XIII Международная студенческая научная конференция Студенческий научный форум - 2021

Introduction

Securing national business competitive power – is the problem which both business representatives and government authorities are in search of the solution to. First and foremost companies tend to consolidate their positions and secure competitive edges of their products and their concrete enterprise. However in case of potential or real threat to their completive ability concerns the interests of the whole branch, the companies often pass to industry-wide level and work out corporate actions in order to consolidate the positions of the whole economy sector. Speaking of a national competitive ability a state, first and foremost, means competitive ability of national economy in whole, understanding that for that end there is a need for competitive branches, enterprises and products. With this end in view authorities will offer various methods of business support, change laws and regulations, solve infrastructural and environmental matters etc. Yet, so far there are no universal formulations regardless of the level these competitive ability problems are solved on. In each specific situation the result can be both positive or negative as the environment where such business competitive advantages are formed is very complex, multifarious and dynamic. The present study intends to examine the idea and factors of business competitive ability, so that from this point on offers a range of tools which will be the most effective in competitive abilities control on the level of companies in the near decade.

Idea and factors of competitive

ability The term "competitive ability" during the last 20 years became rather actual because a great number of new states entered the circle of the world economy so economical competition among countries has strengthened1 . Revelation of national markets, lowering of trade barriers, globalization and internationalization processes as a whole led to that sort of aggravation of competition, so in actual fact none of a company in the world can be sure in its tomorrow. There are always new threads on the horizon in the form of pioneer substitute products, bankruptcy of suppliers, changes in tax regulations, rates of exchange, countries entering WTO, world crisis etc. The actuality and complexity of the problem can be confirmed by the fact that the questions of competitive ability are considered by economists of different specializations and are set out in various economic disciplines. Thus, competitive goods is mainly marketing field of research, which educe essential consumer qualities and terms of goods proposal in the market with a view to ensuring great demand for it. A competitive company – is the problem of strategic management which allocates the targets of business profitability and its benefits, which are necessary for long-term market presence. The competitive branch and national economy are studied by specialists in the field of world economy as here the competition is of international aspect and the function of government regulation in some cases is of fundamental importance. On account of the fact that the idea is multilevel there is no single, recognized definition of the term "competitive ability. Therefore prior to relying on one oа the multiple definitions we need to define which level is the key and backbone one. Without controversy that is the level of a company. It is just a company and, to be more precise, its actions an decisions realized by its managers and employees make products, compete with other national and foreign companies, together with other companies of the country form a branch and contribute in national GDP. The leading researchers in this field consider market share and profitability as the basic criteria2 . The positive dynamics of these rates in the longer term mean that the product of a company finds a market, i.e. it is competitive, that the branch wherein the firm is functioning is consolidating on domestic or foreign markets, that it contributes to national economy by way of work positions, taxes, levies and other payments. However, while distinctly understanding the main objectives of their business and criteria of competitive ability, all too often companies do not know where to find growth sources and do not investigate which factors bring an appreciable effect and which should not be considered at all. Aside from that when colliding with changes managers often respond to accomplished events just using intuition or the most evident shortrun decisions. Yet it would be more effective to foresee the events which can influence their business, and to develop reaction strategies through acting proactively. In such a manner business may not wait for any changes but to create, but to provoke them pro domo sua. The most complete system of sources of competitive advantage of a company was suggested by an English scientist in the field of strategic management R. Grant. One of the approaches he proposed lies in separation of inner and external sources. For example the exter nal sources include shift in consumers' tastes, onset of new goods and services on the market, departures of foreign economic policy of the state, changes of free market prices etc. Yet to the end that the external change frames the calmative advantage, it must render differentiated effect on companies owing to their various resources and responsibilities or strategic positioning3 . The peculiarities of the internal environment of a company, its resources and business processes define the character and rate of response to external changes, that's why the quality of internal environment also leads to enhancement or loss of competitive ability

