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

What is competitive advantage

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

Competitive advantage for business provides:

– prospects for long-term growth;

– work stability;

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

- creating barriers for new players to enter the market.

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

What are the types of competitive advantages

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

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

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

4 criteria for assessing competitive advantages

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

Uniqueness. Competitive advantage should distinguish the product from competitors, and not repeat them.

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

Value for the target audience of the business.

Competitive Advantage Strategies

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

• Information about competitors: 3 rules for collecting and using it

This strategy often requires the unification and simplification of the product to facilitate production processes, increasing production volumes. It may also require a high initial investment in equipment and technology to reduce costs. For the effectiveness of this strategy, careful control of labor processes, design and development of products, with a clear organizational structure, is necessary.

Cost leadership can be achieved through certain opportunities:

- limited access of the enterprise to obtaining cheap resources;

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

- the management of the company's production capacity is based on the principle that promotes economies of scale;

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

– strict control over invoices and production costs refusing small operations;

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

– standardized production of the company;

2 steps to building a competitive advantage

Alexander Maryenko, Project Manager of A Dan Dzo Group of Companies, Moscow

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

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

Determine the real need of such people related to your services or products, which are not yet satisfied by suppliers.

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

Product leadership strategy requires:

- the product must have unique properties;

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

– high qualification of employees;

- ability to protect competitive advantage.

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

Risks or disadvantages of using a differentiated marketing strategy:

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

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

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

3. Niche leadership or focus. The strategy involves protection from major competitors and substitute products. In this case, it is possible to achieve a high rate of return due to more effective satisfaction of the needs of a narrow audience of consumers. This strategy can be built on competitive advantages of any type - on the breadth of the proposed range or the lower price of the product.

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

Risks and disadvantages of using a focus strategy:

- there is a high probability of large differences in prices for goods compared to the leading brands of the market, which may scare away their target audience;

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

- a serious danger of reducing the difference between the needs of the industry and the niche market.

Where to Use a Niche Leadership Strategy? Working with this strategy is recommended for small companies. It is most effective when the market is saturated, there are strong players, with high costs or non-competitiveness in terms of costs in comparison with market leaders.

Three stages of service strategy

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

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

III stage. Requirement. For consumers, this proposal becomes an integral element of a service or product, moving into the category of standards.

How to check the level of service in your company

• Conducting informal surveys. The CEO and other leaders need to understand the opinion of consumers about the proposed service.
• Conducting formal surveys (focus groups). It will be rational to involve both consumers and representatives of all departments of your company for these events.
• Engage third-party consultants to interview company employees. Thanks to external consultants, the importance of answers increases (with more candid answers).

How to improve the service

Tatiana Grigorenko, managing partner of 4B Solutions, Moscow

Consider general tips for improving the service in the work of companies.

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

2. Break the rules. On modern market it is ineffective to be like everyone else, you need to be better than the rest.

3. Listen to your customers. Do you need to ask your customers what they would be interested in?

How to create competitive advantage

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

1) Uniqueness.

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

3) Uniqueness.

4) Credibility.

5) Attractiveness.

6) Have Reasons to Believe (a basis for trust). Concrete grounds that will make buyers believe.

7) Be better. Buyers need to understand why this product is better than others.

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

9) Brevity. Must fit in a sentence of 30 seconds.

Step #1. Compiling a list of all benefits

The benefits of the product are sought as follows:

– we are interested in buyers, what competitive advantages they hope to get at the expense of your product;

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

1) Product

What can be said about the product:

– functionality;

– brand symbolism: logo, name, corporate identity;

– appearance: packaging, design;

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

– service and support;

- assortment, variety.

2) Price

What can be said about the price:

– price strategy for entering the market;

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

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

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

– policy regarding the conduct of promotional events;

– Availability of seasonal promotions or discounts;

- Possibility of price discrimination.

3) Place of sale

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

What can be said about the sale meta:

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

– distribution channels for the sale of goods;

– type and conditions of distribution;

– conditions and rules for the display of goods;

- Logistics and inventory management issues.

