gained on the basis of such advantages can be held for decades or even longer. So, in the production of tobacco products, whiskey and high-quality porcelain, English firms have been leading for more than a century, despite the recession of the British economy as a whole. Similar examples of long-term leadership can be found in Germany (printing presses, chemical products), the United States (soft drinks, movies, computers) and virtually all other developed countries.

The reasons for the change in the position of countries in the competitive race are the same as in the more general cases discussed above. Recognized international leaders are losing ground if they do not respond to changes in the structure of the industry, giving other firms the opportunity to bypass them through a rapid transition to new technologies or products. Thus, economies of scale, reputation and links with distribution channels of established leaders are lost. Thus, the traditional leaders of some industries gave way to Japanese firms in those industries that were greatly changed by the advent of electronics (for example, the production of machine tools and tools) or where mass production has replaced the traditional small-scale production (the production of cameras, forklifts, etc.). Existing leaders also fail if other firms discover new market segments that have been ignored by the leaders. Thus, Italian firms producing electrical appliances saw the opportunity to produce compact, unified models using mass production, and sell them to newly emerging retail chains, so that they would sell them under their own brand. By actively developing this rapidly growing new segment, Italian manufacturers of electrical household appliances have become the European leaders. Firms that are the first to take advantage of changes in industry structure often become new leaders, as they benefit from the next change in industry structure. Home country significantly influences the ability of firms to respond to these changes, and, as discussed earlier, firms from one or two countries often become global leaders in the industry.

Firms' ability to retain the advantages gained from previous strategies is often the result of sheer luck, namely, that there are no major changes in the industry. Still, more often it is the result of constant updating in order to adapt to changing conditions. Subsequent chapters explore in detail the country characteristics that explain this adaptability. The forces that enable a country's firms to maintain a competitive advantage once achieved are the mainstay of a country's prosperity.

Alliances and global strategy

Strategic alliances, which can also be called coalitions, are important tool conducting global strategies. These are long-term agreements between firms that go beyond normal trading operations, but do not lead to a merger. The term "alliance" refers to a number of types of cooperation, including joint ventures, sale of licenses, long-term supply agreements, and other types of inter-firm relationships24. They are found in many industries, but especially often in the automotive industry, aircraft construction, aircraft engine production, industrial robots, consumer electronics, semiconductor devices and pharmaceuticals.

International alliances (of firms of the same industry, based in different countries) are one of the means of global competition. In an alliance, there is a division between partners of the activities included in the value chain around the world. Alliances have been around for quite some time, but their nature has changed over time. Previously, firms from developed countries formed alliances with firms from less developed countries for marketing (often such a maneuver was required to gain market access). Now more and more firms from highly developed countries are entering into alliances in order to operate together in large regions or around the world. In addition, alliances are now being made not only for marketing, but also for other activities. Thus, all American car companies have alliances with Japanese (and in some cases, Korean) firms to produce cars sold in the United States.

Companies join alliances to gain benefits. One of them is economies of scale or reduction in time and costs for product development, achieved by joint efforts in marketing, manufacturing of components, or assembly of certain models of finished products. Another advantage is access to local markets, the necessary technologies, or meeting the requirements of the government of the country in which the company operates, so that the company operating in the country belongs to that country. For example, General Motors Corporation's alliance with Toyota - NUMMI - was conceived by General Motors in order to learn from Toyota's production experience. Another advantage of alliances is risk sharing. For example, some pharmaceutical companies have entered into mutual licensing agreements for the development of new drugs to reduce the risk of research failures in each individual company. Finally, firms with sophisticated and advanced technology often use alliances to influence the nature of competition in an industry (for example, by selling licenses for technology that is in high demand to achieve standardization). Alliances can compensate for competitive disadvantages, be it high cost factors of production or outdated technology, while maintaining the independence of the companies and eliminating the need for costly mergers.

However, alliances are costly strategically and organizationally. Take, at least for a start, the very real problems of coordinating the activities of independent partners, which have significantly different and even contradictory goals. Coordination difficulties jeopardize the benefits of the global strategy. In addition, today's partners may well be competitors tomorrow; this is especially true for partners with a more persistent or more rapidly developing competitive advantage. Japanese firms have confirmed this idea many times. To top it all off, the partner gets a part of the firm's profits, sometimes quite substantial. Alliances are fragile and can disintegrate or fail. It often starts out great, but soon the alliance falls apart or ends with a merger.

Alliances are often temporary, they are common in industries that are undergoing structural change or competition is fiercer, and managers of firms fear that they cannot do it alone. Alliances are the result of firms' lack of confidence in their strengths and are most often found among second-tier firms trying to catch up with leaders; at first, they give weak competitors the hope of maintaining independence, but in the end it may well come to the sale of the company or its merger with another.

As you can see from the above, the alliance is not a panacea. And in order to maintain its place in the competitive race and come out ahead, the firm must develop internal reserves in the areas most important to achieving competitive advantage. As a result, world leaders rarely, if ever, rely on partners to help them gain the funds and skills they need to gain a competitive edge in their industry.

The most successful alliances are very specific. Alliances from global leaders such as IBM, Novo Industry (an insulin firm) and Canon are narrowly focused, targeting specific markets or technology. Alliances are generally a means of enhancing competitive advantage, but they are rarely effective means of building it.

The Impact of National Conditions on Competitive Success

The principles of competitive strategy outlined above show how much needs to be taken into account when highlighting the role of the home country in international competition. Different strategies are more suitable for different industries, since the structure of the industries and the sources of competitive advantage in them are not the same. And in the same industry, firms can choose different strategies (and apply them successfully) if they strive to different types competitive advantage or targeting different segments of the industry.

A country succeeds when conditions in the country are conducive to conducting best strategy for any industry or its segment. A strategy that works well in this country should lead to a competitive advantage. Many of the characteristics of a country make it easier or, conversely, difficult to implement a particular strategy. These features are heterogeneous - from the behavioral norms that determine the methods of managing firms, to the presence or absence of certain types of skilled labor in the country, the nature of demand in the domestic market and the goals set by local investors.

Gaining a competitive advantage in complex industries requires improvement and innovation - finding new, better ways to compete and applying those ways everywhere, as well as continually improving products and technologies. A country is successful in these industries if the conditions in it are conducive to such activities. Achieving an advantage requires anticipation of new ways to compete and a willingness to take risks (and invest in risky ventures). And those countries that succeed are those in which the conditions give firms unique opportunities to recognize new competitive strategies and the incentive to immediately apply those strategies. Those countries whose firms do not adequately respond to changes in the environment or do not have the necessary capabilities are the losers.

Maintaining a competitive advantage in long period requires the improvement of its sources. Improving the advantage, in turn, requires more sophisticated technologies, skills and production methods, and constant investment. Countries succeed in industries that have the skills and resources to change strategy. Firms that rest on their laurels using the once and for all fixed concept of competitive advantage are quickly losing ground, as competitors copy the techniques that once allowed these firms to take the lead.

The constant change needed to maintain a competitive advantage is both inconvenient and organizationally difficult. Countries succeed in industries in which firms are under pressure to overcome inertia and continually improve and innovate rather than sit idly by. And in those industries where firms stop improving, the country loses.

The country is successful in industries where its advantages as a national base have weight in other countries and where improvements and innovations precede international needs. To be successful internationally, firms must transform domestic leadership into international leadership. This allows the benefits gained “at home” to be leveraged through a global strategy. Countries succeed in industries where domestic firms compete globally, either sponsored by government or pressured by circumstances. In the search for the determinants of the competitive advantage of countries in different industries, it is necessary to determine the conditions in the country that are conducive to success in competition.

