IN modern conditions economic development of Russia, the category of competitive position is one of the key concepts, since it concentrates the economic, scientific, technical, production, organizational, managerial, marketing capabilities of any market entity.
In order to further operate the concept of “competitive position”, describe and analyze approaches to its assessment, we consider it necessary to consider the most common definitions of the competitive position of an organization today in modern domestic and foreign theory and practice of competitive relations.
In a general sense, the term "competitive position" is defined by M. Porter as "the position that the company occupies within the industry ... a reflection of the endless war of competitors" According to M. Porter, the position in the industry is determined by competitive advantage, along with the structure of the industry, it is the basis for choice of competitive strategy of the enterprise.
From the point of view of the American marketer A. Little, a competitive position is a comparative characteristic of the main parameters of a company relative to a competitor.
G. Azoev defines a competitive position as one of the typical provisions of an enterprise, "... differing in the degree of use of competitive advantages and the potential ability to withstand the pressure of competitors."
I. Ansoff uses the concept of the competitive status of an enterprise as a position in competition, a kind of measure of market position.
J.-J. Lamben, without giving a definition of the concept of "competitive position", identifies four types of competitive position depending on the productivity of the enterprise (the cost of a unit of production compared to a priority competitor) and its market power (the maximum acceptable price compared to a priority competitor).
Competitive position - a set of goals and resources of a company competing in a given target market.
So, having considered the existing definitions of the concept of "competitive position", we can conclude that there are a variety of interpretations this concept in modern economic theory. As synonyms for competitive position, scientists and specialists in the field of competitive analysis use the concepts of “competitive status”, “competitive position”.
In our opinion, a single component of most of the above definitions of a competitive position is that the competitive position reflects a certain place of the enterprise in the market, its comparative position in relation to competitors.
The competitive position of enterprises is determined by their goals, specifics of the ongoing product and pricing policy, marketing organization, methods of stimulating the sale of products, financial condition, the assessment of which is the first initial action of competitive analysis.
Competitive analysis is a multi-stage process, where each stage has its own methodological content. For a clear orientation of the analysis and increase the objectivity of its results, it is fundamentally important to determine subject, object and goals competitive analysis.
The full realization of the goals of the analysis largely depends on how correctly the geographical and product boundaries of the market in question are defined. When choosing a market geography, a number of factors must be taken into account.
- 1. The specifics of the use of the goods. It is determined by its purpose. For industrial goods, the boundaries of the market should be determined taking into account the location of the enterprises - producers. In the case of consumer goods, the sphere of sale, that is, the network of wholesale and retail and its territorial location.
- 2. Reasonable alternativeness of the goods offered on the market. An unreasonably narrow market boundary can lead to the fact that even a small retail outlet selling standard products can act as a “territorial” monopolist due to the lack of an alternative supply in the territory in question. If the produced product is really considered unique for the given region and at the same time is not the product of a monopolist, it is necessary to expand the boundaries under consideration until there is a reasonable (from the point of view of remoteness) number of alternative offers.
In the case of products of domestic monopolists, the geographic boundaries of the analysis may include foreign markets, if they are available in terms of prices, quality and geographical distance.
- 3. The cost of transporting goods to the place of their use. All manufacturers (sellers) of the goods in question should be in the zone of maximum accessibility for the consumer, taking into account the actual transport network. An enterprise that produces similar products cannot be considered a competitor if the cost of transporting its goods to a given region increases the price of the goods to a non-competitive level. It is advisable to limit the geographical boundaries of the market under consideration to the territory for which the cost of transporting goods to the consumer does not exceed 10 percent of the market value of products.
- 4. The frequency of purchases has a great influence on the consumer when choosing a seller. The more often a product is purchased, the narrower the geographical boundaries of the market should be and vice versa. This is due to the requirement to save time that the consumer spends with each purchase.
Thus, the geographical boundaries of the market are expanding with an increase in the degree of uniqueness of the product and its complexity. On the other hand, they narrow down with weak and expensive communication, a short service life and high product unification.
In fixed grocery and geographical boundaries ah, the subject of competitive analysis can be any of the elements of the company's integrated marketing activities in the market: product, price, marketing and communication.