4) Promotion

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

What can be said about the promotion:

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

– target values ​​of knowledge, brand loyalty and consumption by their target audience;

– required marketing budget, SOV in the segment;

- the geography of their communication;

– communication channels for contact with consumers;

– participation in specialized shows and events;

- brand media strategy

– PR-strategy;

– promotions for the next year, events aimed at sales promotion.

5) People

– employees who represent your product and company;

– sales personnel in contact with the target consumers of the product;

– consumers who are “opinion leaders” in their category;

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

– this group also includes privileged consumer groups, including VIP clients and loyal customers who generate sales for the company.

What can you say about working with people:

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

– methods of working with people on whom the opinion of the consumer audience depends;

– education and loyalty programs for their sales staff;

- Methods for collecting feedback.

6) Process

This one applies to the service market and the B2B market. Under the "process" refers to the interaction of the company and consumers. It is this interaction that is the basis of buying on the market with the formation of consumer loyalty.

• Unique Selling Proposition: Examples, Development Tips

You can talk about programs to improve the process of providing services to your target customers. The goal is to provide the most comfortable conditions for buyers when purchasing and using the offered service.

7) Physical environment

This also applies to the service market and B2B. This term describes what surrounds the buyer during the purchase of the service.

Step #2. Rank all the benefits

To evaluate the list, a three-point scale of the importance of characteristics is best suited:

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

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

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

Step #3. Compare list of benefits with competitors

The resulting list of characteristics should be compared with its competitors according to two principles: the presence of this property in a competitor, whether the condition is better for a competitor or for you.

Step number 4. Look for absolute competitive advantages

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

- the product is unique in one or several properties;

– uniqueness by combination of properties;

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

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

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

– creation and implementation of innovations;

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

– qualification of personnel and the uniqueness of its human capital;

- the ability to ensure the minimum cost in their industry, while assuming a higher profit;

– special conditions of sales, after-sales service for consumers;

- access to limited raw materials, resources.

Step number 5. Look for "false" competitive advantages

First mover. Declare the properties of competitors' products first, while they have not yet informed their target audience about them;

Efficiency indicator. Creating your own performance evaluation indicator;

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

Step number 6. Make a development and control plan

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

How to analyze current competitive advantages

Stage 1. Make a list of evaluation parameters

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

For evaluation, a three-point scale is best suited, according to which are put:

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

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

3 points = the parameter is fully reflected.

Stage 3. Make a development plan

Form your plan of action aimed at improving the competitive advantage of the company. It is necessary to plan improvements on the points of assessment, which were given less than three points.

How to develop competitive advantages

Competitive behavior in the market can be of three types:

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

Adaptive. Accounting for innovative changes in production, ahead of competitors in relation to the modernization of production;

Providing-guaranteeing. The basis is the desire to maintain and stabilize the obtained competitive advantages and market positions in the long term by supplementing the assortment, improving quality, and additional services to consumers.

The duration of retention of competitive advantages depends on:

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

The number of clear sources of competitive advantage in the enterprise. A greater number of competitive advantages at the enterprise will seriously complicate the tasks of its pursuers-competitors;

Constant modernization of production.

How to survive the crisis and maintain competitive advantages

Alexander Idrisov, Managing Partner, StrategyPartners, Moscow

1. Keep your finger on the pulse of events. Some of the employees should collect and analyze information about the state and trends of the market, how these trends can affect the business, taking into account the study of consumer preferences, demand dynamics, data on investors and competitors.

2. Develop the most pessimistic forecast for your company.

3. Focus on paying customers.

4. Focus on a narrow range of tasks. You need to carefully study the business model of your company. This does not mean that you need to abolish all areas of your activity. But it is worth focusing on a narrow range of tasks, abandoning non-core tasks or areas that can be outsourced.

• Reframing, or How to deal with customer objections

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

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

Information about the author and company

Alexander Maryenko, Project Manager of A Dan Dzo Group of Companies, Moscow. Graduated from the Faculty of Finance of the Nizhny Novgorod state university. Participated in projects (more than 10, of which six - as a manager) aimed at increasing the profitability of companies' businesses and solving their systemic problems.

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

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

Tatiana Grigorenko, managing partner of 4B Solutions, Moscow.