FEDERAL EDUCATION AGENCY

Coursework on the subject "> on the topic:" Competitive advantages of a firm "Checked by ____________________ _____________________ Completed by a student of the group _______ _____________________ CONTENTS INTRODUCTION Today, the competition between firms is moving to a new level, which is not always clear to their management. Too many firms and their top managers they misunderstand the nature of competition and the challenge it faces: they focus on improving financial performance, getting government aid, ensuring stability and reducing risk through alliances and mergers with other firms.The realities of modern competition require leaders. change, they bring to their organizations the energy they need to constantly innovate, they recognize the importance of their home country to the success of their firms in competition, and they work to improve that polo. zheniya. Most importantly, leaders recognize the importance of adversity and challenges. Because they are willing to help the government make adequate - albeit painful - political decisions and rules, they are often honored with the title of "statesmen", although few of them consider themselves as such. They are ready to trade a quiet life for difficulties in order to ultimately gain an advantage over competitors. The relevance of the research topic is due to the presence of residual phenomena of the economic crisis in the Russian economy, the tightening of competition, in which, in order to get a client, firms are ready to reduce prices for their products or services, sometimes bringing them to a minimum level. The purpose of the presented study is to expand the theoretical knowledge base on the issue of competitive advantages for developing in the future a strategy not only for survival, but also for development for one's own company. Within the framework of this goal, the following tasks have been formulated: - to reveal the meaning of the concept of "competitive advantage"; - consider the types of competitive advantages of the firm; - to study several strategies for achieving the competitive advantages of the firm. The subject of the research is competitive advantages as a form of economic relations, which is manifested in the superiority of a firm recognized by the consumer relative to a direct competitor in any field of activity. The object of the research is the process of forming a sustainable competitive advantage of a firm or a strategy. The theoretical and methodological basis of the study is the works of leading Russian and foreign scientists dedicated to the concept of competitive advantages (G. L. Azoev, M. Porter, A. Yudanov ...) 1. THEORETICAL BASIS OF THE COMPANY'S COMPETITIVE ADVANTAGES 1.1 The concept of competitive advantages The specific market position of an organization is determined by its competitive advantages. In general terms, competitive advantage is superiority in some area that ensures success in the competition. The specific content of the concept of competitive advantage depends, firstly, on the subject of competition, and secondly, on the stage of competition. Competitive struggle, which is a consequence of limited resources, forces us to look for an answer to the question of the patterns of behavior of an economic entity in such conditions, this answer is given by science - economic theory, in the course of this struggle there is a change in the methods of its implementation (policies for achieving competitive advantages, sources of competitive advantages), which is reflected in the evolution of the concept of competitive advantage. The scarcity of resources manifests itself at all levels: a person, a firm, a region, a country, respectively, the concept of “competitive advantages” can be applied to various subjects of competition1 http://www.dissland.com/catalog/formirovanie_ustoychivogo_konkurentnogo_preimushchestva_na_osnove_intellektualnogo_kapitala.html