For example, if the direction of competitive analysis is price policy competitors, then its goals may be price segmentation of the market; determination of competitors' pricing methods; assessment of their pricing strategies or reactions, etc. Competitive analysis of product policy consists in collecting and systematizing information about competitors' products, their stage of life cycle, determining the assortment and brand policy of firms in the market, etc. Competitive analysis of marketing policy involves the collection of information on the marketing network of competitors and analysis of its structure, identification of intermediaries, assessment of the competitive position of the enterprise.
The subject of the study of competitive analysis in our work is the marketing policy of firms. The purpose of the analysis was to assess the competitive positions of airlines.
The assessment of competitive positions traditionally begins with an analysis of the market or its segment, which consists in the systematic identification of all the circumstances associated with its real and potential participants.
Identification of existing and potential competitors involves the use of various techniques: drawing up both a complete and incomplete list of competitors. When compiling a complete list of competitors, all possible competitors are selected. For its formation, you can use, for example, the typology of F. Kotler's competitors: branded, specific, generic, competitors of desire.
Not full list competitors is compiled when not all competitors selected according to the above criteria pose a threat to the enterprise in question, and in order to save financial resources many of them exclude such "neutrality" from the desired list.
In an incomplete list, competing firms are grouped as follows:
1. Selection of the nearest competitors.
The analyzed enterprises include competitors that produce similar products, the volume of sales of which in physical and value terms is closest to the corresponding values of the enterprise in question.
2. The choice of more powerful competitors.
Financially more powerful enterprises with a higher market share are selected for analysis. Usually these are enterprises that determine the nature of competition and have clear competitive advantages. The results of the analysis make it possible to build models of the most effective competitive behavior in this market and develop means for their implementation (imitation, search for new ways, confrontation with the leader, etc.).
3. Selection of enterprises with a significant total market share.
As a rule, this is the most representative part of the enterprises (total market share > 50%), which determine the main trends and traditions of this commodity market. Analysis based on such a base is complete and time-consuming. It allows you to detail the conclusions for various market situations and develop wide range both offensive and defensive actions.
- 4. The choice of all existing competitors within the geographical boundaries of the market makes it possible to conduct a systematic analysis of competition in the industry due to the completeness and representativeness of the composition of the objects under consideration. The results of the analysis can be used in long-term plans for the development of the enterprise.
- 5. Selection of all possible competitors.
In addition to operating enterprises, this group also includes potential competitors that may appear in the analyzed market in the near future. These businesses may include:
- - under construction enterprises of the industry;
- - enterprises that do not operate in this business, but are able to overcome the "entrance barrier" without significant difficulties or have production capacity, which can be re-profiled for the production of this product without a significant investment of time and resources;
- - firms of an innovative nature, manifesting themselves by extraordinary, hard-to-predict actions;
- - enterprises for which competition in the analyzed market (in the industry) is a logical continuation of the existing business;
- - consumers and / or suppliers of products who seek to make their technological chains more complete “supply production implementation service;
- - new firms formed as a result of the acquisition of outsiders in this industry by large firms from other industries;
- - new joint ventures, etc. .
Thus, an incomplete list may consist of the closest competitors or include the most dangerous of them, from which, for example, "attack" actions can be expected in the near future. It can also be compiled on the basis of the benchmarking approach, then the best marketing developments of competitors, in our case, marketing ones, should fall into the field of competitive analysis.
The choice of one or another of the listed methods for preparing a list of competitors depends on the subject and goals of the analysis, the characteristics of the competitive situation in the market, the resources of the enterprise, and, of course, its competitive position, in relation to which the analysis is carried out.
In our assessment of competitive positions, we determined that this would be a complete list of branded competitors, i.e. we will be interested in all firms producing similar products within the established geographic and product boundaries of the market.
Starting to assess the competitive position of the company, it is required to collect, analyze, distribute and use a large amount of information accordingly. The quality of the information received and the effectiveness of its use in the analysis process largely depend on the accuracy of the problem formulation. Without a correct definition of the essence of the tasks to be solved, the collected information can be harmful and lead to the opposite effect. At the same time, if the essence of the problem is defined correctly, the task of selecting the data necessary for analysis comes to the fore.
When determining the composition of the data used, it is important to constantly compare the value and significance of the results obtained during the analysis. In other words, it is necessary to correctly determine your position regarding objective, but rather “expensive” results, and “cheap”, but not accurate enough.