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

Alexander Idrisov, Managing Partner of StrategyPartners, Moscow.

strategy partners. Field of activity: strategic consulting. Form of organization: LLC. Location: Moscow. Number of staff: about 100 people. Main clients (completed projects): Atlant-M, Atlant Telecom, Vostok, GAZ, MTS, Press House, Razgulay, Rosenergoatom, Russian Machines, Talosto, "Tractor Plants", "Uralsvyazinform", "Tsaritsyno", publishing houses "Enlightenment", "Eksmo", Ministry information technologies and Communications of the Russian Federation, Ministry regional development Russian Federation, Murmansk port, Rosprirodnadzor, administrations of the Arkhangelsk, Nizhny Novgorod, Tomsk regions and Krasnoyarsk Territory, Avantix company.

On international market Firms compete, not countries. It is necessary to understand how a firm creates and maintains competitive advantage in order to understand the country's role in this process. On present stage firms' competitive opportunities are not limited to their home country. The role of global strategies in creating competitive advantage should be given special attention, as these strategies completely change the role of the home country.

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

Competitive strategy

To understand the nature of competition, the basic unit is the industry (whether processing or from the service sector), that is, a group of competitors that produce goods or services and directly compete with each other. A strategically significant industry includes products with similar sources of competitive advantage. Examples of this are facsimile, polyethylene, heavy haul trucks and plastic injection molding equipment. In addition, there may be related industries whose products have the same buyers, production technology or distribution channels, but they impose their own requirements for competitive advantage. In practice, the boundaries between industries are always very vague.

In many discussions about trade and competition, too general definitions of industries are used, for example, “banking”, “ chemical industry or mechanical engineering. This is a very broad approach, as both the nature of competition and the sources of competitive advantage vary considerably within each such group. For example, mechanical engineering is not single industry, but dozens of sectors with different strategies, such as the production of equipment for the weaving industry, the manufacture of rubber products or the printing industry, each with its own special requirements for achieving a competitive advantage.

By developing a competitive strategy, firms seek to find and implement a way to compete profitably and in the long term in their industry. There is no universal competitive strategy; only a strategy that is consistent with the conditions of a particular industry, the skills and capital that a particular firm has, can bring success.

The choice of a competitive strategy is determined by two main points. The first is the structure of the industry in which the firm operates. The essence of competition in different industries varies greatly, and the likelihood of long-term profits in different industries is not the same. For example, the average profitability in the pharmaceutical and cosmetics industries is very high, but not in steel and many types of clothing. The second main point is the position that the firm occupies within the industry. Some positions are more profitable than others, regardless of the average profitability of the industry as such.

Each of these moments in itself is not enough for choosing a strategy. So, the firm is in a very profitable industry may not make much profit if he chooses the wrong position in the industry. Both the structure of the industry and the position in it can change. An industry can become more (or less) “attractive” over time as the country's conditions for creating that industry or other elements of the industry's structure change. Position in the industry - a reflection of the endless war of competitors.

The firm can influence both the structure of the industry and the position in its “table of ranks”. Successful firms not only respond to change " environment”, but also try to change it to their own advantage. A significant change in the competitive position entails changes in the structure of the industry or the emergence of new foundations for competitive advantage. Thus, Japanese firms that produce televisions have become world leaders due to the trend towards compact, portable televisions and the replacement of the lamp element base with a semiconductor one. Firms in one country take over the lead from firms in another country if they are better able to respond to such changes.

Structural analysis of industries

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

Picture 1. The Five Forces That Determine Industry Competition

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

The five forces of competition determine the profitability of an industry because they influence the prices firms can charge, the costs they must incur, and the amount of capital investment required to compete in the industry. The threat of new competitors will reduce overall potential profitability in the industry, because they bring new production capacity to the industry and seek to gain market share, thereby reducing positional profit. Powerful buyers or suppliers, by bargaining, benefit and reduce the firm's profits. Fierce competition in the industry reduces profitability, because in order to remain competitive, you have to pay (expenses for advertising, marketing, research and development (R&D), or profit "leaks" to the buyer due to lower prices.

The availability of substitute products limits the price that firms competing in the industry can charge; higher prices will encourage buyers to look for a substitute and reduce industry output.

