The competitive status of the company is its assessment. Increasing the competitive status of the organization. The concept of a company's competitive status

The first step to assessing the future competitive status of an organization in the agricultural sector is to determine its relative investment positions in the future, namely: assessing the strategic investments that the organization is making and planning at the present time; assessment of the critical point of volume and the point of optimal volume in the future; determining the ratio of the organization's capital investments with optimal investments.

Competitive status of the organization in the agricultural sector will be the result of the interaction of three factors: 1) the relative level of the organization’s strategic investments in a particular business area, ensuring competitive status based on the effect of scale in the output of certain types of products, as well as the effect of scale in the organization’s activities as a whole; 2) competitive strategy, which allows you to distinguish between the positions of the organization and its rivals; 3) mobilization capabilities of the organization, when the strategy is provided with effective support at the levels of planning and implementation of plans, as well as in the form of well-established operational work after the strategy is adopted.

If each of the three indicators turns out to be equal to one, then the organization will be able to secure an exceptionally strong competitive status and will be one of the most effective in this agricultural sector. If at least one of the indicators is zero, the organization will not make a profit.
SSF = Level of strategic capital investments (question 38) * Strategic standard (39) * Capability standard (37)
1. (CSF = 1) => the company has an exceptionally high competitive status and will be one of the most efficient.
2. (If one of the indicators making up the KSF = 0) => KSF = 0 and the company will not make a profit
3. (0 < КСФ < 0,4) =>
4. (0,4 < КСФ < 0,7) =>the company has a weak position in competition;
5. (0,7 < КСФ < 1) =>The company has a strong position in competition.
Using the methodology for assessing industry attractiveness (IA) and the competitive status of a company proposed by Ansoff requires complex analytical work and, undoubtedly, is quite complex, but allows one to obtain fairly accurate results.

40. The competitive status of a firm (CSF) characterizes the prerequisites for a firm to achieve a particular level of competitive advantage, i.e., the main goal of competition in the market.

These prerequisites are determined by:

strategic potential of the company (i.e. internal factors of the company’s competitiveness);
the cumulative impact of external factors of the marketing environment (determinants<национального ромба>) on the conditions for achieving a certain level of competitive advantage.

CSF predetermines the level of competitive advantage of a company (hereinafter, for convenience, CPF):

Y KPF = f (KSF)

The main task in determining the SPF is to assess the degree of sufficiency of the development of the firm's strategic potential (SPF) and the conditions of the external marketing environment to maintain the SPF at a high level. To do this, the following actions must be performed:

For each element of strategic potential, resources must be identified that can ensure the achievement of the company’s goals in one or another phase (stage) of the CPF life cycle. By comparing the values of the actual and required resource parameters, indicators of compliance of the actual parameters with the required ones are determined for each element of the strategic potential, which are combined into a general assessment taking into account the significance of each element.
the degree of sufficiency of the conditions formed by the elements must be determined<национального ромба>. The difficulty lies in the fact that environmental conditions are highly dynamic. Since the speed with which changes occur is practically unpredictable, all that remains is to constantly monitor these changes, predict the possibility and expect the moments of their occurrence. Based on the processing of the information received by experts, it is determined how favorable the external conditions are for the company to achieve the maximum value of the CPF level at a particular stage of its life cycle.

Thus, the level of CSF depends on the level<пролезности>(Pareto efficiency) SPF and the nature and extent of use of environmental conditions.

Y KSF = f (SPF, D HP)

The principles of quantitative assessment of CSF levels are as follows:

assessments should be differentiated by stages of the CPF life cycle;
assessments must take into account the significance of each determinant<национального ромба>in the formation of CPF conditions;
assessments should take into account the structure of the SPF by its elements, types and degree of compliance of resources with the Pareto efficiency principle;
assessment indicators should make it possible to analyze the influence of both individual aspects of the internal and external marketing environment (particular indicators), and the combined influence of these conditions on the creation of prerequisites for the corresponding level of CPF (general indicator)

41. If the company’s existing set of strategic business areas is generally not promising enough, or the short-term prospects differ significantly from the long-term, it is necessary to reconsider the decisions made regarding the set of strategic areas in such a way as to ensure a balance between short-term and long-term profitability. A violation of this balance can lead to the collapse of the company. Here we can talk about the emergence resonance effect when, as the frequency of external harmonic influences approaches the frequency of one of the natural oscillations of the system, the amplitude of the steady-state forced oscillations sharply increases. In this case, we are talking about the fact that the coincidence of the phases of the life cycles of all agricultural enterprises will provide the company with prosperity at the stages of growth and maturity and can lead to bankruptcy when all agricultural enterprises reach the stage of decline. One of the methods for balancing near and distant prospects can be life cycle balance matrix . The matrix consists of two parts: the first reflects the position of various strategic business zones in accordance with their competitive status and life cycle phase in the short term, the second - in the long term.
Algorithm for balancing a set of strategic management zones
Balancing of a set of agricultural storage facilities located in different phases of the life cycle is carried out in stages, and all data is entered into the life cycle balance matrix.
1. The attractiveness of each agricultural sector and the competitive status of the company in this area in the short and long term are assessed
2. All SZH are distributed between the corresponding cells of the short-term and long-term blocks of the table. The size of the circle corresponds to the size of the market, the shaded area corresponds to the firm's share in the market.
3. The volumes of sales and profits that the company can count on in each agricultural sector and the strategic capital investments required at the corresponding phase of the life cycle to ensure the planned sales volume are assessed.
4. The volumes of sales and profits for agricultural enterprises located in the same phase of the life cycle are summed up, and the results are recorded in the upper cells of the cells (“extrapolation”) in both blocks of the matrix - short-term and long-term. Horizontal addition is performed, and the resulting amounts are entered into the last cells of the cells of each row (predicted sales and profits for all SZHs in the short and long term).
5. Benchmark indicators for sales volumes and profits for both the short and long term are determined, and these data are entered into the lower cells (“benchmarks”) of the corresponding cells. If extrapolation indicators are transportable and show what a company can count on in a particular agricultural sector while maintaining the policy pursued in relation to this zone, then control figures show what the company wants to receive from this agricultural agricultural sector, and depend primarily on the settings adopted by the management company, the aspirations of the most influential group
shareholders.
6. The volume of capital investments required to ensure the target sales volumes and profits for all
strategic business zones (this data is entered in the line “Capital investments: extrapolation”), as well as control indicators of capital investments (line “Capital investments: control indicators”), the value of which depends on the availability of resources at the company. It is important here to determine how currently planned capital investments should “overlay” the relevant phases of life cycles. It is necessary to take into account that the annual results for each agricultural sector in each phase of the cycle must correspond to the benchmark indicators of sales volumes and profits; the set of SZH as a whole should develop continuously; it is necessary to have security for all newly emerging SZH (often unprofitable) in order to thereby guarantee the further growth of the company; it is necessary to have sufficient resources in the first and second phases of growth to ensure profit growth. The data on the “Capital investments” line is summarized. The extrapolation capex indicator and the capex benchmark are compared.
7. Check the availability of resources. To do this, the amounts for the capital investment lines are compared with the estimated amount of resources available for strategic investment. If the amounts turn out to be higher than the available resources, steps two through seven should be repeated until the indicators are completely equalized. In this case, changes can be made to the set of SZH. It is possible to reduce some agricultural agricultural enterprises, expand others, withdraw from existing ones, as well as determine target scales and profitability for those new agricultural agricultural enterprises that are expected to be developed in the corresponding phases of their life cycles.
When balancing the set of SZH, one should proceed from the fact that not all additions will have to be made in the phases of origin and growth. A firm that has already made very large investments in a nascent-phase SZH may need additional resources for other mature-phase zones that are low in risk and will provide a strong base for cash flow.