Data specifically collected to analyze specific aspects of a competitor's business, i.e. primary information about the facts of interest is of particular interest to the analyst. With its help, it is possible to answer the questions of interest quite accurately, unambiguously and with the necessary degree of reliability. Even though the collection primary information relatively large financial costs and significant time reserves are required, its use is a prerequisite for a specific focus of analytical procedures.
Secondary information about a competitor includes data that has undergone preliminary analytical processing, the purposes of which, as a rule, do not coincide with the goals of the analysis. In this regard, this information requires additional selection, ranking and compilation procedures that bring it into the form necessary for analysis. The main sources of secondary information include:
Thus, the assessment of competitive positions allows us to solve a number of interrelated tasks: to determine the features of the development of a competitive situation; establish the degree of dominance of the firm in the market; highlight the closest competitors.
For the correctness of the procedures, it is important to outline the analyzed geographical market, make a list of competitors and determine their goals. Knowing the intentions of competitors is necessary to clarify the degree of satisfaction with the current position and possible actions to change the existing alignment of forces. The prepared preliminary information serves to localize the general directions of the search and to give the subsequent work a purposeful character.
In general, competitor analysis should be seen as part of an ongoing market research process to study competitive practices in order to gain competitive advantage. As practice shows, research of this kind is a prerequisite for the success of goods, technologies, services offered on the market. They are effective when they are considered not only as an information tool, but also as a tool that provides the management of the enterprise with the necessary data to improve the potential of the management system.
"Competitive position is the position that an enterprise occupies in its industry in accordance with the results of its activities and its advantages and disadvantages in comparison with other enterprises."
Relevance of the topic. Modern theory competition is not complete in terms of general economic theory. However, studies of several scientific schools of competition helped to create general laws and concepts, on the basis of which the main applied areas used in management were developed. Meanwhile, the developed mechanisms for assessing the interaction between the competitive and internal environment of an enterprise do not allow determining the effectiveness of decisions in terms of improving or strengthening the competitive position of an enterprise relative to other manufacturers. Methodological developments in this area are limited by the need to comprehensively explore the external environment of the enterprise, which is difficult in modern conditions due to increased competition in all product markets, including food markets. On the other hand, with the help of management decisions, enterprises form and change the competitive environment of the market, so the use of a method that allows you to assess the competitive position of an enterprise in the market will allow you to choose the most effective directions for a survival strategy in a dynamic business environment.
The purpose of the study is to develop a method for assessing the competitive position of an enterprise. The main tasks to be solved to achieve it are:
1. The study of the approaches of various researchers to the definition of categories of competitive position, competitive advantages and competitiveness of the enterprise.
2. Analysis existing methods determining the competitive position of the enterprise and identifying the limitations of their application.
3. Development of a method for assessing the competitive position of an enterprise.
Competitive strategy of the enterprise. Marketing - as a system for ensuring the competitiveness of an enterprise. Strategies and complex marketing of the enterprise. Competitive strategy of the enterprise.
A competitive strategy is a set of rules and practices that an enterprise should follow if its goal is to achieve and maintain competitiveness in the relevant industry. Consequently, the competitive strategy of the enterprise is focused on achieving competitive advantages that provide the best and sustainable long-term financial position enterprises, as well as gaining a strong position in the market.
The scheme of the determining factors of the strategic success of an enterprise, based on the achievement of competitive advantages, taken into account in the formation of competitive strategies, is presented below. Scheme of determining factors of enterprise competitiveness. The strategic success of a firm depends on having a long-term and sustainable competitive advantage.
The duration of competitive advantage is determined by the ability of the enterprise to maintain and protect it from possible reproduction by competitors.
The sustainability of competitive advantage is determined by three factors: the source of the advantage; the number of sources of advantage for the enterprise and the ability of the enterprise to find new sources of competitive advantage. Competitive advantages of an enterprise can be classified according to the following features:
* according to the degree of their stability (with low, medium and high degrees of stability);
* competitive advantages with a low degree of stability. This kind of competitive advantage is readily available to competitors. For example, the competitive advantage of cheap work force or raw materials, achieving economies of scale from the use of technologies, equipment or methods readily available to competitors;
* competitive advantage with a medium degree of sustainability. This type should include competitive advantages held by more than long time. For example, differentiation based on unique products or services, company reputation, established product distribution channels;
* competitive advantages with a high degree of sustainability. This type of competitive advantage requires a combination of large capital investments with high quality performance. This category includes new discoveries, new technologies, and other opportunities for use or time to achieve (real and potential competitive advantages);
* real competitive advantages that determine the current competitive position of the enterprise in the industry;
* potential competitive advantages that serve as the basis for the future desired competitive position.