The most complete interpretation of the concept of “competitive advantages” existing in economic research is reflected in the definition of G.L. Azoeva. In accordance with this interpretation, competitive advantages are understood as “concentrated manifestations of superiority over competitors in the economic, technical, organizational areas of the enterprise, which can be measured by economic indicators (additional profit, higher profitability, market share, sales volume)”. According to G.L. Azoev, superiority over competitors in the economic, technical, organizational spheres of an enterprise is a competitive advantage only if it is reflected in an increase in sales, profits and market share2. Thus, competitive advantage is those characteristics and properties of a product or brand, as well as specific forms of business organization, which provide a firm with a certain superiority over its competitors. The key success factors affecting the competitive advantage include: - technological: high research potential, the ability to industrial innovation; - production: full use of production economies of scale and experience, high quality production, optimal use of production capacity, high productivity, the required productive flexibility; - marketing: the use of marketing economies of scale and experience, a high level of after-sales service, a wide product line, a powerful sales network, high speed of product delivery, low sales costs; - managerial: the ability to quickly respond to changes in the external environment, the presence of managerial experience; the ability to quickly bring a product to the market from the R&D stage; - others: a powerful information network, a high image, a favorable territorial location, access to financial resources, the ability to protect intellectual property3. The main task of the firm in the field of competition is to create such competitive advantages that would be real, expressive, significant. Competitive advantages are not permanent, they are won and maintained only with continuous improvement in all areas of the company, which is a laborious and costly process. 1.2 Types of the firm's competitive advantages Consider the typology of the firm's competitive advantages. The first typology (internal and external competitive advantages) Internal competitive advantage is based on the superiority of the company in terms of costs, which allows the cost of manufactured products to be lower than that of competitors. The lower cost price gives the firm an advantage if the products meet the industry average quality standard. Otherwise, a product of inferior quality can be sold through a decrease in its price, which reduces the share of profits. Accordingly, in this embodiment, the cost advantage is not beneficial. Internal competitive advantage is the result of high productivity and effective cost management. Relatively low costs provide the firm with greater profitability and resistance to lower sales prices imposed by the market or competition. Low costs allow, if necessary, to carry out a price dumping policy, setting lower prices in order to increase market share, as low costs are a source of profit that can be reinvested in production to improve product quality, other forms of product differentiation, or directed to support other areas of business ... In addition, they create effective protection against the five forces of competition (M. Porter). Such as the emergence of new competitors, the possibility of the appearance of substitute goods, the ability of consumers to defend their interests, the ability of suppliers to impose their conditions, competition between long-standing firms. Internal competitive advantage is based mainly on a mature production process and efficient resource management of the enterprise. External competitive advantage is based on the distinctive properties of a product or service that has a greater “consumer value” for the customer than similar products from competitors. This allows for higher sales prices than competitors that do not provide the appropriate distinctive quality. Any innovation that gives an organization a real increment in its market success is a competitive advantage. Organizations gain competitive advantage by finding new ways to compete in their industry and entering the market with them, which can be summed up as “innovation”. Innovation in the broadest sense includes both improved technology and improved ways and methods of doing business. Innovation can be expressed in a change in a product-product or production process, new approaches to marketing, new ways of distributing a product, new concepts of the sphere of competition, etc. The most typical sources of obtaining external competitive advantages include: - new technologies; - changes in structure and cost individual elements in the technological chain of production and sale of goods; - new consumer demands; - the emergence of a new market segment; - changes in the "rules of the game" in the market. A special source is information about your business plus professional skills that allow you to extract and process such information so that the final product of processing turns out to be a real competitive advantage. Competitive advantage based on cost alone is usually not as persistent as advantage based on differentiation. (Cheap labor is a low rank advantage.) Higher level or order competitive advantages such as proprietary technology, differentiation based on unique products or services, an organization's reputation based on enhanced marketing activities, and strong customer relationships can be held for longer. Typically, the achievement of high-order benefits becomes possible under the condition of long-term and intensive investments in production facilities, in specialized training of personnel, in R&D, as well as investments in marketing. To remain competitive, an organization must create new advantages at least as fast as its competitors can copy existing ones. manifestations highlight: - competitive advantages in the field of R&D, expressed in the degree of novelty, the scientific and technical level of applied R&D and R&D, the optimality of the structure of R&D costs and their economic efficiency, in the patent purity and patentability of developments, the timeliness of the preparation of R&D results for production development, completeness taking into account the conditions of consumption of the products being developed, the duration of R&D; - competitive advantages in the field of production, expressed in accordance with the level of concentration of production and the type of market (a high level of concentration in conditions of pure monopoly, monopolistic and oligopolistic competition, a low level in a market of free competition), in the use of progressive forms of organization of production (specialization, cooperation, combination ), in the amount of the production capacity of the enterprise, in the use of advanced technology, technology, construction materials, in a high professional and qualification level of labor personnel and scientific organization of labor, the efficiency of the use of production resources, the efficiency of design and technological preparation of production and production efficiency in general; - competitive advantages in the field of sales, expressed in better pricing, more efficient distribution of goods and sales promotion, more rational relations with intermediaries, more efficient systems of settlements with consumers; - competitive advantages in the service sector, expressed in more efficient pre-sale and after-sale service of products, warranty and post-warranty service. The fourth typology (by type of manifestation) By the types of manifestation, it is necessary to distinguish between technical, economic, managerial competitive advantages: - technical competitive advantages are manifested in superiority in production technology, superiority of technical characteristics of machines and equipment, technological features used in the production of raw materials, materials, technical parameters of products ; - economic competitive advantages consist in a more favorable economic and geographical position and a more rational location of the enterprise, a greater economic potential of the enterprise, more efficient use of the enterprise's resources, which allows to reduce the cost of production, the best economic characteristics of products compared to competitors, a better financial condition of the enterprise, making it easier access to credit resources and expanding investment opportunities; - managerial competitive advantages are manifested in a more efficient implementation of the functions of forecasting, planning, organization, regulation, accounting, control and analysis of production and economic activities. The fifth typology of competitive advantages The following types of competitive advantages are distinguished: 1) competitive advantages based on economic factors; 2) competitive advantages of a structural nature; 3) competitive advantages of a regulatory nature; 4) competitive advantages associated with the development of market infrastructure; 5) competitive advantages of a technological nature; 6) competitive advantages associated with the level information support ; 7) competitive advantages based on geographic factors; 8) competitive advantages based on demographic factors; 9) competitive advantages achieved as a result of actions that violate the rule of law. Competitive advantages based on economic factors are determined by: 1) the best general economic state of the markets in which the enterprise operates, expressed in high average industry profits, long payback periods, favorable price dynamics, high disposable income per capita, absence of non-payments, inflationary processes and so on; 2) objective factors stimulating demand: large and growing market capacity, low sensitivity of consumers to price changes, weak cyclical and seasonal demand, lack of substitute products; 3) economies of scale of production. 4) the effect of the scale of activity, which manifests itself in the ability to satisfy the most diverse needs of the consumer, while setting high prices for the product due to its complex nature; 5) the effect of learning experience, which is expressed in greater labor efficiency due to specialization by types and methods of work, technological innovations in production processes, optimal equipment utilization, more complete use of resources, the introduction of new concepts of goods; 6) the economic potential of the enterprise. Structural competitive advantages are mainly determined by the high level of integration of the production and sales process in the company, which makes it possible to realize the advantages of intra-corporate relations in the form of transfer internal prices, access to aggregate investment, raw materials, production, innovation and information resources, and a general sales network. Within the framework of integrated structures, potential opportunities are created for concluding anti-competitive agreements and coordinated actions of group members (both horizontal and vertical), including with government authorities. A powerful source of strengthening the competitive position of a company is the use of relationships between its various divisions and strategic areas of management. The phenomenon when the revenues from the shared use of resources exceed the sum of revenues from the separate use of the same resources is called the synergy effect. Also, structural competitive advantages include the ability to quickly penetrate unoccupied market segments. Regulatory competitive advantages are based on legislative and administrative measures, as well as incentive policies of the government in the field of investment volumes, credit, tax and customs rates in a particular commodity area. Such competitive advantages exist by virtue of laws, regulations, privileges and other decisions of the authorities and administration. These include: - benefits provided to the region or individual enterprises by the authorities; - the possibility of unhindered import and export of goods outside the administrative-territorial unit (region, territory); - exclusive rights to intellectual property, securing monopoly positions for a certain period. Regulatory advantages differ from others in that they can be removed relatively quickly by repealing the relevant legislation. Competitive advantages associated with the development of market infrastructure arise as a result of varying degrees: - development of the necessary means of communication (transport, communications); - organization and openness of labor markets, capital, investment goods and technologies; - development of a distribution network, including retail, wholesale, futures trade, consulting, information, leasing and other services; - development of inter-firm cooperation. Technological competitive advantages are determined by the high level of applied science and technology in the industry, special technical characteristics of machinery and equipment, technological features of raw materials and materials used in the production of goods, and technical parameters of products. Competitive advantages associated with the level of information support are determined by good awareness, based on the availability of an extensive database of sellers, buyers, advertising activities, information about the market infrastructure. The absence, insufficiency and inaccuracy of information becomes a serious obstacle to the competition. Specific advantages based on geographic factors are associated with the ability to economically overcome the geographic boundaries of markets (local, regional, national, global), as well as the favorable geographic location of the enterprise. In addition, the geographical barrier for potential competitors to enter the market is the difficulty of moving goods between territories due to the inaccessibility of vehicles for transporting goods, significant additional costs for crossing market boundaries, loss of quality level and consumer properties of goods during transportation. Competitive advantage based on demographic factors is formed as a result of demographic changes in the target market segment. The factors influencing the volume and structure of demand for the offered products include changes in the size of the target population, its sex and age composition, population migration, as well as changes in the level of education and professional level. Competitive advantages achieved as a result of actions that violate the rules of law include: - unfair competition; - directly or indirectly fix the prices of sales or purchases or any other trading conditions; - restrict or control production, markets, technical development or investment; - share markets or sources of supply; - apply different conditions to the same transactions with other parties, thereby placing them at a disadvantage; - raise the issue of concluding contracts depending on the acceptance by other parties of additional obligations that are not related to the subject of these contracts, etc. 2. STRATEGIES FOR IMPLEMENTATION OF COMPETITIVE ADVANTAGES 2.1 Strategic competitive advantages of the company and ways of their implementation in the domestic market The main task in strategic orientation the firm is the choice of a basic strategy of competition in relation to a particular area of ​​business. Competitive strategy should be based on two essential conditions: - it is necessary to determine the strategic goal of the firm in relation to a given product or service in terms of the scale of competition. - it is necessary to choose the type of competitive advantage. The strategic goal of the company involves focusing on the entire market or a specific segment. Basic competitive strategies differ depending on which edge they rely on. Here it is necessary to decide which type of competitive advantage to give preference to - internal, based on cost reduction, or external, based on the uniqueness of the product; which is easier to defend in a competitive market. The main factors affecting the competitive advantage include: - technological: high research potential, the ability to industrial innovation; - production: full use of production economies of scale and experience, high quality production, optimal use of production capacity, high productivity, the required productive flexibility; - marketing: the use of marketing economies of scale and experience, a high level of after-sales service, a wide product line, a powerful sales network, high speed of product delivery, low sales costs; managerial: the ability to quickly respond to changes in the external environment, the presence of managerial experience; the ability to quickly bring a product to the market from the R&D stage; - others: powerful information network, high image, advantageous territorial location, access to financial resources, ability to protect intellectual property. The basic competitive strategies include: - cost leadership strategy; - differentiation strategy; - focusing strategy. Cost Leadership Strategy When choosing a cost leadership strategy, a firm addresses the entire market with one and the same product, neglecting differences in segments, trying to reduce the cost of production as much as possible. It targets a broad market and produces goods in large quantities. At the same time, the company focuses attention and efforts not on how the needs of individual groups of consumers differ, but on what is common in these needs. In addition, this strategy ensures the broadest possible boundaries of the potential market. The focus of the entire strategy is to create an internal competitive advantage that can be achieved by higher productivity and an effective cost management system. The purpose of the firm in this case is related to the use of cost superiority as the basis for increasing market share through price leadership or additional profit. Leadership through an advantage at lower costs than competitors gives the firm the ability to withstand its direct competitors even in the event of a price war. Low costs are a high barrier to entry for potential competitors and good protection against substitute products. The main factors of cost overbalance include - taking advantage of economies of scale and experience; - control over fixed costs; - high technological level of production; - stronger staff motivation; - privileged access to sources of raw materials. As a rule, these advantages are manifested in the manufacture of standard products of mass demand, when the possibilities of differentiation are limited and the demand is elastic in price, and the likelihood of switching consumers of the product to others is high. The cost minimization strategy has drawbacks. Cost reduction techniques can be easily copied by competitors; technological breakthroughs can neutralize the existing internal competitive advantages associated with the accumulated experience; due to an excessive focus on cost reduction - insufficient attention to changes in