The significance of each of the five forces of competition is determined by the structure of the industry, that is, its main economic and technical characteristics. For example, buyer impact is a reflection of questions such as: how many buyers does the firm have; what part of the sales volume is accounted for by one buyer; Is the price of the product a significant part of the buyer's total cost (making the product "price sensitive")? The threat of new competitors depends on how difficult it is for a new competitor to “infiltrate” an industry (determined by indicators such as brand loyalty, the size of the economy, and the need to connect to a network of intermediaries).

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

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

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

Secondly, often the sectors that are important for a high standard of living are those that have an attractive structure. Industries with an attractive structure and affordable conditions for new competitors (in terms of technology, specialized skills, access to distribution channels, brand reputation, etc.) are often associated with high performance labor and give a large return on invested capital. The standard of living depends to a large extent on the ability of a country's firms to successfully enter industries with a profitable structure. Reliable indicators of the "attractiveness" of an industry are not scale, growth rate, or newness of technology (traits often emphasized by businessmen or government planners), but the structure of the industry. By targeting structurally disadvantaged industries, developing countries often misuse resources they don't have much of.

Finally, another reason for the importance of industry structure in international competition is that changing structure creates real opportunities for a country to enter new industries. Thus, Japanese firms producing copiers began to successfully compete with the American leaders in this field (specifically, Xerox and IBM) due to the fact that they turned to a market sector left almost without attention (small-sized copiers), applied new approach to the customer (selling through dealers instead of direct sale), changed production (mass production instead of small-scale production) and pricing approach (selling instead of renting, which is expensive for the customer). This new strategy has eased entry into the industry and eroded the edge of the former leader. How domestic conditions point the way or force firms to recognize and respond to changes in structure is critical to understanding "patterns of success" in international competition.

Position in the industry

Firms must not only respond to changes in the structure of the industry and try to change it in their favor, but also choose a position within the industry. This concept includes the approach of the firm as a whole to competition. For example, in the production of chocolate, American firms (Hershey, M & M "s / Mars, etc.) compete due to the fact that they produce and sell in huge quantities a relatively small set of chocolate varieties. In contrast, Swiss firms (Lindt, Sprungli, Tobler / Jacobs and etc.) sell mostly refined and expensive products through narrower and more specialized distribution channels They produce hundreds of items, use the highest quality components and have a longer manufacturing process As this example shows, position in an industry is the firm's overall approach to competition , and not just its products or who it is designed for.

Position in the industry is determined by competitive advantage. Ultimately, firms outperform their rivals if they have a strong competitive advantage. Competitive advantage is divided into two main types: lower costs and product differentiation. Low costs reflect a firm's ability to develop, produce, and sell a comparable product at a lower cost than its competitors. Selling goods at the same (or approximately the same) price as competitors, the company in this case receives a large profit. Thus, Korean firms producing steel and semiconductor devices won over foreign competitors in this way. They produce comparable goods at very low cost, using a low-paid but highly productive labor force and modern technology and equipment bought from abroad or manufactured under license.

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

Competitive advantage of any type gives higher productivity than competitors. A firm with a low cost of production produces a given value at a lower cost than competitors; a firm with a differentiated product has a higher profit per unit of output than its competitors. Thus, competitive advantage is directly related to the formation of national income.

Difficult, but still possible to gain a competitive advantage based on both lower costs and differentiation6. It is difficult to do this because the provision of very high consumer properties, quality or excellent service inevitably leads to a rise in the cost of goods; it will cost more than if you just strive to be at the level of competitors. Of course, firms can improve technology or production methods in ways that both reduce costs and increase differentiation, but ultimately competitors will do the same and force the decision on what type of competitive advantage to focus on.

However, any effective strategy must pay attention to both types of competitive advantage, albeit strictly adhering to one of them. A firm focusing on low costs must still provide acceptable quality and service. In the same way, the product of a firm that produces differentiated products should not be so expensive as the products of competitors that it would be to the detriment of the firm.

Another important variable that determines position in an industry is the scope of competition, or the breadth of purpose a firm has within its industry. The firm must decide for itself how many varieties of products it will produce, what distribution channels it will use, what customer base it will serve, in what parts of the world it will sell its products, and in what related industries it will compete.