42. The source of strengthening the company’s competitive position is the use of relationships between its various divisions and strategic business areas. The phenomenon when the income from sharing resources exceeds the amount before the moves from the separate use of the same resources is called the “2 + 2 = 5” effect or synergy . In practice, this means that, under certain conditions, two SZHs operating jointly will achieve greater results than they operating autonomously. The concept of synergy initially represented a transition from the principle of economies of scale in manufacturing to the broader principle of strategic economies of scale, the source of which is the mutual support of various agricultural economies.
The source of synergy can be:
use of the same production facilities, common technological base, common reserves of raw materials;
coordination of efforts in such activities as purchasing equipment, introducing new technologies, human resource management;
centralization of management of individual activities at various levels. A company that optimizes this effect, paying great attention to the selection of goods and markets, has significant flexibility in choosing a competitive position. It can gain greater market share through low prices, can afford to spend more on research and development than its competitors, can maximize its return on investment and thereby attract investors. All this can be done while maintaining the company's competitiveness with respect to firms that are less responsible in taking advantage of synergistic opportunities. If large companies do not exploit the synergies of their divisions, they will have no advantage over small firms.
However, it should be remembered that synergy can be both positive and negative: with the right choice of the degree of synergy, the competitive position of the company is strengthened, and vice versa.
When determining the degree of synergy for a particular company, one should take into account the conditions of the external environment, the managerial experience of the company's management, the existing level of relationship between various divisions of the company, and existing experience in using the synergistic effect.
In addition, competitive advantages of a structural nature include the possibility of rapid expansion into unoccupied market segments, pushing aside real and potential competitors.
Synergy level analysis
Another important factor determining a company’s competitive position is synergy indicator. The procedure for developing a company's strategy includes establishing the relationship between the company's various SZHs and determining what their interaction should be when changing the set of activities. In this case, an important point is to assess the degree of relationship (synergy).
The synergy effect can be described by several variables: increased profits, decreased company costs, decreased investment requirements, and accelerated changes in these variables. In practice, it can be quite difficult to quantify these variables and their combined impact on the company's position. Assessing cost-based synergies
1. It is necessary to evaluate the company’s expenses in each strategic business area. This includes costs for marketing research, research and development, acquisition and use of equipment, remuneration and training of employees, sales organization, transportation, purchase of components, etc. In this case, we proceed from the assumption that in this agricultural agricultural sector the company operates autonomously, i.e. that this is its only area of management. Expenses for all SZHs are summed up
2. Then the same expenses are assessed from the perspective of the company’s full-scale activities, i.e. in real conditions, taking into account the mutual influence and complementarity of various SZH . 3. The difference between the costs of all SZHs, assessed under conditions of their autonomous operation and in real conditions, is determined. 4. The synergy indicator is calculated, which is the ratio of saved resources to the amount of expenses for all agricultural storage facilities, assessed under the conditions of their autonomous functioning. All expenses are determined in monetary terms.
Synergy indicator – is an important factor determining the competitive position of the company. Therefore, the company needs to correctly assess its importance.
The procedure for developing a company's strategy includes establishing the relationship between the company's various SZHs and determining what their interaction should be when changing the set of activities. In this case, an important point is to assess the degree of relationship (synergy).
In principle, the synergy effect can be described by several variables:
- increase in profit;
- reduction of company expenses;
- reducing the need for investment and accelerating changes in these variables.
However, in practice, it can be quite difficult to quantify these variables and their combined impact on the company's position.
Assessing cost-oriented synergies.
The synergy assessment procedure includes the following steps.
1. It is necessary to evaluate the company’s expenses in each strategic business area. This includes costs for marketing research, research and development, acquisition and use of equipment, remuneration and training of employees, sales organization, transportation, purchase of components, etc. At the same time, based on the assumption that in this agricultural agricultural sector the company operates autonomously, i.e., that this is its only management area. Expenses for all SZHs are summed up.
2. Then the same expenses are assessed from the perspective of the company’s full-scale activities, i.e. in real conditions, taking into account the mutual influence and complementarity of various SZH.
3. The difference between the costs of all SZHs, assessed under conditions of their autonomous operation and in real conditions, is determined. This amount represents the resources saved.
4. The synergy indicator is calculated, which is the ratio of saved resources to the sum for all agricultural storage facilities assessed under conditions of their autonomous operation.
All expenses are determined in monetary terms.

43. Due to the growing instability of the external environment in the 80s of the last century, most firms were faced with the problem of strategic vulnerability and realized the need to assess it in order to develop adequate self-protection measures.
Strategic vulnerability firm flexibility

44. Assessing strategic flexibility.
Due to the growing instability of the external environment in the 80s of the last century, most firms were faced with the problem of strategic vulnerability and realized the need to assess it in order to develop adequate self-defense measures.
Strategic vulnerability Firms can be assessed by the degree of concentration of sales and profits. For example, if more than 90% of sales and 80% of a company's profits are provided by one or two strategic business areas, then in this case we can say that in certain situations this company may be strategically vulnerable. However, for a more accurate assessment of the company’s condition, it is advisable to supplement the study with an assessment firm flexibility, i.e. its ability to adapt to changing conditions without compromising its competitive position. This involves analyzing the nature and degree of influence of possible strategic surprises on flexibility. The analysis procedure in this case can be divided into several stages.
Stage 1 . Identification of the most likely and significant strategic surprises for the company that could have a serious impact on its competitive position. These primarily include factors such as political instability, stagflation, changes in consumer demands, the emergence of new technologies, changes in work morale, government regulation of business activities, changes in management activities, etc.
Stage 2. Assess the potential impact of each unexpected event. Experts evaluate the influence of each factor on each zone. If the influence is positive, then this factor is considered as an opportunity and is usually assessed on a scale from 1 to 10, if negative, then as a threatening problem and is assessed on a scale from -1 to -10. For each strategic surprise, the probability of its occurrence and the time of impact are assessed (short-term - up to five years and long-term - over five years).
Stage 3. Assessing the flexibility of each agricultural sector by summing up all positive assessments of strategic surprises for this agricultural sector, taking into account the likelihood of their occurrence, as well as all negative assessments for the same agricultural sector. The first sum shows the measure of the positive value of flexibility in case of danger, the second - the degree of vulnerability, or inflexibility. Therefore, the algebraic sum of both quantities will give an indicator of the overall flexibility of the SZH data.
Stage 4. Measuring the likely impact of relevant surprises on the company by summing up the obtained estimates of the influence of a given factor on each SZH of the company, taking into account the likelihood of its implementation. The algebraic sum of the corresponding indicators for all SZH will give an indicator of the impact of the assessed strategic surprise on the company as a whole in the event of this surprise.
Stage 5. Calculation of the overall indicator of firm flexibility. This indicator can be obtained as a total indicator of the flexibility of all SZH or as an indicator of the total impact of all strategic surprises on the company in the short and long term.
Stage 6. Establishing a flexibility benchmark for the firm. This indicator may determined on the basis of the maximum share of the firm's profit that could be received in an area with a certain level of instability. In addition, a firm can set its flexibility benchmark by determining the maximum share of profits that the firm can risk in the event of a strategic surprise.