* the scope of competition or the scale of the enterprise (local, national, global competitive advantages).
* local, which are achieved within the environment (region, locality) where the enterprise is based;
* national, which are determined by the advantages of the country where the enterprise is located;
* global related entrepreneurial activity enterprises in the global market.
Two approaches to the formation of a competitive strategy are market orientation and resource orientation.
Market orientation. Specialists of the Harvard School (M. Porter and others).
A clear focus on sales markets and the choice of one of several types of universal strategies: leadership in cost reduction leadership in differentiation focusing on one of these areas, in relation to a certain group of customers, a certain part of the product or in a certain geographical market (in a narrow market niche).
Below are three main approaches to ensuring the competitiveness of the enterprise. Approaches to ensuring the competitiveness of the enterprise. Goals and methods of providing strategies. Cost leadership strategy. Differentiation strategy. A strategy to focus on a narrow market niche. Strategic goal. Gaining a large market share. Conquest of a narrow market niche, where the needs and preferences of buyers are significantly different from other market participants. The basis of competitive advantage. Ability to provide general level lower costs than competitors The ability to offer customers something different from competitors' products. Lower costs in meeting the needs of a given market niche or the ability to offer customers in this niche something specially tailored to their needs and tastes. The range of manufactured products. Good basic product with few modifications ( good quality with limited choice for buyers). Many varieties of goods, a wide choice, emphasis on advertising a few especially important features. Product differentiation. The range is tailored to meet the specific needs of the selected market segment. The basic principle of the organization of production activities. Constant search for opportunities to reduce costs without losing the achieved level of quality and essential parameters of the product. Finding new ways to better meet customer needs. Individualization of goods in accordance with the special requests of buyers of a selected market niche. Principles of organizing marketing activities. Formation of demand for a product in such a way that it is possible to continue to produce a product with those properties, 1. Endowing the product with all the properties that the buyer is willing to pay
2. Charging Premium Buyers to Cover. accentuation unique feature the seller to satisfy the very specific needs of buyers, which provide conditions for keeping the additional costs of providing the product with additional properties low.
Methods for maintaining the stability of the strategy:
1. Maintaining a balance (price / quality).
2. Maintaining superiority over competitors in terms of costs.
3. Strengthening the image of the enterprise, by relying on distinctive properties goods.
According to proponents of market orientation, the strategic success of an enterprise is a function of two variables: the attractiveness of the industry in which enterprises compete, and the competitive position of the enterprise in this industry. Factors that determine the competitiveness of an enterprise in the framework of the market approach to the formation of a competitive strategy. An attractive competitive position results from having a competitive advantage within certain capabilities, including, for example, the creation of a new product and the choice of customer segments served, the geographic location of the enterprise, the degree of vertical integration of the enterprise and the diversification of the enterprise, the focus on or selection of which is central to the strategy. In turn, the choice of opportunity can have an impact on the structure of the industry. Handy tool to compare the various strategic business areas in which business units operate, a special matrix developed by the Boston Advisory Group (BCG) is used.
Boston Advisory Group Matrix
In this matrix, to determine the prospects for the development of the organization, it is proposed to use a single indicator - the growth in demand. It gives the size of the matrix vertically. The horizontal size is given by the ratio of the market share held by its main competitor. This ratio should determine the comparative competitive position of the organization in the future. BCG matrix proposes the following classification of types of strategic economic units in strategic economic zones: "stars", "cash cows", "wild cats" and "dogs" and suggests appropriate strategies for each of them.