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

The scope of competition is also important because firms can sometimes gain a competitive advantage by setting large goals by competing globally, or by leveraging industry links by competing in related industries. For example, Sony is greatly benefiting from the fact that a wide variety of radio-electronic products are produced around the world with its brand, using its technology and distributed through its channels. Relationships between well-defined industries arise from the commonality of important activities or skills among firms that compete in those industries. The sources of competitive advantage worldwide will be discussed below.

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

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

Figure 2. Model Strategies

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

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

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

Sources of Competitive Advantage

Competitive advantage is achieved based on how the firm organizes and performs certain activities. The actions of any firm are divided into different types. For example, salespeople make phone calls, service technicians make repairs at the customer's request, scientists in a laboratory develop new products or processes, and financiers raise capital.

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

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

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

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

Figure 3 Value chain

But a firm is not only the sum of all its activities. A firm's value chain is a system of interdependent activities with links between them. These links occur when the method of one activity affects the cost or efficiency of others. Relationships often result in additional costs for "fitting" certain types activities to each other pay off in the future. For example, more expensive designs and components or more stringent quality control can reduce after-sales service costs. Firms must incur such costs in accordance with their strategy in the name of competitive advantage.

The presence of links also requires the coordination of different types of activities. In order not to disrupt the delivery time, for example, it is necessary that production, ensuring the supply of raw materials and components, auxiliary activities (for example, commissioning works) were well matched. A clear coordination ensures the timely delivery of goods to the customer without the need to have expensive means of delivery (that is, a large fleet of vehicles when you can do with a small one, etc.). Aligning related activities reduces transaction costs, provides clearer information (which makes management easier), and allows costly transactions in one activity to be replaced by cheaper transactions in another. It is also a powerful way to reduce the overall time required to complete different activities, which is increasingly important for competitive advantage. For example, such coordination significantly reduces the time for developing and launching new products, as well as taking orders and delivering goods.

Careful relationship management can be a critical source of competitive advantage. Many of these connections are subtle and may not be noticed by competing firms. Benefiting from these ties requires both complex organizational procedures and the adoption of compromise decisions in the name of future benefits, including in cases where organizational lines do not cross (such cases are rare). Japanese firms have been particularly good at link management. With their filing, the practice of mutual “overlapping” the stages of new product development in order to simplify their release and reduce development time, as well as enhanced quality control “on stream” to reduce after-sales service costs, became popular.

To achieve competitive advantage, you should approach the value chain as a system, not as a set of components. Changing the value chain by rearranging, regrouping, or even eliminating certain activities from it often leads to a significant improvement in competitive position. An example of this is the production of household appliances. Italian firms in this area completely changed the manufacturing process and used a completely new distribution channel, thanks to which they became world export leaders in the 1960s and 1970s. Japanese firms for the production of photographic equipment have become world leaders by putting single-lens reflex cameras on stream, introducing automated mass production and for the first time in the world setting up mass sales of such cameras.

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

Figure 4 Value system

Competitive advantage is increasingly determined by how well a firm can organize this entire system. The above links not only connect different types of activities of the company, but also determine the mutual dependence of the company, subcontractors and distribution channels. A firm can gain a competitive advantage by better organizing these connections. Regular and timely deliveries (a practice first introduced in Japan and called "kenban" there) can reduce a firm's operating costs and allow it to reduce inventory levels. However, the potential for savings through linkages is by no means limited to securing deliveries and taking orders; it also includes R&D, after-sales service and many other activities. The firm itself, its subcontractors, and the distribution network can benefit if they can recognize and exploit such links. The ability of firms in a given country to use links with suppliers and buyers in their country explains in no small measure the competitive position of the country in the corresponding industry.

The value chain provides a better understanding of the sources of cost gains. The cost benefit is determined by the amount of costs in all necessary activities (compared to competitors) and can occur at any stage of it. Many managers look at costs too narrowly, focusing on the production process. However, firms that lead by reducing costs also win by developing new, cheaper products, using less expensive marketing, reducing service costs, that is, extracting cost benefits from all links in the value chain. In addition, in order to obtain a cost benefit, careful “adjustment” is most often required not only for relationships with suppliers and the distribution network, but also within the company.