45. Methods for managing resistance during implementation
strategies

Forced the approach to suppressing resistance, even under conditions of optimal management, is quite expensive for the company: in a short time, habitual connections are disrupted and conflicts arise. However, in conditions of limited time, this is the only correct decision.
Adaptive method minimizes resistance within the company, but changes are quite slow. It enables change to take place in an environment where the power of changemakers is limited.
Crisis management used only when absolutely necessary. In a crisis situation, behavioral resistance to change is usually replaced by support for reforms, but in this situation the likelihood of making wrong decisions increases, since the leader acts under time pressure. In addition, after emerging from a crisis, a firm must face a rapid resurgence of resistance.
Controlled Resistance Method represents a kind of middle option that is acceptable under conditions of moderate urgency, but brings a positive effect over a certain period of time. If the need for transformation increases, the method becomes compulsory, and vice versa, when management has a reserve of time, it acquires adaptive features. When implementing this resistance management method, the planning and implementation processes of projects are carried out in parallel. However, this is a rather complex method that requires constant attention from the company’s management.
46. Planning for change.
The approach to minimizing risk factors when introducing change is based on comprehensive planning, including aspects such as:
1. Assessing the need to implement strategic changes. The reason for starting a reorganization project must be clearly defined and recorded. Management and employees must be convinced that the implementation of innovations will indeed produce significant results.
2. Creation of a system to support the implementation of changes. The project must be constantly carried out under the control of the company's management (curators), and a hierarchy of curators must be created who are responsible for the progress of the project. The initiating supervisor is, as a rule, the first head of the organization or company. Support supervisors are usually middle managers. The project to reorganize the company should involve company employees - change agents, i.e. the person or group of people responsible for implementing the changes that form the target groups. Change agents must be empowered and create a collaborative environment.
3. Managing change with change agents.
· The most important change agents are at the middle management level
· Agents must have a good working relationship with the support manager.
· Agents must be trained and have a clear description of their responsibilities in the project.
· Change agents must work in teams.
· Facilitators should not be their own change agents.
4. Creating a clear vision of the future state of the company. When planning a project, aspects of the future state related to the human factor, such as behavior, knowledge, skills, expectations, should be determined in as much detail as possible.
5. Multifactorial assessment of an organization's readiness to achieve a future state. The influence factor is one of the means of assessing the degree of readiness, with its help it assesses the company's readiness to accept change without transition to dysfunctional behavior. The influence factor is calculated using a rating on a 10-point scale of 14 parameters (the higher the rating, the greater the likelihood of resistance):
Volume of changes, scope of changes, time, understandability, predictability, opportunity, desire, values, emotions, knowledge, behavior, logistics, economics, politics.
6. Creating a plan for transition to the target state. Change management planning addresses such aspects as the cost of the status quo, clarity of vision of the future situation, anticipating and managing resistance, commitment of supervisors to the company's ideology, developing the skills of change agents, aligning elements of corporate culture, anticipating and managing events, developing an integrated transition plan and monitoring its execution.

7. Organization of the change management process.

Chapter 7 Assessing the competitive status of a company

The competitive status of a firm (CSF) characterizes the prerequisites for a firm to achieve a particular level of competitive advantage, i.e., the main goal of competition in the market.

These prerequisites are determined by:

strategic potential of the company (i.e. internal factors of the company’s competitiveness);
the cumulative impact of external factors of the marketing environment (determinants) on the conditions for achieving a certain level of competitive advantage.

CSF predetermines the level of competitive advantage of a company (hereinafter, for convenience, CPF):

Y KPF = f (KSF)

For each element of strategic potential, resources must be identified that can ensure the achievement of the company’s goals in one or another phase (stage) of the CPF life cycle. By comparing the values of the actual and required resource parameters, indicators of compliance of the actual parameters with the required ones are determined for each element of the strategic potential, which are combined into a general assessment taking into account the significance of each element.
the degree of sufficiency of the conditions formed by the elements must be determined. The difficulty lies in the fact that environmental conditions are highly dynamic. Since the speed with which changes occur is practically unpredictable, all that remains is to constantly monitor these changes, predict the possibility and expect the moments of their occurrence. Based on the processing of the information received by experts, it is determined how favorable the external conditions are for the company to achieve the maximum value of the CPF level at a particular stage of its life cycle.

Thus, the level of CSF depends on the level of (Pareto efficiency) SPF and the nature and extent of use of environmental conditions.

Y KSF = f (SPF, D HP)

The principles of quantitative assessment of CSF levels are as follows:

assessments should be differentiated by stages of the CPF life cycle;
assessments should take into account the significance of each determinant in shaping the conditions of the CPF;
assessments should take into account the structure of the SPF by its elements, types and degree of compliance of resources with the Pareto efficiency principle;
assessment indicators should make it possible to analyze the influence of both individual aspects of the internal and external marketing environment (particular indicators), and the combined influence of these conditions on the creation of prerequisites for the corresponding level of CPF (general indicator).

In this case, assessments of all the conditions for creating a CPF cannot for the most part be determined statistically; they are, as a rule, based on the subjective opinions (feelings) of experts.

The following estimated indicators of conditions for the CPF are generated (i.e., CSF indicators), determined by the external and internal spheres:

a) Conditions formed by the cumulative impact of determinants are assessed by the following indicators:

; ,

where , are the indicators of the cumulative impact of determinants for the entire and z-th stage of the life cycle, respectively; the ratio of the number of favorable to the total number of factors formed by the g-th determinant in the z-th stage of the life cycle; a g z is the significance coefficient of the g - og determinant for the z - og stage of the LCCPF.

b) The conditions formed by the strategic potential of the company are assessed by indicators

; ;

; ,

where is the indicator for assessing the i-og element of the company’s strategic potential according to the compliance of the j-og resource of the company with the requirements that meet the company’s goals in the z-th stage of the life cycle; - coefficient of significance of the i-og element of strategic potential in the z-th stage of the life cycle; - coefficient of compliance of the j-th resource of the company with the requirements that meet the goals of the company in the z-th stage of the life cycle; SPF, SPF z, SP iz - indicators of compliance of the strategic potential with the company's goals for the formation of the CPF for the entire life cycle of the financial cycle, the z-th stage of the cycle of the cycle of production, the i-og element of the strategic potential for the z-th stage of the cycle of the capital cycle, j-og of the type of resource of the company for the z-th stage of the life cycle, j-th type of resource of the company for the entire life cycle, respectively.

; ;

The general assessments of the CSF will be:

a) for the z-th stage of the JCCPF 1

b) for the entire life cycle of the KSF

A quantitative assessment of the level of TFP is used for subsequent analysis of the reasons for the most significant discrepancy between the actual and required values of TFP parameters, identifying the degree of positive (or negative) influence of external factors on the level of TFP and developing, based on such an analysis, the most relevant goals for the strategic development of the company.