Competitive ability control – environmental factors

The strategy generation on changes of external environment first of all requires of external factors classification exercise. Here we can start from the immediate business environment: competitors, consumers, suppliers. The company faces them in day-day work and this fact forces it to keep eyes skinned and control all possible changes. Changes in consumer behavior can be connected with descent of shopping ability (for example amid crisis), with appearance of more cheap and\or qualitative substitutes, competitor's new advertising campaign etc. Each concrete situation needs its own approach. For example, the Dutch company Schick found an effective marketing decision when capturing the Japanese market, a manufacturer of shaving blades, at struggle with the world leader Gillette. The Dutch made accent on adaptation and took up 62%. They changed their name involved a Japanese actor and effected sales through the Japanese distribution system. Americans used the strategy of standardization and took up 10% of the Japanese market4 . Competitors' actions can be unrespectable. At that a company should take into account not only the acting players, but also the possibility of apparition of new competitors or substitute goods. New competitors are inclinable to appear in those branches which demonstrate high profitability over a period of time and where there are no clear-out leaders, oligopolists, monopolists and big companies, which have a liberal market share and the products approved by customers. And appearance of substitute goods and services in XXI century of innovations and technologies will cause no surprise in any branch. Aside from the immediate environment of the company changes in external environment changes can take place in other fields: in economic policy of the nation-state or the consolidated companies' states, in word economy in general, in changes of climate and ecology, in demographic structure and cultural values of the countries where business is conducted etc. The meaning of these non-sectoral factors is not always fast, but thereon the result of their changes does not become less sensitive, and in some cases it is enormous. While understanding all the threats and possibilities from the external environment, business needs a set of efficient measures to react adequately. At the present time the generally recognized means in competitive struggle and survival on the market is co-operation. At that the co-operation in world-practice every so often results in business combination and appearance of more stronger player on the market, who can stay more effectively against external press. Thus, having realized their inability to tide over on the world and even national market many automakers from Central and Eastern Europe, entered production and technologic alliances with leading manufacturers, and eventually this turned out to be an intermediate form of full inter-corporation integration. It will be remembered that alliances between German firm MAN and Polish firm "Star", Italian "Iveco" and Serbian "Zastava", French "Renault" and Czech "Carosa", Korean "Daewoo" and Czech "Avia" eventually ended with eastern-European automobile firms joining their foreign partners5 . At large merger and acquisition across the globe – is, as a rule, reaction of the companies to arising crises and competition stiffening. In the history of the global market M&A there were six peak periods. Economic crises played a key and generating role in these processes6 . Yet merger and acquisition can be used by business, including small and medium, and with the view of forcing change of external environment, rather than as a reaction to the events which have already happened. If business expansion rates are falling and there are no internal sources of optimization and development, then merger with one of the competitors or his absorption can give the strongest impulse concerning further development of the company. In such a manner a company changes the structure of the market: the number of players is declining, a competitive pattern and market power of individual firms are changing, a character of mutual relations with customers and suppliers is modifying. Yet we should remember that the strategy of merger and acquisition is not perfect. Business merging can lead to stiffening, complication of processes of development and decision making, excessive diversification and synergetic effect decrease. We should not forget the would-have-been union of automobile giants Daimler-Benz (Germany) and Chrysler (USA). Strategic alliances widely used nowadays can be an alternative to merger and acquisition – a modern form of intercompany cooperation. Apart from the alternative to excessive integration of business they are also effective when companies need to join efforts not in the whole business sector, but only in one or several directions. Apart from preserving flexibility and independence, the significant advantage of alliances as against the strategy of merger and acquisition is the possibility of joining efforts for not just two or maximum three companies but for unlimited number of them. Nowadays alliance networks are formed in a number of areas of the world economy, which fully transform competitive pattern, thus creating categories of oligopoly or duopoly. A prime example of such a situation is the market of international air transportation. Starting with 1997, three alliances of air transporters were formed: Star Alliance (1997), One World (1999) and Sky Team (2000). Each of them includes nearly twenty players. Through entering an alliance any air company in the world gets access to possibilities of widening customer bases and cost cutting, i.e. it directly leads to growth of competitive ability by means of market-share gain and level of profitability. Companies, outside alliances, confine their possibilities on the market of international air transportation and have to cash on freight routs and/or inner routes. Being a source of growth owing to extra inputs, cooperation of companies anyhow exert enormous influence on internal environment of firms which joined their efforts. An as it was mentioned above, the quality of inner environment is of paramount importance in providing business competitive ability and only the best configuration of external and inner environment can bring a long-term, positive effect. Consolidated firms or the firms which entered an alliance improve their internal resources, methods and processes of management and organization of business due to the following possibilities: access to a partner's knowledge and technologies, co-developing of innovations, exclusion of redundant functions, operating activity optimization, division of powers etc. This changes in internal environment in addition to external sources give additional competitive advantages which will be considered below.