market requirements, a decrease in product quality is possible. This strategy is aggressive and is most easily implemented when the enterprise has access to exclusive low-cost resources. Strategy of differentiation by segments (classes) of manufactured goods The main goal of each strategy of differentiation is to make a product or service distinctive from similar competing goods or services properties that create "customer value" associated with the advantage of the product, time, place, service. Value for buyers is the utility or overall satisfaction they receive when using a product, as well as the minimum transaction costs over its entire life cycle. The main point of the differentiation strategy is understanding the needs of the customers. In this case, we can say that with a certain set of qualities of an exclusive product or service, the firm creates a permanent group of buyers in a specific market segment, i.e. almost a mini-monopoly. Unlike the cost leadership strategy, which can only be achieved in one way — through an efficient cost structure — differentiation can be achieved in a variety of ways. The main approaches used in the differentiation strategy include: - the development of such characteristics of the goods that reduce the total costs of the buyer for the operation of the manufacturer's products (increased reliability, quality, energy saving, environmental friendliness); - creation of product features that increase the effectiveness of its use by the consumer (additional functions, complementarity with another product, interchangeability); - giving the product features that increase the degree of customer satisfaction (status, image, lifestyle). By the nature of the focus, it is possible to distinguish innovative and marketing differentiation strategies. Innovative differentiation An innovative differentiation strategy is real differentiation associated with the production of truly different products using different technologies ... This strategy involves the acquisition of competitive advantages through the creation of fundamentally new products, technologies or upgrades and modifications of existing products. In this case, differentiation affects not only the product itself, but also the technology being sold, which requires taking into account the factor of scientific and technological progress. Scientific discoveries and advancing technologies suggest new ways to meet consumer needs. Real differentiation is characteristic to a greater extent for the market of industrial goods, products of high-tech industries, where the largest gap in the competition is determined by an effective innovation strategy. Marketing differentiation Marketing differentiation strategy involves the achievement of competitive advantages by creating distinctive properties associated not with the product itself, but with its price, packaging, delivery methods (without prepayment, with the provision of transport, etc.); placement, promotion, after-sales service (guarantees, service), a brand that creates an image. The presence of distinctive qualities usually requires higher costs, which leads to an increase in prices. However, successful differentiation allows a firm to achieve greater profitability because consumers are willing to pay for product uniqueness. Differentiation strategies require significant investments in functional marketing and, especially, in advertising in order to communicate to consumers the information about the claimed distinctive features of the product. Focusing strategy A focusing (specialization) strategy is a typical business strategy that involves focusing on a narrow market segment or a specific group of buyers, as well as specializing in a specific part of the product and / or geographic region. Here, the main goal is to meet the needs of the selected segment with greater efficiency compared to competitors serving a wider market segment. A successful focusing strategy achieves a high market share in the target segment, but always leads to a small market share overall. This strategy is the preferred development option for firms with limited resources. A focusing strategy takes the form of a focused low-cost strategy if the price requirements of segment buyers differ from those of the mainstream market, or a focused differentiation strategy if the target segment requires unique product characteristics. Like other basic business strategies, the focus strategy protects the firm from competitive forces in the following ways: focusing on a segment allows you to successfully compete with firms operating in different segments; the specific competence and ability of the firm create barriers to entry for potential competitors and the penetration of substitute products; pressure from buyers and suppliers is reduced by their own reluctance to deal with other, less competent competitors. The reason for choosing such a strategy is the lack or lack of resources, the strengthening of barriers to entry into the market. Therefore, the focusing strategy is typical, as a rule, of small firms5http: //www.logistics.ru/9/2/i20_64.htm (accessed 15.01.2011). 2.2 Problems of realizing competitive advantages in the international market Everything that has been said above about competition and competitive strategy can equally apply to both the external and internal markets. At the same time, international competition has some peculiarities. The first feature Each country, to one degree or another, possesses the factors of production necessary for the activities of firms in any industry. The theory of comparative advantage in the Heckscher-Ohlin model is devoted to the comparison of available factors. The country exports goods, in the production of which various factors are intensively used. However, factors, as a rule, are not only inherited, but also created, therefore, for obtaining and developing competitive advantages, it is not so much the stock of factors at the moment that is important, as the speed of their creation. In addition, an abundance of factors can undermine a competitive advantage, and a lack of them can induce renewal, which can lead to long-term competitive advantage. The combination of factors used varies from industry to industry. Firms achieve a competitive advantage when they have cheap or high quality factors at their disposal that are important in competing in a particular industry. Thus, the location of Singapore on an important trade route between Japan and the Middle East has made it the center of the ship repair industry. However, gaining a competitive advantage based on factors depends not so much on their availability as on their effective use, since MNEs can provide missing factors by purchasing or locating activities abroad, and many factors relatively simply move from country to country. Factors are divided into basic and developed. The main factors include Natural resources , climatic conditions, geographic location, unskilled labor, etc. The country receives them by inheritance or with insignificant investment. They are of little importance to a country's competitive advantage, or the advantage they create is unsustainable. The role of the main factors decreases due to a decrease in the need for them or due to their increased availability (including as a result of the transfer of activities or purchases abroad). These factors are important in extractive industries and in agriculture-related industries. Developed factors include modern infrastructure, highly qualified workforce, etc. It is these factors that are most important, as they allow you to achieve a higher level of competitive advantage. Feature two The second determinant of national competitive advantage is the demand in the domestic market for goods or services offered by this industry. Influencing economies of scale, demand in the domestic market determines the nature and speed of innovation. The volume and nature of growth in domestic demand allow firms to gain a competitive advantage if: - there is a demand abroad for a product that is in great demand in the domestic market; - there is a large number of independent buyers, which creates a more favorable environment for renovation; - domestic demand is growing rapidly, which stimulates the intensification of capital investments and the speed of renewal; - the domestic market is quickly saturated, as a result, competition becomes tougher, in which the strongest survive, which forces them to enter the foreign market. Firms achieve a competitive advantage through the internationalization of demand in the domestic market, i.e. when overseas consumers are preferred. The third feature The third determinant that determines the national competitive advantage is the presence in the country of supplying industries or related industries that are competitive in the world market. In the presence of competitive supplier industries, the following are possible: - efficient and quick access to expensive resources, for example, equipment or skilled labor, etc .; - coordination of suppliers in the domestic market; - assisting the innovation process. Domestic firms benefit most when their suppliers are competitive in the global marketplace. The presence in the country of competitive related industries often leads to the emergence of new highly developed types of production. Kindred are industries in which firms can interact with each other to form a value chain, as well as industries that deal with complementary products such as computers and software. Interaction can take place in the field of technology development, production, marketing, service. If there are related industries in the country that can compete in the world market, access to information exchange and technical interaction opens up. Geographic proximity and cultural affinity lead to more active interchange than with foreign firms. Success in the global market for one industry can lead to the development of the production of additional goods and services. For example, the sale of American computers overseas has increased demand for American peripherals, software, and the development of American database services. Feature Four The fourth important determinant that determines the competitiveness of the industry is the fact that firms are created, organized and managed depending on the nature of competition in the domestic market, while developing different strategies and goals. National characteristics affect the management of firms and the form of competition between them. In Italy, many of the companies successfully operating in the global market are small or medium (in size) family businesses. In Germany, large companies with a hierarchical management system are more common. In addition, you can think of the American and Japanese control systems. These national characteristics greatly influence the position of firms in the orientation towards global competition. Strong competition in the domestic market is of particular importance for achieving high competitiveness in the industry; competition in the domestic market creates advantages for the national industry as a whole, and not just for individual firms. Competitors borrow progressive ideas from each other and develop them, since ideas spread faster within one nation than between different nations. These advantages are enhanced when competitors are concentrated in one geographic area. The role of the government The role of the government in the formation of national advantages lies in the fact that it influences all four determinants: - on the parameters of factors - through subsidies, capital market policy, etc .; - on the parameters of demand - through the establishment of various standards and the implementation of public procurement; - on the conditions for the development of related industries and supplier industries - through control over advertising media or regulation of infrastructure development; - on the strategy of firms, their structure and rivalry - through their tax policy, antitrust laws, by regulating investments and the activities of the securities market, etc. All four determinants can have opposite effects on government. The role of government can be positive or negative. The determinants of national competitiveness are a complex system that is constantly evolving. Some determinants regularly affect others. The action of the system of determinants leads to the fact that competitive national industries are not evenly distributed throughout the economy, but are linked into bundles, or "clusters", consisting of industries that depend on each other. 2.3 Benchmarketing as a strategy for achieving competitive advantages6http: //www.support17.com/component/content/296.html? Task = view (date accessed 01/12/2011) english word benchmark (bench- place, to mark- to mark), is a way of studying the activities of economic entities, primarily their competitors, in order to use and positive experience in their work. Benchmarking includes a set of tools that allow you to systematically find, evaluate and organize the use of all the positive advantages of someone else's experience in your work. The benchmarking is based on the idea of ​​comparing the activities of not only competing enterprises, but also leading firms in other industries. Competent use of the experience of competitors and successful companies can reduce costs, increase profits and optimize the choice of strategy for your organization. Benchmarking is a constant study of the best in the practice of competitors, comparing the company with the created reference model of its own business. Benchmarking allows you to identify and use in your business what others are doing better. Benchmarking is based on the concept of continuous improvement of activities, which provides for a continuous cycle of planning, coordination, motivation and evaluation of actions with the aim of sustainable improvement of the organization's performance. At the core of benchmarking is finding the best business standards for use by the research organization. He is not concentrating on simple measurement and comparison of achievements, but on how any given process can be improved by applying innovative approaches. Benchmarking suggests that a company must be humble enough to accept that someone else can be better at something, and wise enough to try to figure out how to catch up with and even surpass others. Benchmarking reflects the ongoing improvement efforts of an organization and helps to integrate disparate improvements into a single change management system. Types of benchmarking - internal - comparison of the work of the company's divisions; - competitive - comparing your company with competitors by various parameters; - general - comparison of the company with indirect competitors according to the selected parameters; - functional - comparison by function (sales, purchases, production, etc.). General benchmarking is a comparison of the performance and sales of your products with the business performance of a sufficiently large number of producers or sellers of a similar product. This comparison allows us to outline clear directions for investment activities. The parameters used to compare product characteristics are product specific. Functional benchmarking means comparing the performance parameters of individual functions (for example, operations, processes, methods of work, etc.) of the seller with similar parameters of the best enterprises (sellers) operating in similar conditions. Competitive benchmarking examines the products, services, and work processes of an organization's direct competitors. Benchmarking is close to the concept of marketing intelligence, which means the constant activity of collecting current information about changes in the external marketing environment, which is necessary both for developing and adjusting marketing plans. However, marketing intelligence is about collecting confidential information, and benchmarking can be seen as an activity of deliberating a strategy based on the best practices of partners and competitors. F. Kotler equates benchmarking with basic analysis - the process of “searching, studying and mastering the most advanced practical experience and technology used by organizations in different countries around the world to make your organization more effective. " Benchmarketing is becoming a powerful lever for enhancing the competitiveness of an enterprise and the art of understanding how and why some companies achieve significantly better results than others. Benchmarking can improve best technology other companies, i.e. it is aimed at mastering "the most advanced world experience." CONCLUSION In the face of tough competition and a rapidly changing situation, firms must not only focus on the internal state of affairs, but also develop a long-term strategy of behavior aimed at creating sustainable competitive advantages. Acceleration of changes in the environment, the emergence of new demands and changes in consumer positions, changes in government policy, entry of new competitors into the market lead to the need for constant analysis and optimization of existing competitive advantages. The most significant or long-term competitive advantage, in my opinion, is given to a firm by the introduction of a new technology or "know-how" created by the firm itself through the introduction of innovations. Not every firm can create this competitive advantage (the main problem is the lack of sufficient financial and human resources). From the conducted research, we can conclude that there is no competitive advantage that is uniform for all companies. Each firm is unique in its own way, therefore, the process of creating competitive advantages for each firm is unique, since it depends on many factors: on the firm's position in the market, the dynamics of its development, potential, behavior of competitors, characteristics of the product or services provided, the state of the economy , cultural environment and many more factors. At the same time, there are some fundamental points, strategies that allow us to talk about generalized principles of competitive behavior and the implementation of strategic planning aimed at creating a sustainable competitive advantage. REFERENCES 1. Azoev G.L., Chelenkov A.P. Competitive advantages of the company. - Moscow: JSC "Printing House" NEWS ", 2007. 2. Benchmarketing [Electronic resource] 3. Golovikhin SA, Shipilova SM. Theoretical foundations for determining the competitive advantages of a machine-building enterprise 4. Zakharov AN, Zokin AA, Competitiveness of the enterprise: essence, methods of assessment and mechanisms of increase 5. Porter M. "International competition": trans. from English: ed. V.D. Shchetinin. Moscow: International Relations, 1993 6. Fatkhutdinov R.А. Strategic management. 7th ed., Rev. and add. - M .: Delo, 2005 .-- 448 p. 7. Shifrin M.B. Strategic management. - SPb .: Peter, 2008, p. 113 8. Yagafarova EF Abstract of dissertation research on the topic "The role of intellectual capital in the formation of sustainable competitive advantage of the company"