The results of assessing the level of CSF are summarized in analytical tables, with the help of which the level of CSF is analyzed in the following sections:

determination of the provision at each stage of the CPF life cycle of SPF elements with resources both for each element of strategic potential and for each type of resource (Table A);
determining the level of CSF formed by the strategic potential of the company both for each type of resource, each phase (stage) of the life cycle of the CPF, and the strategic potential of the company as a whole (Table B);
determination of the level of CSF formed by determinants, both for each determinant, each phase of the CPF life cycle, the entire CPF life cycle, and in general throughout (Table C);
determination of the level of CSF formed by the combined influence of internal and external factors (Table D)

Table A

Assessment of the CSF formed by the strategic potential of the company in the _______________________ phase of the LCSF

Elements of strategic capability	Types of firm resources (J)		Final score for the element
Elements of strategic capability	Technical	Technological


1. Ability to perform macroeconomic analysis of the situation in the country and abroad.
2. The ability to timely detect current needs, demands and requests of potential consumers.
...
16. The ability to ensure the effective development and implementation of a strategic program for the technical and social development of the company.
Final assessment for the resource

Table B

Summary assessment of the CSF formed by the strategic potential of the company

	Types of firm resources (J)		Final
LCCP phases	Technical	Technological		assessment by phase LCCP


1. Origin
2. Accelerate growth
3. Slow growth
4. Maturity
5. Recession
Final assessment by resource type

Table C

Evaluation of the CSF formed by the determinants of the “national diamond”

Determinants of the “national diamond”(g)	Phases (stages) of the life cycle (z)				Final
	Technical	Technological		assessment for the entire housing and communal services center


1. Factor parameters
2. Firm strategy, structure and rivalry
3. Demand parameters
4. Related and supporting industries
Final assessment for the resource			3. Slow growth
4. Maturity
5. Recession
Final assessment in the area of formation of the CSF

So, by analyzing the data in Table A, we can get answers to the following questions:

What element of the company's strategic potential needs priority provision with one or another resource at one or another stage of the CPF life cycle?
By influencing which element of strategic potential can you most effectively (from the point of view of Pareto efficiency) enhance the entire strategic potential of the company?
What type of resource needs priority expansion?
What type of resource is preferable to expand from the point of view of increasing the efficiency of the company?
For which element of strategic potential is it more effective to expand a particular resource?

By analyzing the data in Table B, you can get answers to the following questions:

Which stage of the CPF life cycle is most provided with resources?
What type of resource is holding back the strengthening of a firm's strategic potential?
What is the best way to distribute certain resources across the stages of the CPF life cycle?

The data in Table C allows you to answer the questions:

What determinants form the most or least favorable conditions for creating and maintaining a company’s competitive advantage at a particular stage of the life cycle?
At what stages of the CPF life cycle are all determinants formed the most or least favorable conditions for the creation and maintenance of CPF?
What is the combined impact of all determinants on the level of competitive status of a firm?

Finally, by analyzing the data in Table D, you can get answers to the questions:

what is the level of competitive status of the company at each stage of the CPF life cycle?
How do internal and external factors of CPF affect the level of CSF at each stage?
What factors (strategic potential of the company or determinants) should the activities of the company's management be primarily directed to in order to improve its competitive status?

Thus, a quantitative assessment of the CSF allows for a targeted search for the most preferable options for creating and maintaining favorable preconditions for a high level of competitive advantage of the company at all stages of the CSF life cycle. The proposed scores can be ranked to determine the firm's competitive position. To do this, you can use the gradations proposed by I. Ansoff:

0 < КСФ < 0,4 - слабая позиция;

0,5< КСФ< 0,7 - средняя позиция;

0,8<КСФ <1,0- сильная позиция.

MINISTRY OF EDUCATION AND SCIENCE OF UKRAINE

KHARKIV NATIONAL UNIVERSITY OF RADIO ELECTRONICS

Department of EC

on the topic “On the competitive status of an enterprise”

Completed:

Asp. department II Polyarush O.N.

scientific director Assoc. Vitko A.V.

Kostin Yu. D.

Competitiveness – This is a property of an object, characterized by the degree of actual or potential satisfaction of a specific need by it in comparison with similar objects presented on a given market. Competitiveness determines the ability to withstand competition in comparison with similar objects in a given market.

The “European Management Forum” determined that competitiveness is the real and potential ability of firms, in their existing conditions, to design, manufacture and sell goods that, in terms of price and non-price characteristics, are more attractive to consumers than the products of their competitors. The disadvantage of this definition is that it concerns only the product and takes into account only price and non-price characteristics.

The competitiveness of an object is determined in relation to a specific market, or to a specific group of consumers, formed according to the appropriate criteria of strategic market segmentation. If the market in which the object is competitive is not indicated, this means that this object at a particular time is the best world model. In market relations, competitiveness characterizes the degree of development of society. The higher the competitiveness of a country, the higher the standard of living in that country.

Enterprise competitiveness – This is a relative characteristic that expresses the differences between the development of a given company and the development of competitive companies in terms of the degree to which their products satisfy people’s needs and the efficiency of production activities. The competitiveness of an enterprise characterizes the capabilities and dynamics of its adaptation to the conditions of market competition.

The competitiveness of an enterprise depends on a number of factors such as:

competitiveness of the enterprise's goods in foreign and domestic markets;
type of product produced;
market capacity (number of annual sales);
ease of access to the market;
market homogeneity;
competitive positions of enterprises already operating in this market;
industry competitiveness;
opportunity for technical innovation in the industry;
competitiveness of the region and country.

Let's formulate general principles , which give competitive advantages to manufacturers:

The focus of each and every employee on action, on continuing the work started.
Proximity of the enterprise to the client.
Creating autonomy and a creative atmosphere in the enterprise.
Increasing productivity by harnessing people's abilities and willingness to work.
Demonstrating the importance of common enterprise values.
The ability to stand firmly on your own.
Simplicity of organization, minimum levels of management and service personnel.
The ability to be soft and hard at the same time. Keep the most important problems under strict control and delegate less important ones to subordinates.

As the world practice of market relations shows, the interconnected solution of these problems and the use of these principles guarantees an increase in the competitiveness of the enterprise.

The competitiveness of products and the competitiveness of the manufacturing enterprise are correlated with each other as a part and a whole. A company’s ability to compete in a particular product market directly depends on the competitiveness of the product and the set of economic methods of the enterprise’s activities that affect the results of competition.

Since the competition of enterprises in the market takes the form competition of the products themselves, The importance of the properties imparted to the products of the enterprise that manufactures and sells them on the world market increases.

In order to more fully illuminate the essence of product competitiveness, in our opinion, it is necessary to give as complete an idea as possible about the product (product).

As you know, the product - main object on the market. It has cost and use value (or value), has a certain quality, technical level and reliability, usefulness specified by consumers, efficiency indicators in production and consumption, and other very important characteristics. It is in the product that all the features and contradictions of market relations in the economy are reflected. A product is an accurate indicator of the economic strength and activity of the manufacturer. The effectiveness of the factors that determine the position of the manufacturer is checked in the process of competitive rivalry between goods in the conditions of a developed market mechanism, which makes it possible to identify the differences between a given product and a competitor product both in terms of the degree of compliance with a specific social need and in terms of the costs of satisfying it. To do this, the product must have a certain competitiveness.

The literature defines that the competitiveness of a product is a level of its economic, technical, and operational parameters that allows it to withstand rivalry (competition) with other similar products on the market. In addition, competitiveness, a comparative characteristic of a product, containing a comprehensive assessment of the entire set of production, commercial, organizational and economic indicators in relation to the identified market requirements or the properties of another product. It is determined by the totality of consumer properties of a given product - a competitor in terms of the degree of compliance with social needs, taking into account the costs of satisfying them, conditions of delivery and operation in the process of production and (or) personal consumption.

Competition is competitive work between commodity producers for the most profitable markets. Competition acts as the highest motivating force that forces product manufacturers to improve their quality, reduce production costs, and increase labor productivity.

Let's consider the soft components of competitiveness.

Work Ethic. Competitiveness largely depends on the desire and ability to work. In many developed countries, the sense that work has value in itself is lacking. When it comes to comparing competitiveness, only a high level of labor productivity is not enough.

Flexibility and willingness to improve yourself. Of course, commitment to traditions, verified solutions, etc. have their advantages. However, in the fight against competitors who have a completely different mentality, ready to quickly respond to any customer desire and new trends, these advantages come to naught.