Competitive ability control – internal environment factors

By all means business external environment is the most important base for searching for competitive advantages. Yet, regardless of all the possibilities of a firm concerning analysis and taking up timely measures while changing the external environment, in some instances all these efforts will be just ineffective. First of all it concerns the situation when substitute goods and services appear. Thus type-writers vanished when personal computers appeared, business correspondence overnight delivery companies showed up on the verge of bankruptcy when faxes and e-mail appeared, film cameras were replaced by digital ones, nowadays smartphones successfully push out classic mobile phones. In all cases as listed one market leaders were replaced by others and the first had to play the secondary roles or leave the market at all as they were not familiar with new technologies. Now we can see Nokia loses its position and iPad Apple cones to the front. It is not a surprise for everybody that during the last two years Apple in particular became the most expensive brand ($ 100,24 bln. in 2012)7 , though just three years ago, in 2009, Apple was in the second ten and Nokia took the 5th place8 . Scientists-economists have started talking about instability of the exter nal environment and necessity for constructing business competitive ability on the ground of internal resources and competence in the middle 90s of the 20th century. At the heart of this approach lies the fact that a firm – is a special combination of resources and competences, and these resources and competences are the primary determinants of its strategy9 . Really, what should producers of type writers do when nobody wants to by their product? To put in vast facilities in absorption of computer technologies so that not to lose their clients and market? If taking such a decision a company preserves the external environment, responding to its demands. But collapse of this decision is evident. It would be far more efficient to give up producing type writers and try, on changing the market and external environment, to produce another product where similar technologies are in demand. For example it could be electric shavers or small domestic electric appliances. In such a situation the risk of collapse will be lower; and it will be far more easier to save business, though in other environment. Unfortunately, Kodak did not use this logic and started producing digital cameras stand ing far behind; and eventually it led to bankruptcy in 2012. Therefore a company should never neglect the significance of internal environment in securing competitive ability and not just work out its quality on behalf of the current business, but to look for the possibilities for use of the resources it has in other, best of all innovative spheres. There are no universal formulae of control as for internal environment. The first action for the company to take – is, like in the case of eternal environment is to classify factors of internal environment so that to be able to fetch out narrow spaces or strengthen the strong points from then on. Traditionally the inner environment of a company is divided into resources and competences or businessprocesses. In their course interaction of resources takes place. The recourses can be divided into material, non-material and human. Business-processes, according to the approach suggested by an American scientist M. Porter, where he calls them types of activities, can be nominally divided into two categories: primary activity and secondary (supporting) one. The most important modern characteristics of quality of the inner environment of a company – is availability of knowledge. Knowledge, created all alone or obtained by a firm, which allow to predict changes, create innovations and take correct strategic decisions give the very same competitive advantage a firm is holding out for. Therefore in the 21st century, the ability to create, exchange and improve knowledge will be replaced by possession and / or control over actives as a supreme source of competitive advantage11. At the present time it is safe to say that neither resources, whatever valuable they are, nor business-processes wherein interaction of resources takes place the value is created, that is special, beyond the reach of copying by competitors, ability to create knowledge is the source of competitive ability. Knowledge is created by people and if we want the process to be effective and involved all human resources of an organization, according to the scientists M. A. Hitt and R. D. Aerland, we need to reconsider the treatment of corporate governance. Corporate governance should be realized not in an authoritarian way, but through the agency of strategic leadership realized by a group of top-managers. Strategic leadership is the ability of a man to anticipate, foresee, support flexibility, think strategically and work with others for initiation of changes which will create economically viable future for an organization12. The processes of strategic leadership assume that all the employees of a company are considered not as salaried workers but as citizens of society interested in its prosperity. Due to the fact that information and knowledge, necessary for creation of competitive advantage can be taken at any time and place, managers should keep away from giving answers but should ask their employees right questions. The most effective strategic leaders should have the ability to work with all citizens of organization in order to find the ways of combination of resources, abilities, and key competences with the corresponding opportunities for growth.

Conclusion

Securing business competitive abilities in the 21st century, in the age of globalization, innovations, knowledge and technologies becomes more and more troublesome problem for companies. Ability to foresee changes, initiate them and quickly make effective strategic decisions becomes the supreme factor as a security of leading positions on the market. Such changes can take place in internal or external environment of a company and be both the sources of competitive ability and threats for it. At the present time the most effective tools of business reaction to the dynamics of external environment factors or its forced change are cooperation of firms and merge. These two strategies of external growth are widely used in business and give a range of advantages necessary for consolidation and leadership on the market. In recent times factors of internal environment of a company play the decisive role among external and internal sources of competitive ability. Quality and diversity of recourses and business processes, a company's ability to create knowledge and innovations determine the quickness and effectiveness of reaction as for changes in external environment. Strategic leadership, as a new organization management style in the 21st century wherein management direct all human recourses of a company to creation of knowledge and innovations, has the most important meaning in management of internal environment. And it results in business cost increase, market share and level of profitability as the basic indexes of a company's competitive ability.

References

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