1. Yagafarova EF Abstract of dissertation research on the topic "The role of intellectual capital in the formation of sustainable competitive advantage of the company" [Electronic resource] URL:
2. S.A. Golovikhin, S.M. Shipilova. Theoretical foundations for determining the competitive advantages of a machine-building enterprise [Electronic resource] URL: http://www.lib.csu.ru/vch/8/2004_01/023.pdf (date of treatment 12/18/2010)
3. Shifrin M.B. Strategic management. - SPb .: Peter, 2008, p. 113
4. Azoev G.L., Chelenkov A.P. Competitive advantages of the company. - M .: JSC "Printing house" NEWS ", 2007.
5. A.N. Zakharov, A.A. Zokin, Enterprise Competitiveness: Essence, Evaluation Methods and Mechanisms for Increasing [Electronic resource] URL:

The world does not stand still, information is constantly updated, and market participants are in search of marketing ideas, ways of doing business, new views on their product. Any business is tested for strength by competitors, therefore, when developing a development strategy, it is reasonable to take into account their influence, market share, position and behavior.

What is Competitive Advantage

Competitive advantage is a certain superiority of a company or product over other market participants, which is used to strengthen its position when reaching the planned profit level. Competitive advantage is achieved by providing the client with more services, better quality products, relatively cheap goods and other qualities.

A competitive advantage for a business is provided by:

- prospects for long-term growth;

- stability of work;

- getting a higher rate of return from the sale of goods;

- creating barriers for new players when entering the market.

Note that competitive advantages can always be found for any type of business. To do this, you should conduct a competent analysis of your product and the product of a competitor.

What types of competitive advantages are there

What allows you to create a competitive advantage for your business? There are 2 options for this. First of all, the product itself can provide a competitive advantage. One of the types of competitive advantages is the price of the goods. Buyers often prefer to buy a product only because of its cheapness relative to other offers with similar properties. Due to its low cost, the product can be purchased even if it does not represent any particular consumer value for buyers.

The second competitive advantage is differentiation. For example, when a product has distinctive features thanks to which the product becomes more attractive to the consumer. In particular, differentiation can be achieved due to characteristics that are not related to consumer properties. For example, at the expense of the brand.

If a company creates a competitive advantage for its product, it can exclusively highlight its market position. This is achieved thanks to the monopolization of a part of the market. True, this situation is contrary to market relations, since the buyer is deprived of the opportunity to choose. However, in practice, many companies not only provide themselves with such a competitive advantage of the product, but also retain it for a long time.

4 criteria for assessing competitive advantages

Utility. The proposed competitive advantage should be beneficial to the company's operations and should also increase profitability and strategy development.

Uniqueness. Competitive advantage should set the product apart from competitors, not duplicate them.

Security. It is important to legally protect your competitive advantage, to make it as difficult as possible to copy it.

Value for the target audience of the business.

Competitive advantage strategies

1. Leadership in costs. Thanks to this strategy, the company earns revenues above the industry average due to the low cost of its production, despite high competition. When a company receives a higher rate of return, it can reinvest these funds to support the product, inform about it, or outperform competitors at the expense of lower prices. Low costs provide protection from competitors because income is maintained in an environment that is not available to other market participants. Where can you use a cost leadership strategy? This strategy is applied with economies of scale or with the prospect of achieving lower costs in the long term. This strategy is chosen by companies that cannot compete in the industry at the product level and work with a differentiation approach to provide distinctive characteristics for the product. This strategy will be effective when there is a high proportion of consumers who are price sensitive.