Willingness to work in the service sector. Reluctance to do this can be fatal for the development of society, especially if this is one of the most important sectors of the economy. Society must understand that working in the service sector does not mean violating human dignity. This is routine work, necessary for the competitiveness of an economy in which the customer wants and needs to be the main actor.

Claim level. The population of developed countries is accustomed to taking their high standard of living for granted. This position deprives society of any flexibility and ultimately reduces the competitiveness of the economy. This makes the state budget, the system of social guarantees, and the level of labor costs unmanageable.

Openness to the outside world. Obstacles to the access of foreign goods to the domestic market, opportunities for foreign citizens to obtain a controlling stake in an enterprise, a tendency to overestimate their own capabilities and merits, reluctance to study world experience, etc. negatively affect the economy.

Labor mobility. A high standard of living and a developed system of social guarantees make the workforce unwilling to study, work abroad, or learn from the experience of other countries. The country's lag in this regard is facilitated by the closedness of internal labor markets from external influence and interference.

Competitive spirit. Competitiveness is formed where the spirit of competition is present. The mentality, for example, of the Swiss is completely devoid of this quality. They prefer cartel agreements rather than disputes and clashes. Corporatism was the basis of the so-called social contracts, thanks to which much of the successes of the past were achieved. However, at present and in the future the situation is different.

Competition is a necessary phenomenon provided that supply exceeds demand and, as a rule, occurs between goods and not between producers. The following types of competition are distinguished: functional, specific, subject, price, hidden, price, illegal.

Functional - may arise due to the fact that the same need can be satisfied in different ways.

Species - production of similar goods by different enterprises or by one enterprise, but with different designs. It is important to have an image of the enterprise.

Subject - as a rule, between similar products from different enterprises.

Price - the simplest type. By reducing the price, you can capture the market.

We must not forget that competitiveness is, first of all, only a comparative, and therefore a relative assessment of the properties of a product. If there were no competitors on the market, with whose products the consumer compares the manufacturer’s product, then it would be impossible to talk about its competitiveness.

Enterprises attach great importance to analyzing their strengths and weaknesses in order to assess real competitive opportunities and develop measures and means through which the enterprise could increase its competitiveness and ensure its success. In the process of marketing research, to assess the competitiveness of an enterprise, certain numerical indicators are used that indicate the degree of sustainability of the enterprise’s position, the ability to produce products that are in demand in the market and ensure that the enterprise obtains the intended and stable final results.

Methods for assessing the level of competitiveness of a product are quite widely known and, if necessary, can be applied without much difficulty. However, to date there has been no developed methodology for assessing the level of competitiveness of an enterprise that would make it possible to clearly and quickly determine the competitive position of one enterprise in the product market in comparison with others. The opinions of scientists regarding the terminology of competitiveness are very different, so to date there is not even a generally accepted concept of “competitiveness of an enterprise.” There is no acceptable set of indicators that can serve as the basis for a methodology for determining the competitiveness of an enterprise.

An enterprise with lower production costs receives a larger profit, which allows it to expand the scale of production, increase its technical level, economic efficiency and product quality, as well as improve the sales system. As a result, the competitiveness of such an enterprise and the products it produces, which helps to increase its share at the expense of other enterprises that do not have such financial and technical capabilities.

The analysis of distribution costs, carried out by relating the amount of sales costs to the amount of profit, is important. Such a comparison is usually made not only for the entire amount of sales expenses, but also for individual elements: sales branches, resellers, for specific goods and sales markets.

Thus, assessing the competitiveness of an enterprise in a specific market or its segment is based on a thorough analysis of the technological, production, financial and sales capabilities of the enterprise; it is designed to determine the potential capabilities of the enterprise and the measures that the enterprise must take to ensure a competitive position in a specific market.

Such an assessment should contain the following indicators: the need for actual and future capital investments, both in general and for individual types of products and specific markets; range of competitive products, their volumes and costs (“product differentiation”; a set of markets or their segments for each product (“market differentiation”); the need for funds to create demand and stimulate sales; a list of measures and techniques by which an enterprise can secure an advantage on the market; creating a favorable image of the company among buyers, producing high-quality and reliable products, constantly updating products based on our own developments and inventions secured by patent protection, conscientious and accurate fulfillment of obligations under transactions regarding the timing of delivery of goods and services.

Regardless of the objectives of the study, the basis for assessing competitiveness is the study of market conditions, which should be carried out constantly, both before the development of new products and during its implementation. The task is to identify the group of factors that influence the formation of demand in a certain market sector:

changes in the requirements of regular customers of products are considered;
the directions of development of similar developments are analyzed;
areas of possible use of products are considered;
the circle of regular customers is analyzed.

The above implies “comprehensive market research”. A special place in the study of the market is occupied by long-term forecasting of its development, associated with the duration of the development and production of goods.

Based on market research and customer requirements, products are selected for analysis or requirements for a future product are formulated, and then the range of parameters involved in the assessment is determined.

The analysis should use the same criteria that the consumer uses when choosing a product.

For each group of parameters, a comparison is made showing how close these parameters are to the corresponding demand parameter.

Figure 2. General scheme for assessing competitiveness

Competitiveness analysis begins with an assessment of regulatory parameters. If at least one of them does not correspond to the level prescribed by current norms and standards, then further assessment of the competitiveness of the product is impractical, regardless of the result of comparison in other parameters. At the same time, exceeding norms and standards and legislation cannot be considered as an advantage of the product, since from the consumer’s point of view it is often useless and does not increase consumer value.

As a result of assessing the competitiveness of products, the following decisions can be made:

changes in the composition, structure of materials used (raw materials, semi-finished products), components or product design;
changing the order of product design;
changes in product manufacturing technology, test methods, quality control systems for manufacturing, storage, packaging, transportation, installation;
changes in prices for products, prices for services, maintenance and repair, prices for spare parts;
changing the procedure for selling products on the market;
changes in the structure and size of investments in the development, production and marketing of products;
changes in the structure and volumes of cooperative supplies in the production of products and prices for components and the composition of selected suppliers;
changing the supplier incentive system;
changes in the structure of imports and types of imported products.

The principles and methods of assessing competitiveness can be used to justify decisions made when:

comprehensive study of the market and selection of areas of commercial activity of the enterprise;
development of measures to improve the competitiveness of products;
assessing the prospects for the sale of specific products and forming a sales structure;
development of proposals for the development of the production potential of the enterprise;
product quality control;
setting prices for products;
selection of products when purchasing through tenders and auctions;
product certification;
preparation of technical specifications for the creation of new product samples;
resolving the issue of inclusion in the export program and removal of products from export, or its modernization;
preparation of information for product advertising;
deciding on the feasibility of patenting and maintaining the patent in action;
developing incentives for developers and suppliers

In accordance with the results of their own assessments of competitiveness, managers of enterprises and firms can choose effective measures to improve work in certain areas, in specific areas. Efforts should be aimed at researching sales markets, searching for new forms of cooperation with competitors and suppliers, improving product quality and reducing costs, searching and developing market niches, sales channels, models and types of products, organizing an effective promotion system. Models of behavior of modern managers must be adequate to business conditions. The application of the developed methods will contribute to the implementation of this principle in practice.

LITERATURE

1. Vlasova V.M. Fundamentals of Entrepreneurship. M.: “Finance and Statistics”, 1995.

2. Vikhansky O.S., Naumov A.N. Management. M.: “Higher School”, 1994. – 234 p.

3. Gerchikova I.N. Management. M.: “UNITY”, 1995. - 371 p.

4. Krayukhin G.A. Methodology for analyzing the activities of enterprises in a market economy. St. Petersburg: 1995 - 346 p.