BCG matrix - universal tool for portfolio analysis. There are four groups of goods, for each of which there is a priority strategy. Products with low growth rates and high market share - "cash cows" - require little investment and yet bring a lot of profit. They are a source of funds for the development of the company. Optimal Strategy in relation to them - "harvesting". "Stars" have a high growth rate and bring a lot of profit. These are market leaders, but investments are required to maintain their position in the market. In the stage of maturity, the "stars" turn into "cash cows". "Dogs" have a small market share and low growth rates. The cost of their production is relatively high compared to competitors. If these are not related products that are needed to maintain the assortment, then optimal solution- remove them from the range or stop investing in them. And, finally, "difficult children" (or, in other words, "wild cats") - growth rates are high, but the market share is small. Increasing market share requires investment. If these are promising products, it makes sense to invest in their development in order to transfer them to "stars". If you do not support "difficult children", their growth will slow down and they will move into the category of "dogs". The activities of an enterprise are schematically depicted as a value chain and a value system. Value chain and system of value When choosing and forming a competitive strategy within the framework of the market approach, incentives, which are structural determinants, are important (Determinants of demand are factors other than price that affect demand. The determinants of demand include: - the level of personal disposable income of consumers; - inflationary or deflationary price expectations - price changes for related products - socio-economic factors: market size, advertising, tastes and preferences, seasonality, changes in legislation, disasters, etc.) differences among competing enterprises in costs or preferences and behavior of a consumer or group of consumers. Incentives are at the heart of the sources of competitive advantage. Most of Meaningful incentives include the scale of operations, the accumulation of knowledge in the course of operations, the location of the enterprise's production facilities, the timing of investment in the course of operations, the degree of integration of the enterprise, government regulation, etc. Some group of incentives determines both relative costs and differentiation. The composition and significance of individual incentives varies depending on the activities of the enterprise and industry.
II resource orientation. Considered as an alternative to the market-oriented strategy development scheme. According to the supporters of the resource approach (E. Rühli, R. Hall), in contrast to the market approach, which involves determining the need for resources depending on the position of the enterprise in the market, the resource approach is based on the assertion that the market position of the enterprise is based on its resource potential, that is, the basis for choosing a strategy is the resources of the enterprise and their management. Enterprise competitiveness in long term depends on the right choice of resources and the ability to combine resources better, more original and faster than its competitors. The resource approach to the formation of a strategy is based on the fact that each company has a variety of resources acquired in the markets for factors of production and “acquired” in the course of its activities, as well as the ability to combine them with its capabilities (qualified personnel, technical means, etc.) and goals. An original and effective combination of resources compared to competitors in foreign economic literature has been defined as the key competencies of an enterprise (competencies - translated from English means competencies, skills, abilities). Core competence, in turn, is based on tangible and intangible competencies. As a material competence, the technical and technological capabilities of the enterprise (unique technology, highly specialized equipment, etc.) are considered, which serve as the basis for the development of key competencies in a strategic aspect. An example is Japanese companies (Honda, Canon, Sony, etc.), which had basic technologies in the field of precision mechanics and optics, microelectronics, internal combustion engines, miniaturization, etc., which provided them with key competencies in the manufacture of a number of high-tech products and components. While the effect of possessing material key competencies is obvious, non-material competencies, including functional competencies and organizational culture, are difficult to perceive, since they do not have a material form in the usual representation and, therefore, their role and significance are not always clearly visible. in achieving business success. The resource-oriented approach to justifying the choice of a competitive strategy should not be considered as an alternative to the market one, since it cannot be separated from other structural components of a competitive advantage, including the scale of activity, specialization, the optimal degree of integration, etc. Thus, the resource concept of the enterprise should be present in all strategic developments, while the role and importance of intangible key competencies in achieving the stability of the enterprise's competitiveness should not be ignored. It is necessary to distinguish between a competitive market penetration strategy and a competitive market presence strategy. The market penetration strategy has a direct impact on the long-term presence of the product on the market and determines to a large extent the choice and development by the management of the enterprise of a subsequent competitive strategy for market presence, and ultimately the competitiveness of the enterprise. According to foreign experts, due to the lack of proper attention to the formation of this strategy in 80% of cases New Product fails in the market. Below is a market penetration strategy model. The general concept of the formation of a market penetration strategy. The general concept of forming a penetration strategy and long-term presence includes:
* the decision of the management of the enterprise regarding the entry into the market - about the time of entry;
the amount of investment at entry and during the entry period and their distribution; the field of competition.
* structural characteristics of the product market or industry;
* the characteristics of the enterprise itself; * the mutual influence of all these elements on the long-term presence of the product on the market.
The main stages of the formation of the competitive strategy of the enterprise
Scheme of formation of enterprise strategies. The concept of the functional strategy of the enterprise is associated with the functional services (departments) of the enterprise and is used to indicate the direction of activity of a particular functional service or department within the overall strategy of the enterprise.