• Competitive information: 3 rules for collecting and using it

This strategy often requires product unification and simplification to facilitate production processes and increase production volumes. It may also require a high initial investment in equipment and technology to reduce costs. To be effective, this strategy requires careful control of work processes, product design and development, with a clear organizational structure.

Cost leadership can be achieved through certain opportunities:

- limited access of the enterprise to obtaining cheap resources;

- the company has the opportunity to reduce production costs due to the accumulated experience;

- the management of the company's production facilities is based on a principle that contributes to economies of scale;

- the company provides for scrupulous management of the level of its reserves;

- strict control of overhead and production costs, abandoning small operations;

- availability of technology for the cheapest production in the industry;

- standardized production of the company;

2 steps to building a competitive advantage

Alexander Maryenko, project manager of the group of companies "A Dan Dzo", Moscow

There are no clear instructions for building a competitive advantage, taking into account the individuality of each market. However, in such a situation, you can be guided by a certain logical algorithm:

Determine the target audience who will buy your product or influence this decision.

Determine the real need of such people associated with your services or products that are not yet satisfied by suppliers.

2. Differentiation. When working with this strategy, the company provides unique properties for its product, which are important for the target audience. Consequently, they allow you to set a higher value on the product compared to competitors.

A product leadership strategy requires:

- the product must have unique properties;

- the ability to create a reputation for high quality product;

- high qualification of employees;

- the ability to protect a competitive advantage.

The advantage lies in the ability to sell the product at higher prices than the industry average, avoiding direct competition. Thanks to this strategy, it is possible to achieve better brand loyalty and loyalty, under the conditions of competent assortment construction, and the presence of competitive advantages.

Risks or Disadvantages of Using a Differentiated Marketing Strategy:

- a significant price difference is possible, due to which even the unique qualities of the product will not attract a sufficient number of buyers;

- the product may lose its uniqueness when copying advantages with cheaper products.

This strategy is used for saturated markets by companies ready for high investment in promotion. There is no need to talk about low cost - it will be higher than the market average. However, this is offset by the ability to sell the product at higher prices.

3. Niche Leadership or Focus. The strategy assumes protection from large competitors and substitute goods. In this case, it is possible to achieve a high rate of return due to more efficient satisfaction of the needs of a narrow audience of consumers. This strategy can be built on competitive advantages of any type - on the breadth of the offered assortment or on the lower price of the product.

In this case, the company is limited in market share, but it does not need significant investments to develop the product, which is a chance for the survival of small enterprises.

Risks and Disadvantages of Using a Focusing Strategy:

- there is a high probability of large differences in the prices of goods in comparison with the leading brands of the market, which can scare away its target audience;

- the attention of large market participants switches to the niche segments in which the company operates;

- the serious danger of narrowing the gap between the needs of the industry and the niche market.

Where to use a niche leadership strategy? This strategy is recommended for small companies; it is most effective when the market is saturated, there are strong players, when the cost is high, or when costs are not competitive in comparison with the market leaders.

Three stages of a service strategy

Stage I. Innovation. When one of the market participants introduces new things in customer service. The company stands out in this period, given the presence of a new competitive advantage.

Stage II. Addictive. The proposed service is becoming familiar to consumers, and an analogue is gradually being introduced in the activities of competitors.

Stage III. Requirement. For consumers, this offer becomes an integral part of a service or product, passing into the category of standards.

How to check the level of service in your company

• Conducting informal surveys. The CEO and other executives need to understand what consumers think about the service they offer.
• Conducting formal interviews (focus groups). Will rationally involve both consumers and representatives of all departments of his company for these events.
• Hire third-party consultants to survey company employees. Freelance consultants increase the value of responses (with more candid responses).

How to improve the service

Tatiana Grigorenko, Managing Partner, 4B Solutions, Moscow

Let's consider general tips for improving the service in the work of companies.

1. Surprise, affect emotions. Typically, visitors to the office are offered tea bags or instant coffee. We decided to pleasantly surprise our customers - the visitor is offered a choice of 6 types of professionally prepared coffee, 6 excellent varieties of tea with branded chocolate for dessert.

2. Break the rules. In today's market it is ineffective to be like everyone else, you need to be better than the rest.

3. Listen to your customers. Need to ask customers what they will be interested in?

How to create a competitive advantage

When developing a competitive advantage, there are nine criteria for a successful option to consider:

1) Uniqueness.

2) Long term. Competitive advantage should be of interest for at least three years.

3) Uniqueness.

4) Plausibility.

5) Attractiveness.

6) Have ReasonstoBelieve. Specific reasons that will lead buyers to believe.

7) To be better. Buyers should understand why this product is better than others.

8) Have the opposite. There must be a complete opposite in the market. Otherwise, it will not be a competitive advantage.

9) Brevity. Must fit into a 30 second sentence.

Step # 1. We make a list of all the benefits

Product benefits are sought as follows:

- we ask buyers what competitive advantages they hope to get at the expense of your product;

- make a detailed list of all the properties that the product has, based on the characteristics from the "marketing mix" model:

1) Product

What can be said about the product:

- functionality;

- brand symbols: logo, name, corporate identity;

- appearance: packaging, design;

- the required quality of the product: from the position of the target market;

- service and support;

- assortment, variability.

2) Price

What can be said about the price:

- price strategy for entering the market;

- retail price: the selling price of a product must necessarily be related to the desired retail price, only if the company does not become the last link in the overall supply chain.

- pricing for different sales channels; different prices are assumed, depending on a specific link in the supply chain, a specific supplier;

- package pricing: with the simultaneous sale of several products of the company at special prices;

- policy regarding the conduct of promotional events;

- availability of seasonal promotions or discounts;

- the possibility of price discrimination.

3) Place of sale

It is necessary to have a product on the market in the right place so that the buyer can see and purchase it at a suitable time for himself.

What can be said about the sale meta:

- sales markets, or where the sale of goods is planned;

- distribution channels for selling goods;

- type and conditions of distribution;

- conditions and rules for displaying goods;

- issues of logistics and inventory management.

4) Promotion

Promotion in this case involves all marketing communications to attract the attention of the target audience to the product, with the formation of knowledge about the product and key properties, the formation of the need to purchase goods and repeat purchases.

What can be said about promotion:

- promotion strategy: pull or push. With the Push strategy, it is supposed to push the product along the trade chain by stimulating intermediaries and sales personnel. Pull - "pulling" products through the distribution chain by stimulating consumers, the final demand for their goods;

- target values ​​of knowledge, brand loyalty and consumption among their target audience;

- the required marketing budget, SOV in the segment;

- the geography of your communication;

- communication channels for contact with consumers;

- participation in specialized shows and events;

- media strategy of your brand;

- PR strategy;

- promotions for the coming year, events aimed at stimulating sales.

5) People

- employees who represent your product and company;

- sales staff in contact with target consumers of the product;

- consumers who are "opinion leaders" in their category;

- manufacturers, on whom the quality and price of the goods may depend;

- Preferred consumer groups also belong to this group, including VIP clients and loyal customers who generate sales for the company.

What can be said about working with people:

- programs for the formation of motivation, with the development of relevant competencies and skills among employees;

- methods of working with people on which the opinion of the consumer audience depends;

- education and loyalty programs for your sales staff;

- methods for collecting feedback.

6) Process

This applies to the service market and the B2B market. The "process" implies the interaction between the company and the consumers. It is this interaction that forms the basis of buying in the market with the formation of consumer loyalty.

• Unique selling proposition: examples, development tips

You can talk about programs to improve the process of providing services to your target customers. The aim is to ensure maximum comfortable conditions for buyers when purchasing and using the proposed service.

7) Physical environment

This also applies to the service market and B2B. This term describes what surrounds the buyer at the time of purchasing a service.