5. Meskon M.H., Albert M., Khedouri F. Fundamentals of management. M.: “Delo”, 1993.–251 p.

6. Porter M. International competition. Per. from English / Ed. IN AND. Shchetinina. M.: Intl. rel., 1993.

7. Martynova O.K. Quality control at the enterprise // Supplement to the magazine “Standards and Quality”. – 1999. - No. 5. – P. 35 – 43.

THE CONCEPT OF COMPETITIVE STATUS OF A COMPANY (ENTERPRISE)

I. Ansoff interprets the concept of competitive status as a kind of measure of a company’s position in the market. In its economic content, I. Ansoff’s interpretation is close to the concept of competitive advantage in Porter’s interpretation, since both believe that it is necessary to determine the ratio of the actual and basic productivity of the use of the company’s resources. However, Porter does not specify the productivity indicator. I. Ansoff defines this indicator as the profitability of strategic capital investments, adjusted to the degree of optimality of the company's strategy and the degree of compliance of the company's potential with this optimal strategy. On this essential basis, I. Ansoff proposes a formula for calculating CSF indicators:

KCB= (If-Ik/Io-Ik)*Sf/So*Cf/Co,

where If is the level of the company’s strategic IC; Ik is the critical point of the volume of IC located on the border of profits and losses; Io is the point of optimal EF, after which an increase in EF leads to a decrease in income; Sf, So - the current and optimal strategy of the company, respectively; ;Cf,Co - respectively, the available and optimal capabilities of the company.

If KSF = 1, then the company will be able to secure an exceptionally strong status for itself and will be one of the most efficient. If at least one of the components of the CSF = 0, the company will not make a profit. The following gradations of CSF are offered:

00,50,8
Let us analyze Ansoff's proposals from two points of view. Firstly, in what case does a firm have zero CSF. This is possible in three cases: when strategic EFs correspond to a critical point; when there is no company strategy; when the company does not have any capabilities.

Secondly, how do factors external to the company influence the CSF? In the assessment of the CSF itself, according to the formula proposed by Ansoff, such an investment is not taken into account. In addition, it does not fully consider the impact on a firm's competitive advantage (CAF) of all the environmental factors that Porter called the determinants of the “national diamond.”

It seems advisable to combine the positions of both authors on the basis, firstly, of distinguishing the very concepts of CSF and CPF, secondly, on the basis of specifying methods for assessing both, and thirdly, determining the dependence of the level of CPF and CSF.

The competitive status of a company should characterize the prerequisites for the company to achieve one or another level of competitive advantage.
These prerequisites are determined, on the one hand, by the strategic potential of the company (SPF), and on the other, by the cumulative impact of the determinants of the “national diamond” on the conditions for achieving this level.

In other words, the CSF must answer the questions:
- 1. Are the elements of strategic potential sufficiently developed?
- 2. whether the external environmental conditions are sufficiently favorable and to what extent the company uses them.
The main problem in determining the CSF becomes the problem of assessing the degree of sufficiency of the development of the strategic potential of the company and the external environmental conditions for creating and maintaining a high level of CSF. Having solved this problem, we can talk about the level of CSF as the degree of sufficiency of the prerequisites for creating and maintaining an appropriate level of CSF.

By comparing the values of the actual and required parameters of resources, indicators of compliance of the actual indicators with the required ones are determined for each element of the strategic potential, which are combined into a general assessment of the SS taking into account the significance of each element.

The outlined approach to assessing the degree of sufficiency of strategic potential development is based on the potential possibility of determining the values of resource parameters. You can overcome this by following these rules:
- 1. the strategic potential of a company is a system of interconnected elements, therefore it is influenced by all the laws of the systems;
- 2. the costs associated with providing each element of the TFP with resources represent the alternative costs of these resources, that is, the values of those alternative opportunities that had to be abandoned by directing resources to one element rather than another in order to maximize the utility of the total TFP, that is, with the goal of creating the most favorable preconditions for achieving the maximum level of CPF for each stage of the life cycle;
- 3. maximization of utility, total TFP - is the process of achieving Pareto efficiency, that is, such a distribution of resources between TFP elements in which it is impossible to improve the utility of at least one TFP element without reducing the utility of another;
- 4. the degree of sufficiency of the development of the SPF, taking into account the limited resources that the company has at each stage of the life cycle of the LCPF, is assessed relative to the base, which is taken as the maximum utility of the total SPF, that is, the utility created by the interaction of all elements. In other words, maximum utility is a kind of effect of the integrity (emergence) of the system, which is the total TFP.

An important role in the marketing of manufactured products is played by the competitive advantage and competitive status of the company. The change in the political and economic situation in the country, the transition to a market economy has changed all existing approaches to management. The market deprives the director of an enterprise of the “privilege of strategic irresponsibility.” He must independently, guided by legislative and regulatory acts regulating the rules for conducting production activities, as well as the prevailing market conditions, make fundamental, long-term strategic decisions. At the same time, he bears full responsibility to himself, to the work collective, and finally to the Law for all economic, legal, environmental and other consequences of the strategic decisions made.

The company's economic strategy is based on three main premises:

The resource concept of a company as an information system characterizing a set of resources, i.e. the firm's ability to define and achieve long-term strategic goals;

Theories of competitive advantage as a conceptual basis for the formation of global and local strategic goals of a company and cost-effective means of achieving them;

The theory of transaction costs as a concept that allows one to specify distant, sometimes amorphous strategic goals and give them a clearly defined implicit character.

The main idea of the concept is that the economic strategy of a company should develop primarily economic means of achieving the company’s goals, that is, means that encourage all participants in the production process to actively fulfill their roles in ensuring the prosperity of the company.

One of the main forces influencing a company that operates in a particular market is competition. The term "competition" is often taken by economists in different senses.

COMPETITION- competition between producers (sellers) of goods, and in the general case - between any economic, market entities; the struggle for markets for goods in order to obtain higher incomes, profits, and other benefits.

Competition represents a civilized, legalized form of struggle for existence and one of the most effective mechanisms of selection and regulation in a market economy; it is the most effective method of mutual coordination of individual actions of market subjects without centralized interference in their activities.

The main question for developing a company's strategy is: what needs to be done to seize leadership in the competition, in other words, how to ensure the company's competitiveness.

The concept of a company's competitiveness includes a large complex of economic characteristics that determine the company's position in the industry market (national or global).

Since the competition of firms in the market takes the form of competition of the product itself, the importance of the properties imparted to the product by the company that manufactures and sells it on the market increases. At the level of competitiveness of a company, the most important influence is exerted by the scientific and technical level and the degree of improvement of production technology, the use of the latest inventions and discoveries, and the introduction of modern production automation equipment.

Competitiveness reflects the productivity of resource use. The principle is valid both at the level of an individual company and at the level of the country’s economy as a whole. Based on it, it can be argued that in order to ensure competitiveness, firms must constantly take care of the most complete and effective use of all types of resources available at their disposal, as well as those acquired for future production.

The competitiveness of a firm can be detected (assessed) only within a group of firms belonging to the same industry, or firms producing substitute goods. Competitiveness can only be revealed by comparing these firms with each other both on a national scale and on a global market scale. Thus, the competitiveness of a company is a relative concept: the same company within, for example, a regional industry group can be recognized as competitive, but not within industries of the world market or its segment. Firms attach great importance to analyzing their strengths and weaknesses in order to assess real competitive opportunities and develop measures and means through which the company could increase its competitiveness and ensure its success. In the process of research, to assess the competitiveness of a company, they use certain numerical indicators that indicate the degree of stability of the company’s position, the ability to produce products that are in demand in the market and ensure that the company obtains the intended and stable final results. The most difficult thing is to assess the degree of competitiveness, that is, to identify the nature of the company’s competitive advantage compared to other companies. There are several problems here.