The value chain also helps to understand the scope for differentiation. A firm creates special value for the buyer (and this is the meaning of differentiation) if it gives the buyer such savings or such use properties that he cannot get by buying a competitor's product. In essence, differentiation is the result of how a product, ancillary services, or other activities of the firm affect the activities of the buyer. A firm and its customers have many points of contact, each of which can be a source of differentiation. The most obvious of them shows how the product affects the activity of the buyer in which this product is used (say, a computer used to take orders, or a laundry detergent). Creating additional value at this level can be called first-order differentiation. But almost all products have a much more complex effect on buyers. Thus, a structural element included in a product purchased by the customer must be credited and - in the event of a failure in the entire product - repaired as part of the product sold to the end customer. At each stage of this indirect influence of the product on the activity of the buyer, new opportunities for differentiation open up. In addition, almost all activities of the company in one way or another affect the buyer. For example, the developers of an affiliate company can help build a component product into the final product. Such high-order relationships between the firm and customers are another potential source of differentiation.

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

The concept of the value chain allows for a better understanding of not only the types of competitive advantage, but also the role of competition in achieving it. The scope of competition is important because it determines the direction of the firm, the way in which those activities are carried out, and the configuration of the value chain. Thus, by choosing a narrow target market segment, a firm can fine-tune its activities to the requirements of this segment and thereby potentially gain cost benefits or differentiation compared to competitors operating in a broader market. At the same time, aiming at a broad market can provide a competitive advantage if the firm is able to operate in different segments of the industry or even in several interconnected industries. Thus, German chemical companies (BASF, Bayer, Hoechst, etc.) compete in the production of a wide variety of chemical products, but certain product groups are produced at the same plants and have common distribution channels. Likewise, Japanese manufacturing firms consumer electronics Companies such as Sony, Matsushita, and Toshiba benefit from their sister industries (TV, audio, and VCR). They use the same brand names, worldwide distribution channels, common technology and joint purchasing for these products.

An important reason for competitive advantage is that the firm chooses a field of competition that is different from that chosen by competitors (other market segment, region of the world), or by combining products of related industries. For example, Swiss hearing aid firms have focused on high power hearing aids for people with severe hearing impairments, outperforming broader American and Danish competitors. Another common technique for increasing competitive advantage is to be among the first firms to move to global competition while other domestic firms are still limited to the domestic market. The home country plays an important role in how these competitive differences manifest themselves.

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

Innovation leads to a change in competitive leadership if other competitors either have not yet recognized the new way of doing business, or are unable or unwilling to change their approach. There are many reasons for this: complacency and complacency, inertia of thinking (a wary attitude towards the new), funds invested in specialized funds and equipment (this “ties hands”), and, finally, there may be “mixed” motives. It was precisely such “mixed” motives that Swiss watch companies had, for example, when the American company Timex threw cheap watches onto the market that could not be repaired, and the Swiss were all afraid to undermine the image of their watches as an equivalent of quality and reliability. In addition, their factories turned out to be completely unsuitable for the mass production of cheap products. However, without a new approach to competition, the challenger rarely succeeds (unless he changes the very nature of competition). Established leaders will most often retaliate immediately and "avenge themselves."

In the international market, innovations that provide a competitive advantage anticipate new needs both at home and abroad. Thus, with the growing global concern for product safety, the Swedish firms Volvo, Atlas Copco, AGA and others have succeeded because they foresaw this development in advance. However, innovations undertaken in response to a situation specific to the domestic market can have the opposite effect of what is desired - to push back the country's success in the international market!

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

Here are the most typical reasons for innovations that give a competitive advantage:

1. New technologies. Changing technology can create new opportunities for product development, new ways to market, manufacture or deliver, and improve related services. It is this that most often precedes strategically important innovations. New industries emerge when a change in technology makes a new product possible. Thus, German firms became the first in the X-ray equipment market, because X-rays were discovered in Germany. Leadership shifts are most likely to occur in industries where abrupt change in technology obsoletes the knowledge and funds of former leaders in the industry. For example, in the same X-ray and other types of medical equipment for this purpose (tomographs, etc.), Japanese firms overtook German and American competitors due to the emergence of new electronic-based technologies that made it possible to replace traditional X-rays.