Step # 2: Rank All Benefits

A three-point scale for the importance of characteristics is best suited for evaluating a list:

1 point - the benefit of this characteristic for target consumers is of no value;

2 points - the benefit is not primary, which stimulates the purchase of goods in the first place;

3 points - the received benefit is one of the most significant properties of the offered service.

Step # 3. Compare the list of benefits with competitors

The resulting list of characteristics should be compared with your competitors on two principles: whether the competitor has a given property, whether the competitor's condition is better or yours.

Step # 4. Look for an absolute competitive edge

Among the sources of absolute competitive advantages, it should be noted:

- the product is unique in one or several properties;

- uicality in the combination of properties;

- special components of the product composition, a unique combination of ingredients;

- certain actions are performed better, more efficiently and quickly;

- features appearance, form, packaging, method of sales or delivery;

- creation and implementation of innovations;

– unique technologies, methods for creating a product, patents;

- Calification of personnel and the uniqueness of their human capital;

- the ability to ensure the minimum value in your industry, while assuming a higher profit;

- special conditions of sales, after-sales services for consumers;

- availability of access to limited raw materials and resources.

Step # 5. Look for “false” competitive advantages

First-mover. Be the first to announce the properties of competitors' products, before they have not yet informed their target audience about them;

Performance indicator. Creation of your own performance indicator;

Curiosity and interest. You can stand out thanks to a factor that is not considered decisive when buying, but will attract the attention of the target audience.

Step 6. Make a development and control plan

After identifying a competitive advantage, you need to form two further marketing action plans - a plan to develop your competitive advantage for the next few years and a plan to maintain the relevance of the presented advantage.

How to analyze your current competitive advantage

Stage 1. List Assessment Parameters

Create a list of the key competitive advantages of your product and competitors.

For assessment, a three-point scale is best suited, according to which:

1 point = the parameter in the competitive advantages of the product is not fully reflected;

2 points = the parameter in the competitive advantage is not fully reflected;

3 points = the parameter is fully reflected.

Stage 3. Make a development plan

Form your action plan to improve the company's competitive advantage. Improvements should be planned for items on the assessment that are given less than three points.

How to develop competitive advantage

Competitive behavior in the market can be of three types:

Creative. Implementation of measures to create new components of market relations to gain a competitive advantage in the market;

Adaptive. Taking into account innovative changes in production, outstripping competitors in terms of production modernization;

Providing-guaranteeing. The basis is the desire to maintain and stabilize the obtained competitive advantages and market positions in the long term due to the addition of the assortment, improvement of quality, additional services to consumers.

The duration of the retention of competitive advantages depends on:

A source of competitive advantage. Can be a high and low order competitive advantage. The advantage of a low order is represented by the possibility of using cheap raw materials, labor, components, materials, fuel and energy resources. At the same time, competitors can easily achieve low-order advantages by copying, searching for their sources of these advantages. The advantage in the form of cheap labor can also lead to negative consequences for the enterprise. With a low salary for repairmen, drivers, they can be lured away by competitors. The advantages of a high order are the excellent reputation of the company, specially trained personnel, production and technical base.

The number of clear sources of competitive advantage in the enterprise. Large quantity competitive advantages of the enterprise will seriously complicate the tasks of its competing pursuers;

Constant modernization of production.

How to survive the crisis and maintain a competitive edge

Alexander Idrisov, Managing Partner, StrategyPartners, Moscow

1. Always keep your finger on the pulse of events. Some of the employees should be engaged in the collection and analysis of information about the state and trends of the market, how these trends can affect the business, taking into account the study of consumer preferences, demand dynamics, data on investors and competitors.

2. Develop the most pessimistic forecast for your company.

3. Focus on paying customers.

4. Focus on a narrow range of tasks. You need to take a close look at your company's business model. This does not mean that you need to abolish all areas of your activities. But it is worth focusing on a narrow range of tasks, abandoning non-core tasks or areas that can be outsourced.

• Reframing, or How to Deal with Customer Objections

5. Consider teaming up with competitors. Many companies are now ready for alliances with competitors on mutually beneficial terms.

6. Maintain relationships with potential investors. A particularly important condition during a crisis is that you must not lose ties with investors; it is better to activate them whenever possible.

Information about the author and company

Alexander Maryenko, project manager of the group of companies "A Dan Dzo", Moscow. Graduated from the Finance Faculty of the Nizhny Novgorod State University. Participated in projects (more than 10, of which in six - as a leader) aimed at increasing the profitability of companies' business and solving their systemic problems.

John Schole, President, ServiceQualityInstitute, Minneapolis (Minnesota, USA). It is considered the pioneer of the service strategy. At the age of 25, he founded a firm specializing in service culture training for companies. Author of five bestsellers on the topic of the service, translated into 11 languages ​​and sold in more than 40 countries around the world.

ServiceQualityInstitute Company formed by John Schole in 1972. He specializes in the development and implementation of service strategies in companies. More than 2 million people have been trained by ServiceQuality Institute specialists. The main office is located in Minneapolis, branches - around the world (in 47 countries), their share is 70% of the total number of representative offices of the company. ServiceQualityInstitute and John Shoul are represented in Russia by ServiceFirst.

Tatiana Grigorenko, Managing Partner, 4B Solutions, Moscow.

4B Solutions founded in 2004. Provides outsourcing and consulting services. Areas of specialization - improvement of customer service systems, crisis management, professional legal and accounting business support. The staff of the company is over 20 people. Among the clients are the Business Aviation Association, the Triol corporation, the Rafamet machine-tool plant (Poland), the ANCS Group, IFR Monitoring, MediaArtsGroup, the Gaastra boutique chain.

Alexander Idrisov, Managing Partner, StrategyPartners, Moscow.

StrategyPartners. Field of activity: strategic consulting. Organization form: LLC. Location: Moscow. Number of staff: about 100 people. Major clients (completed projects): Atlant-M, Atlant Telecom, Vostok, GAZ, MTS, Press House, Razgulyay, Rosenergoatom, Russian Machines, Talosto, "Tractor Plants", "Uralsvyazinform", "Tsaritsyno", publishing houses "Prosveshchenie", "Eksmo", the Ministry of Information Technologies and Communications of the Russian Federation, the Ministry of Regional Development of the Russian Federation, the Murmansk Port, Rosprirodnadzor, the administrations of the Arkhangelsk, Nizhny Novgorod, Tomsk regions and the Krasnoyarsk Territory, Avantix company.

Strategic management is designed to ensure the firm's long-term survival. Of course when it comes about 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 who is associated with the company is not happy about this relationship, he leaves the company, and after a while it dies. Therefore, survival in the long term automatically means that the firm is quite successfully coping with its tasks, bringing satisfaction with its activities to those who enter the sphere of its business interaction. First of all, this applies to buyers, employees of the company and its owners.

The concept of competitive advantage

How can an organization ensure its long-term survival, what should be inherent in it in order for it to cope with its tasks? The answer to this question is quite obvious: the organization must produce a product that will consistently find customers. This means that the product should be, firstly, interesting to the buyer so much that he is ready to give money for it, and, secondly, the buyer is interested in more 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.

Consequently, 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 creation and retention of competitive advantages involves the analysis of relations and, accordingly, the interaction of three subjects of the market environment. First, this is “our” company that produces a certain product. e ct is a buyer who may or may not buy this product. Thirdly, these are 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 contained in the product for the buyer, prompting him to buy this product. Competitive advantage does not necessarily arise from comparing “our” firm's product with those of competitors. It may be that there are no firms on the market offering a competitive product, nevertheless, the product of "our" firm is not sold. This means it doesn't have enough customer value or competitive advantage.

Types of competitive advantages

What creates a competitive advantage? It is believed that there are two possibilities for this. First, the product itself can have a competitive advantage. One kind of competitive advantage of a product is its price characteristic. Very often, a 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 consumer utility to the customer.

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 due to such characteristics that have nothing to do with its utilitarian consumer properties, for example, due to the brand.

Second, in addition to the fact that the firm creates a competitive advantage in the product, it may try to create a competitive advantage for its product in its market position. This is achieved by securing the buyer or, in other words, by monopolizing part of the market. In principle, such a situation contradicts 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.