The first of these is the selection of basic objects for comparison, that is, the choice of a leading company in the industry of the country or abroad. Such a leading company must have certain parameters in order for comparison with it to be correct. These parameters include:

Commensurability of the characteristics of manufactured products according to the identity of the needs satisfied with their help;

Commensurability of market segments for which manufactured products are intended;

Commensurability of the life cycle phase in which the company operates.

The competitive advantage of one firm over another can be assessed when both firms satisfy identical needs of buyers in related market segments. Moreover, both companies are in approximately the same phases of the life cycle.

The second problem is the selection of criteria for the productivity of the firm's resources. The productivity of resource use presupposes the greatest return, the greatest result per unit of total resources available to the company. When a company's activities are related to making a profit, and total resources are valued in monetary terms, productivity can be assessed by an indicator of profitability of production, that is, the ratio of the profit received in a particular period to the resources spent in the same period, valued as production costs.

Competitive advantage, as the productivity of resource use, should be assessed, as a rule, over a long period during which the company's strategic goals can be achieved.

The third problem is the ability to segment the market, especially outside the country. The complexity, and sometimes complete lack of access to information about the activities of competitors, can create a misconception among the company's management about the current situation.

Therefore, to obtain correct results for assessing the level of competitive advantage, the efforts of the three components of the company’s strategic potential are necessary.

When developing a competitive strategy, it is necessary, on the one hand, to understand as fully as possible the strengths and weaknesses of the company, its position in the industry, and, on the other hand, the structure of the industry itself and the national economy as a whole, which influence the balance of forces that determine competition in this industry and country.

The strategic development goals identified on the basis of the analysis primarily reflect the areas of activity to overcome the weak and strengthen the strong competitive positions of the company. Since the components of strategic potential are directly related to all types of company resources, the expansion of one or another resource in conjunction with others will allow the implementation of these strategic goals.

Thus, a firm's competitive advantage arises from cost reduction and product differentiation. Competitive advantage of any type (cost reduction or product differentiation) results in greater efficiency in the use of a firm's resources than its competitors.

Which competitive strategy will be more effective for a company depends on three main factors:

b structures of strategic potential;

l opportunities to expand the company's resources;

b features (structure) of the industry and the national economy as a whole.

One of the most important goals of strategic management is the rational distribution of the company's limited resources between elements of strategic potential. That is, it is necessary to determine where it is more profitable to direct resources, in the development of which “abilities” of the company, in order to ensure a high level of competitive advantage.

Competitive advantage is influenced by the characteristics of the industry to which the company belongs, as well as the conditions prevailing in the national economy of the country where the company is based.

This means that to survive in market conditions, a company must:

Form the most preferable strategic potential structure from the point of view of the effectiveness of its activities;

Rationalize the provision of strategic potential elements with the required resources;

Adapt to the conditions of the national economy of the home country.

There is another concept that reflects the competitiveness of a company and its competitive advantages - this is the competitive status of the company.

The competitive status of a company should characterize the prerequisites for the company to achieve a particular level of competitive advantage. These prerequisites are determined, on the one hand, by the strategic potential of the company, on the other, by the cumulative impact of the determinants of the “national diamond” on the conditions for achieving this level.

The competitive status of a company should answer the questions:

Are the elements of strategic potential sufficiently developed, that is, are the firm’s “abilities” of all types fully provided with resources to capture a leading position;

Are the external environmental conditions favorable enough and to what extent are they used by the company to create and maintain a high level of competitive advantage for the company?

Thus, the level of a firm's competitive advantage is determined by its competitive status.

The main problem in determining the competitive status of a company becomes the problem of assessing the degree of sufficiency of the development of the company's strategic potential and external environmental conditions to create and maintain a high level of the company's competitive advantage. Having solved this problem, we can talk about the level of competitive status as the degree of sufficiency of the prerequisites for creating and maintaining the competitive status of the company.

The modern task of strategic planning is to ensure the flexibility and innovation in the enterprise's activities necessary to achieve goals in a changing environment.

Strategic planning- one of the tools for reproducing entrepreneurial behavior by an enterprise. Within the framework of strategic planning, the following main tasks are solved: distribution of limited resources, adaptation to the external environment, internal coordination, formation of a strategic organizational culture.

Strategy- this is the main direction of activity, it must be reflected in a plan designed to ensure the implementation of the mission - the main goal of the organization and the achievement of its other goals.

In other words, economic strategy presupposes the effective achievement of goals using economic methods and means.

At the level of an individual enterprise, the problem of economic efficiency arose only when it was necessary to evaluate the advantage of one or another variant of a local technical or organizational solution (choice of a design element, technological process, type of material, one or another form of production organization, etc.). Strategic goals were set for the enterprise “from above” in the form of a “plan-law”. Therefore, there was no need to evaluate the preference for achieving certain long-term goals - they were predetermined by a higher management body.

In market conditions, the use of a “national economic approach” when choosing preferred strategic goals and methods for achieving them at the firm level loses all meaning, since the owner of the means of production who created the firm is guided by the interests of the survival (prosperity) of the firm. At the same time, he understands, naturally, that without satisfying the needs, demands and requests of potential buyers of his goods or services, it is impossible to survive in a competitive environment.

At the same time, when choosing one or another strategic business zone to meet the needs of the many market entities included in it, the entrepreneur must take into account the interests of the entire set of potential consumers of his products. Sometimes this set can be represented by an entire branch of the national economy, or a branch of industry, or a significant social group of individual buyers. Consequently, making one or another strategic decision, in particular choosing one or another target of a strategic nature for his company, the entrepreneur must assess whether his choice will negatively affect other goals that reflect the interests of other market entities and can bring him a certain effect in a strategic perspective.

Choosing a goal involves directing a certain set of resources available to the company to achieve it. Since these resources are always limited, the entrepreneur must determine which goals will ensure the most productive use of these resources, that is, provide a competitive advantage for the company.

The choice of a strategic goal is always associated with determining its opportunity cost , that is, with an assessment of what needs to be sacrificed in order to achieve this goal.

However, it should be borne in mind that the goals towards which resources are directed must be equivalent in terms of the scale of influence on the survivability of the company (a branch of the national economy or the national economy as a whole) in the long term.

Thus, economic strategy develops rules and techniques for cost-effectively achieving strategic goals of the same type in terms of the impact on the competitive status of the company. Mutual coordination of such local strategic goals in terms of time and resources makes it possible to achieve the global goal of the economic strategy - creating and maintaining a competitive advantage of the company.

Economic strategy answers the same questions as any economic system:

what to produce and in what quantity?

how and by what means to produce?

for whom and when to produce?

In order to answer these questions, the company’s economic strategy must develop rules and techniques:

1) researching the conditions of competitive advantage formed by the determinants of the national “diamond” within the country and abroad, and identifying the preferred mission of the company;

2) research into the markets for potential goods and services that meet the mission of the company, and the selection of such strategic business areas that are capable of ensuring the external flexibility of the company in the long term, that is, the possibility of reorienting the company to operate in the most favorable economic, political, legal, socio-cultural , scientific, technical and environmental points of view zones;

3) the formation of a company’s product range that best satisfies the current individual and production needs of potential buyers within the country and abroad, and ensures on this basis the company’s systematic receipt of economic profit, that is, profit that allows the implementation of expanded reproduction programs;

4) distribution of the additional resources available to the company and the additional resources it attracts between various areas of activity, ensuring maximum productivity (profitability) of the use of these resources;

5) interaction with the markets for factors of production, securities, and foreign exchange markets, ensuring cost-effective maintenance of the strategic potential of the company at a level sufficient to have a competitive advantage at all stages of the life cycle;

6) formation of an effective pricing policy that ensures in the long term a stable position of the company in traditional and newly developed market segments;

7) early detection of crisis trends both within the national economy and its industries, and within the company, and prevention of insolvency (bankruptcy) of the company.