IN market economy enterprises mainly develop the following functional strategies:
marketing strategy, financial strategy, quality strategy, innovation strategy (or R&D strategy), production strategy, social strategy, organizational change strategy, environmental strategy. The functional strategies of an enterprise are directly related to the implementation of its competitive strategy and are of paramount importance for its successful implementation.
Any market, regardless of its specific type, is based on four main elements: price, demand, supply and competition. In today's markets, competition is the norm and every year it becomes more intense. Many American, European and Japanese companies organize their production in countries with inexpensive resources, counting on the export of relatively cheap products. In addition, the Internet greatly facilitates the entry of new types of competitors into the market, contributing to a significant increase in the intensity of competition in many markets in a wide variety of industries.
Competition is today the driving force behind the development of subjects and objects of management, society as a whole, and the country's market economy.
For the first time, the theory of competition was summarized by the famous economist Adam Smith in his work "An Inquiry into the Nature and Cause of the Wealth of Nations". Competition is the "invisible hand" that regulates the entire social economy.
There are various definitions of competition in the economic literature:
Competition(from lat. concurrere"collide", "compete") - struggle, rivalry in any area with gain.
Competition-- the economic process of interaction, interconnection and struggle between enterprises operating on the market in order to ensure best opportunities sales of its products, meeting the diverse needs of customers.
Competition-- rivalry of subjects of market relations for Better conditions and business results.
Competition is a natural attribute of the market, where separate producers meet, their interests collide, related to the sale of goods or the provision of services to the same consumers. Successes in the struggle in the market, no matter how miserable they are, are always the result of infringement of the interests of other competitors. In its most general form, competition is understood as rivalry in any field between separate persons (competitors) interested in the same goal.
In the mechanism of competition, two aspects should be distinguished: objective and subjective. In an objective aspect, competition acts as a law that expresses significant, recurring, stable causal relationships between market participants in the process of their rivalry and struggle for survival and economic prosperity. In the subjective aspect, the mechanism of competition is economic war all against all - a war in which all participants in market relations act and defend their interests.
In marketing, there is Porter's 5 competitive forces model.
Each force in Michael Porter's model represents a separate level of product competitiveness:
Bargaining power of buyers. Buyers can influence the competitiveness of the company's product in the market, since in fact they are consumers of the finished product and ensure the existence of the market by satisfying their needs. When developing a strategy, a company should choose those buyers who are the least influential in the market.
Consumers can toughen competition by imposing higher demands on the quality of goods, on the level of service, and put pressure on the price level. Higher requirements for the finished product force industry manufacturers to improve the quality of the product produced by increasing costs (better quality raw materials, additional service conditions, etc.), and, consequently, reduce their profit level.
- · market power suppliers. Suppliers can influence the competitiveness of the company's product in the market, as they are the owners of resources for the production of industry goods. Rising prices for raw materials and the conclusion of transactions on unfavorable terms for the company leads to an increase in the cost of finished products, an increase in production costs. If it is impossible to increase retail prices for finished goods at a level comparable to the growth of raw materials, the profitability from the sale of goods or services decreases in the industry.
- · the threat of new entrants. Usually, new players bring new production capacities, new technologies, new resources to the market, which can be a shock to the industry, change consumer behavior, set new standards for existing players.
The strength of the influence of new players depends on the entry barriers of the industry and the speed of influence of existing market players. If barriers to entry into an industry are high and the level of opposition from existing firms in the industry is high, then the impact of new entrants on industry profits will be minimal. Therefore, when working with new players, it is important to properly build exit barriers.
- the danger of the appearance of goods - substitutes.
- · the level of competition or intra-industry competition.
Substitute goods (or substitute goods) limit the market's potential for price increases. Usually, substitute goods have an impact on the establishment of the upper limit of market prices, which, in the face of rising production costs and raw materials, reduces the profitability of companies. Until market players can improve product quality and differentiate their product from substitute products, the industry will experience low profits and limited market growth.
Competitive analysis of the industry according to Michael Porter helps to determine the intensity and severity of competitive forces in the industry, to find a position in which the company will be maximally protected from the influence of competitive forces and will be able to influence them for its part. Golden Rule Michael Porter's theory of the five forces of competition is as follows: the weaker the influence of competitive forces, the more opportunities for high profits in the industry the company has. Conversely, the greater the influence of competitive forces, the more likely it is that no company will be able to provide a high return on investment. And the average profitability of an industry is determined by the most influential competitive forces.