Competitive Advantage Strategy

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

Rational business management based on accumulated experience;

Economies of scale by reducing unit costs while increasing production;

Savings on diversity as a result of reducing costs due to the synergistic effect arising from the production of various products;

Optimization of intercompany relationships, which helps to reduce general company costs;

Integration of distribution networks and supply systems;

Optimization of the firm's activities over time;

The geographical location of the firm's activities, which allows to achieve cost savings through the use of local characteristics.

Bringing to life pricing strategy To create a competitive advantage in the product, the company should not forget that its product must at the same time correspond to a certain level of efficiency. Only in this case, price leadership can bring a significant effect. If the quality of the product of the price leader is significantly lower than the quality of similar products, then the creation of 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 confused, 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, which the buyer may like and for which the buyer is willing to pay. A differentiation strategy is about making 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 obtain 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 a strategy of 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 a 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 for a competitive advantage to emerge, the product's unusualness, novelty or uniqueness must have value for the buyer. Therefore, the differentiation strategy assumes, as a starting point, the study of the interests of the consumer. This requires:

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

Study the 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 customer's perception of the product (sources of information about the properties of the product, image, etc.).

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

A third strategy that a firm can use to create a competitive advantage in its product is focusing on the interests of specific consumers. In this case, the company creates its product specifically for specific buyers. Concentrated product creation is associated 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 (a system for selling and delivering a product). By pursuing a strategy of concentrated creation of competitive advantages, the firm can use both price attraction of buyers and differentiation.

As you can see, all three strategies for creating competitive advantages have significant distinctive features that allow us to conclude that the firm should clearly define for itself what strategy it is going to implement, and in no case should these strategies be confused. 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 a competitive advantage.

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However, when making any changes, it is necessary to adhere to one of the main principles of marketing: first of all, when creating or changing a product, it is necessary to take into account the wishes and interests of the consumer.

This principle is the first step towards a successful and prosperous business. But attitude to consumers alone is not enough; it is necessary to create a certain competitive advantage that will allow it to overtake competitors in the chosen niche.

Creating an advantage

The term “competitive advantage” means an exclusively positive difference between a product and the products of competitive organizations. It is this advantage that is the factor by which the consumer chooses this product, and not the product of competing companies. A competitive advantage can be, for example, the quality of a product or service.

When creating a competitive advantage, it is important to adhere to two basic principles:

• This benefit should be really important to the consumer;
• The consumer must see and feel the competitive advantage.

Despite such a great efficiency in creating a competitive advantage, it must be remembered that competitors will still determine this advantage after a while and apply it to their products.

However, as practice shows, this time is quite enough to recoup costs, get significant profits and overtake direct competitors.

The creation of a competitive advantage should not take huge budgets of the company, therefore it is necessary to use a certain methodology that allows not only to create a competitive advantage, but also to significantly reduce the costs of this process.

This methodology can be divided into four main stages, each of which is an integral part of the entire process of creating product benefits:

• Segmentation;
• Specialization;
• Differentiation;
• Concentration.

Segmentation

In this case, the concept of a segment hides end consumers who are looking for this or that type of product with certain parameters. In other words, each consumer has certain needs and interests, based on which he chooses the necessary product. Thus, all consumers can be divided into groups of requests.

When carrying out (to individuals), sex characteristics, age characteristics, place of residence, vehicle availability, etc. are often selected as the parameters of the segmentation process.

In addition, sometimes more detailed consumer data is used, that is, targeting is carried out. On the other hand, customers can be organizations to which the product is supplied. In this case, segmentation is carried out according to the organization's belonging to a certain type: store, dealer, manufacturer, etc.

One of the main parameters of segmentation in this case is the number of the company, knowing which, you can easily determine the total amount of products passing through the organization.

After identifying the signs of segmentation and identifying the future competitive advantage, it is necessary to apply the usual marketing tools for product promotion: product advertising, direct introduction of the product in the company, sending letters with a request to purchase the product, and other methods.

Of course, all of these methods have a big problem: there is no guarantee that the company will decide to purchase the product. In this regard, there is a more practical way - the implementation of segmenting consumers based on the problems present in this area.

Surely, every business has a bottleneck that arises from the fact that consumers cannot find what they need. For example, customers of a butcher shop want a certain type of meat to cost 250 instead of 300 rubles.

Or so that the delivery of pizza home is carried out not in one hour, but in 30 minutes. Thus, segmentation is carried out according to unsatisfied consumer requests.

It is quite easy to assess such requests, for example, by a regular survey of potential consumers. Polls have always yielded the most effective results. After analyzing the results of the survey, the most acute problem is selected and a competitive advantage is built on its basis. Thus, the promoted products will be associated by the target audience with this particular competitive advantage.

Specialization

Identifying problems in a certain segment of the market is only half the trouble. It is necessary to decide on one problem that needs to be eliminated and made an advantage. However, this is not as easy as it seems. The choice of a specific problem for its further solution depends on a number of factors, which include money, the presence of certain conditions, personnel, time.

In particular, time, money and personnel are the determining criteria in choosing a specific problem. After all, with a large budget, unlimited time and specialized personnel, you can solve any problem. Therefore, before choosing, it is necessary to correctly assess the available resources.

An equally important step is to assess the importance of the problem. The relevance and severity of a specific problem determines the success of the work of a competitive advantage. That said, don't pick a problem that other organizations can easily fix. And, of course, do not forget about the eternal problems that exist in every market segment.

It's about price, staff and range. Each consumer always wants the purchased products to be of the highest quality and cheapest in a huge assortment, and the service personnel did everything to ensure that he was satisfied and arrived in a good mood.

These problems cannot be completely and permanently eradicated, since nothing is ideal. But you can reduce the severity of the problem by increasing the quality, reducing the cost of products, expanding the range and recruiting qualified personnel.

Evaluating all the factors and criteria presented above, it is required to choose the most suitable problem that will be able to cope with. At the same time, it is important to remember that the more acute the problem, the more effective it will be to create a competitive advantage, and the longer this advantage will last. In this regard, the difficulty of the entire process of creating a competitive advantage is only a plus, and not vice versa.

Differentiation

Having decided on the problem that needs to be solved, that is, after identifying a competitive advantage, it is necessary to start advertising. The stage of differentiation as a whole consists in the implementation of various kinds of advertising.

At the same time, it is necessary to advertise not just a company, service or product, but to advertise with an emphasis on the chosen competitive advantage. Thus, the consumer will know that this particular product has a certain advantage that he has been looking for from other companies for so long.

At the same time, it is not prohibited to use various images and graphic techniques, slogans and quotes, the main thing is that the emphasis is on the competitive advantage of the product.

But so that it is not short, since all consumers have different inertia in the perception of advertising, that is, a certain period during which the target audience gets used to the advertising material. This period is different for all groups.

Thus, for individuals, the inertia of perception of advertising is usually up to 6 months, and for organizations - up to several tens of months. Of course, this indicator depends on the specifics of the product being promoted and the business as a whole.

Concentration

The stage of concentration is equally important in creating a competitive advantage, since it is negligence, relaxation, and absent-mindedness that can cause failure. For the most effective creation of a competitive advantage, it is recommended to make this task a priority by communicating to all employees of the company. It is this pace and daily work on this problem that guarantees the continued success of the product.

Don't forget about re-segmentation, which is recommended annually. It will not only help to identify new problems in a specific market segment, but also determine the current state of affairs in relation to the previously selected competitive advantage, which will make it possible to more accurately assess the company's strategy in the market and draw the right conclusions.

Combining all the stages, and competently performing each of them, it is important to remember that creating a competitive advantage is a rather complicated and time-consuming process that requires considerable financial and time costs. Therefore, the stages of segmentation and specialization are so important for choosing a problem and assessing the possibilities of solving it.

If there is a financial opportunity, re-segmentation is often useful, but already in its own region, in the region of the manufacturer. With a professional and competent approach due to the competitive advantage, the company makes a significant step forward.