By developing rules and techniques for the effective implementation of these areas of activity, the economic strategy of the company, the formation of its production profile throughout the entire period of operation, should be focused on maintaining a competitive advantage, preventing its bankruptcy, and ensuring long-term prosperity in a constantly changing world. As can be seen from the listed aspects of economic strategy, the main directions of the company’s activities in developing strategic decisions are:

Collection and processing of significant volumes of diverse information;

Negotiating with numerous strategic influence groups, potential resource providers, clients, customers and other contact audiences;

Monitoring markets for goods and services, factors of production;

Development of actual strategic decisions.

Thus, the development of options and the choice of a preferred economic strategy is, in essence, the process of forming a portfolio (set) of strategic market transactions, that is, various agreements, transactions with numerous partners, which the company must carry out in the future in order to ensure sustainable prosperity. Creating such a portfolio involves very significant costs.

But what can we say about developing a portfolio of long-term fundamental strategic transactions if the costs associated with just one transaction are so high! Consequently, the magnitude of transaction costs associated with the development of an economic strategy is so significant that it has a decisive influence on the direction of this strategy.

Therefore, the essence of economic strategy consists of:

Firstly, in choosing such methods for identifying strategic goals that would lead to a reduction in transaction costs;

Secondly, in choosing such goals, the achievement of which would require lower total production and transaction costs;

Thirdly, in the selection of goals, the achievement of which would provide the greatest increase in the level of the company’s competitive status by increasing the combined influence of the company’s strategic potential and the determinants of the “national diamond”.

The magnitude of strategic transaction costs largely depends on the degree of instability of the external environment in which the company will operate in the future. In turn, the degree of instability of the external environment is characterized by the familiarity of expected events, the expected rate of change, and the ability to predict the future. The higher the instability of the external environment, the more difficult it is to develop adequate strategic decisions, the greater the amount of information that needs to be collected and processed, the greater the number of contacts that will need to be made in order to correctly assess the situation developing in a particular strategic zone of management, the greater the number of options for strategic transactions that need to be worked out. .

The main focus of a cost reduction strategy is to provide a competitive advantage by reducing costs. This may come from efficient scale of production, strong life-cycle effects, other cost-reducing and efficiency-enhancing capabilities, and a market characterized by price-sensitive buyers.

The strategy must develop methods for achieving low cost of production and, on this basis, seizing leadership in the “central ring” of competition.

But first, let’s define what production costs are. The costs of production factors used for production and sales activities are called production costs. Each company is interested in analyzing costs and the dynamics of their relationship with the price level of the product. There are two approaches to cost estimation: accounting and economic.

Both accountants and economists agree that a firm's costs in any period are equal to the cost of the resources used to produce the goods and services sold during that period. The company's financial statements record actual - “explicit” costs, which represent cash costs to pay for the production resources used. However, economists, in addition to “explicit” ones, take into account “implicit” costs (example: bank interest on borrowed capital).

Any company strives to obtain maximum profits at minimum costs. Naturally, the minimum amount of total costs varies depending on the volume of production. However, the components of total costs react differently to changes in production volume (payment of service personnel, production workers). Therefore, total total costs are divided into “fixed” (depreciation, insurance, advertising, loan payments, payment of service personnel) and “variable” (costs of raw materials, materials, payment of production workers, etc.). Variable costs change in proportion to the volume of production.

Any company is always faced with the task of what volume of products to produce and, accordingly, offer to the market? The problem is solved through the marginal costs of manufactured products. Marginal costs are defined as the additional consumption of resources in the event of a change in output volume by one unit.

Due to the fact that fixed costs remain constant depending on the volume of production, it is obvious that the level and dynamics of marginal costs are determined by the level of variable costs.

Costs can be “structural”, the value of which is very difficult to influence and their level changes synchronously in the same direction for all firms in the industry, and “functional”, depending on the company’s ability to produce a given product. It is functional costs that will decrease with increasing skill of the company.

The company's strategy may be based on low costs compared to competitors, however, low costs themselves cannot be an end in themselves, since they can harm the product offered by the company through weakening competitiveness. The latter may occur due to the loss of qualities that the buyer values: image and representativeness, fast delivery, availability of spare parts, reliability, maintenance, etc.

The main advantages that a low-cost manufacturer has against the main forces of competition are:

Competitors. A company with low-cost production is in a better position, competing on the most dangerous basis for other competitors - price, having the opportunity to protect itself in the context of an ongoing price war, using the tool of low prices as a weapon to capture market share (including to intercept other people's buyers) and to attack once-prosperous firms, as well as to make above-average profits (due to higher sales volume) in markets characterized by price competition.

Buyers. Low-cost firms can partially protect their profit margins from the economic power of buyers, since the latter are rarely able to negotiate prices to the survival level of other most efficient firms.

Suppliers. In some cases, low-cost companies can be better insulated from the economic power of suppliers if their superior efficiency allows them to cope with price pressures on critical costs.

Potential competitors. In terms of the threat from new competitors, low-cost industries have a better competitive position because they have lower costs, and this not only acts as a barrier to entry, but also provides easier ways to use price-cutting policies to protect market from new competitors.

Substitutes. In relation to substitute products, companies with low costs are also in a better position to take advantage of price reduction policies designed to protect against attractive low-cost substitutes.

Thus, low costs are only an opportunity to increase your competitiveness. For low cost to bring results, it is necessary:

So that the method of achieving price leadership is not easily copied;

So that competitors do not have the opportunity to engage in non-price competition;

So that the interests of buyers remain constant and do not change in the direction of improving the product.

A low-cost strategy protects against all five forces of competition. If all competitive forces are active in the market and firms in the industry receive normal economic profits, then the cost leader always has excess profits and can use it, for example, to improve the quality of its product in order to further implement an optimal cost strategy (you need to know production well and be a good marketer , i.e. know what consumers want).

Advantages through achieving low product costs are achieved when the total (cumulative) costs, covering all costs associated with the production and promotion of goods to the end consumer, are lower than those of competitors.

Let us note two possible ways to obtain cost advantages:

Using factors that may cause an increase (decrease) in costs.

Regulating the process of formation of cumulative costs through differentiation and savings at all stages of production.

Large, but not always justified from the point of view of the competitiveness of the product, benefits can be obtained by a company if it finds any other ways to reduce costs.

Here are the main ways to get benefits:

Refuse extra goods, offer the consumer only simple products (services), without frills;

Automate basic operations that have high costs;

Find a way to use cheaper raw materials;

Sell products on your own without intermediaries;

Relocate production closer to suppliers and consumers;

Strengthen vertical integration;

Refuse mass production, focusing on a limited range of products.

Competitors do not necessarily, but usually, have certain additional costs in bringing their products to consumers. Differences in costs between different producers can occur for a number of reasons, such as:

Differences in prices for raw materials, components, energy and other types of resources received from suppliers;

Differences in technologies used, age of plants and equipment;

Differences in internal operating costs due to efficient scale of production and different plant sizes, life cycle effects, differences in wage levels, energy costs, etc.;

Differences in the dependence of competing firms on inflation and exchange rates;

Differences in transport conditions and costs of distribution channels.

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