In economic theory, there are different kinds, forms and methods of competition. According to the subjects of competitive relations, there is a distinction between competition between producers, buyers, sellers, between buyers and sellers, etc.
Unfair or dishonest competition is considered to be the use by competitors of false statements, information, someone else's trademark or other actions.
According to the means and methods used, there are:
- -price (competition based on price);
- non-price (competition based on the quality of use value).
Price competition dates back to the days of free market competition, when even homogeneous goods were offered on the market at a wide variety of prices. Price reduction was the basis by which the manufacturer (merchant) distinguished his product, attracted attention and, ultimately, won the desired market share.
In the modern world, price competition has lost such importance in favor of non-price methods of competition. This does not mean, of course, that the "price war" is not used in the modern market, it exists, but not always in an explicit form. The fact is that "a price war in an open form is possible only until the moment when the company exhausts the reserves for reducing the cost of goods. In general, price competition in an open form leads to a decrease in the rate of profit, deterioration financial condition firms and, as a result, to ruin. Therefore, firms avoid open price competition.
It is currently used usually in the following cases:
- - by outsider firms in their fight against monopolies, for competition with which, in the field of non-price competition, outsiders have neither the strength nor the opportunity;
- - to enter markets with new products;
- - to strengthen positions in the event of a sudden aggravation of the sales problem.
Under covert price competition, firms introduce new product with significantly improved consumer properties, and the price is raised disproportionately little.
Non-price competition highlights the higher use value of the product than its competitors (firms produce goods more than High Quality, reliable, provide a lower cost of consumption, more modern design). More efficient and more modern form competition is the struggle for the quality of the goods offered on the market. The entry into the market of higher quality products or new use value makes it more difficult for a competitor to respond. The "formation" of quality goes through a long cycle, starting with the accumulation of economic, scientific and technical information.
Competition can be conditionally divided into fair competition and unfair competition.
The main methods of fair competition are:
- - improving product quality
- - price reduction ("price war")
- - advertising
- - development of pre- and after-sales service
- - creation of new goods and services using the achievements of scientific and technological revolution, etc.
The main methods unfair competition are:
- - economic (industrial espionage)
- - fake products of competitors
- - bribery and blackmail
- - cheating consumers
- - fraud with business reporting
- - currency fraud
- - concealment of defects, etc.
To this we can also add scientific and technical espionage, because. any scientific and technical development is only a source of profit when it finds application in practice, i.e. when scientific and technical ideas are embodied in production in the form of specific goods or new technologies.
Among the main forms of competition, it is customary to single out intra-industry and inter-industry competition. Intra-industry competition is competition between producers of the same industry, when enterprises with higher than average labor productivity receive additional profit, and technically and organizationally backward enterprises, on the contrary, lose part of the individual value of the goods they produce and go bankrupt.
Intersectoral competition-competition between enterprises in different industries. It is expressed in the overflow of capital from industries with a low rate of return to industries with a high share of profit.
In marketing, there are three forms of competition: functional, specific, subject.
Functional competition arises from the fact that any need can be satisfied in a variety of ways, for example, boats, bicycles, cars, etc. are needed for tourism. Therefore, these goods functionally compete with each other.
Specific competition arises due to the presence of goods intended for the same purpose, but having differences in some essential important characteristics(e.g. different types printers - laser, jet, matrix).
Subject competition arises as a result of the release of identical goods that differ only in the quality of their workmanship (for example, radios, cars).
Competition features:
- 1. Regulatory - competition determines the structure and volume of production in society and thus ensures the maximum level of welfare.
- 2. Resource allocation function (allocation) - as a result of competition, economic resources are concentrated where they can be used with maximum return.
- 3. Innovative - competition forces manufacturers to introduce more efficient technologies to innovate.
- 4. Distributive - competition distributes the created property. Larger incomes are received by those who own more efficient and high-quality factors of production ( Natural resources, knowledge, skills, physical capital.
Methods for assessing the competitiveness of an enterprise are presented in Appendix A.
One of the methods for determining the competitiveness of an enterprise is a SWOT analysis.
Figure 1.1 - SWOT analysis matrix.
It describes in the form of opportunities and threats the main positive and negative impacts of factors external environment, in the form of strengths and weaknesses - the result of an internal audit of marketing.
SWOT is an acronym for Strength, Weakness, Opportunities, Threats.
Strength - strength, the strengths of the enterprise - what it succeeded in or some kind of feature that provides additional features and advantage over competitors. The strength may lie in the existing experience, access to unique resources, the availability of advanced technology and modern equipment, highly qualified personnel, high brand awareness, low product costs, use of more profitable distribution channels.
Weakness - weakness weak sides of this enterprise - the absence of something important for its functioning or something that has not yet been possible in comparison with other companies and puts it in disadvantage. Examples of weaknesses include too narrow a range of products, poor reputation of the company in the market, lack of funding, low level of service, etc.42
Opportunities are favorable circumstances that an enterprise can use to gain an advantage. An example of market opportunities are: the deterioration of the position of competitors, a sharp increase in demand, the emergence of new production technologies, an increase in the income level of the population, etc.
Opportunities from the point of view of SWOT analysis are not all the opportunities that exist on the market, but only those that can be used by a given enterprise.
Threats - threats, events, the occurrence of which may have an adverse effect on the implementation of the enterprise strategy. Examples of market threats: new competitors entering the market, tax increases, changing consumer tastes, declining birth rates, etc.
To assess the opportunities, the method of positioning each specific opportunity on the opportunity matrix is used.
Table 1.1 - Opportunity Matrix
Opportunities that fall into the fields "BC", "VU" and "SS" are of great importance for the enterprise, and they should be used without fail. Opportunities falling on the fields "SM", "NU" and "NM" practically do not deserve attention.
A similar matrix is compiled for hazard assessment. Those threats that fall on the "VR", "VK" and "SR" fields pose a very great danger to the enterprise and require immediate and mandatory elimination. Threats that have fallen into the "BT", "SK" and "NR" fields should also be in the field of view of senior management and be eliminated as a matter of priority. As for the threats that are on the fields of "NK", "ST" and "VL", a careful and responsible approach to their elimination is required here.
Table 1.2 - Threat Matrix
The next step in the analysis is to identify the strengths and weaknesses, which can also be presented in tabular form, indicating the scores for the company and its competitors.
The result of SWOT is the development of solutions at the intersection of the identified factors.
With regard to the pairs "Strengths - Opportunities", a strategy should be developed for using strengths enterprises in order to benefit from the opportunities that have appeared in the external environment. For the “Weaknesses - Opportunities” pairs, the strategy should be built in such a way that, due to the emerging opportunities, try to overcome the weaknesses in the enterprise.
For “Strengths - Threats” pairs, the strategy should involve the use of enterprise strength to eliminate threats.
And, finally, for the “Weaknesses - Threats” pairs, the enterprise must develop a strategy that would allow it to get rid of weaknesses, and also try to prevent the impending threat.
It can be concluded that competition is today the driving force behind the development of subjects and objects of management, society as a whole, and the country's market economy.
In its most general form, competition is understood as rivalry in any field between separate persons (competitors) interested in the same goal.
In marketing, competition is understood as the rivalry of subjects of market relations for the best conditions and results of commercial activity.
Porter's Competitive Forces Model 5 takes into account factors such as: the bargaining power of buyers and suppliers, the threat of entry by new entrants, the threat of substitutes, the level of competition or intra-industry competition.
There are different types of competition: fair and unfair, price and price, functional, specific, subject, intra-industry and inter-industry.
The role of competition in modern markets is certainly important, it performs a regulatory function, the function of allocating resources, promotes the introduction of innovations, and also performs a distributive function.
One of the methods for assessing the competitive situation is SWOT analysis. It describes in the form of opportunities and threats the main positive and negative impacts of environmental factors, in the form of strengths and weaknesses - the result of an internal audit of marketing. With it, you can determine the strategy for the development of the enterprise in the market.
The competitiveness of a firm shows the differences between a given firm and its competitors in terms of the degree to which its products satisfy the needs of customers, as well as in terms of the efficiency of production and economic activities. One of the tools for determining the competitiveness of a firm is the concept of value chains. The use of this tool is necessary, but clearly insufficient. A deep assessment of the competitive strength and competitive position of the firm is also needed. The list of indicators of strengths and weaknesses in the competitive position of the company proposed in the work of AA. Thompson and. A. J. Strickland)