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

1. New or changed customer requests. Often, a competitive advantage arises or changes hands when buyers have completely new demands or their views on “what is good and what is bad” change dramatically. Those firms that are already entrenched in the market may not notice this or may not be able to respond properly, because in order to respond to these requests, a new value chain is required to be created. Yes, US companies fast food gained an advantage in many countries because customers wanted cheap and always available food, and restaurants were slow to respond to this demand, because the fast food chain works in a completely different way than a traditional restaurant.
2. Emergence of a new industry segment. Another opportunity for competitive advantage arises when an entirely new industry segment is formed or existing segments are regrouped. There is an opportunity not only to reach a new group of buyers, but also to find a new, more effective method release certain types of products or new approaches to a certain group of customers. A striking example of this is the production of forklift trucks. Japanese firms have discovered an overlooked segment - small multi-purpose forklift trucks - and have taken it. At the same time, they achieved the unification of models and highly automated production. This example shows how taking on a new segment can dramatically change the value chain, which can be quite a challenge for competitors who are already established in the market.
3. Change in the cost or availability of production components. Competitive advantage often changes hands due to changes in the absolute or relative cost of components such as labor, raw materials, energy, transportation, communications, media, or equipment. This indicates a change in the conditions of suppliers or the possibility of using new or other components in their qualities. The firm gains competitive advantage by adapting to new conditions, while competitors are bound hand and foot by capital investments and tactics adapted to old conditions.

A classic example is the change in the ratio of labor costs between countries. Thus, Korea, and now other countries in Asia, have become strong competitors in relatively uncomplicated international construction projects when wages have risen sharply in more developed countries. IN Lately the sharp fall in transport and communication prices opens up opportunities to reorganize the management of firms and thus gain a competitive advantage, for example, the ability to rely on specialized subcontractors or expand production around the world.

1. Change in government regulation. Changes in government policy in areas such as standards, environmental protection, new industry requirements, and trade restrictions are another common incentive for innovation to bring competitive advantage. Existing market leaders have adapted to certain "rules of the game" from the government, and when these rules suddenly change, they may not be able to respond to these changes. American exchanges benefited from the deregulation of securities markets in other countries because the United States was the first to introduce this practice, and by the time it spread around the world, American firms had already adjusted to it.

It is important to respond quickly to changing industry structure

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

Early Birds benefit by being the first to benefit from economies of scale, driving down costs through intensive staff training, building brand image and customer relationships at a time when competition is not yet fierce, being able to choose distribution channels or getting the best plant locations and best profitable sources of raw materials and other factors of production. Responding quickly to a new situation can provide a firm with a different kind of advantage that may be easier to retain. The innovation itself can be copied by competitors, but the benefits derived from it often remain with the innovator.

Early birders benefit most in industries where economies of scale are important and where customers have a strong hold on their subcontractors. Under such conditions, it is very difficult for a well-established competitor to challenge. How long an early bird can hold an advantage depends on how soon changes in the industry structure occur to negate that advantage. For example, in the consumer packaged goods industry, customer loyalty to any given brand of product is very strong and there is little change in the situation. Firms such as Ivory Soap, M&M's / Mars, Lindt, Nestle and Persil have maintained their positions for more than one generation.

Every major change in the structure of an industry creates the opportunity for new early risers. Thus, in the watch industry, the emergence in the 1950s and 1960s of new distribution channels, mass marketing and mass production allowed the American firms Timex and Bulova to bypass their Swiss competitors in terms of sales. Later, the transition from mechanical to electronic watches created a “breakthrough” that allowed the Japanese firms Seiko, Citizen, and then Casio to take the lead. That is, the “early birds” who win in one generation of a technology or product may well be the losers in a generational change, since their capital investments and skills are of a specialized nature.

But this example of the watch industry also reveals another important principle: early birds will only succeed if they can correctly predict changes in technology. American firms (for example, Pulsar, Fairchild and Texas Instruments) were among the first to start producing electronic watches, based on their position in the production of semiconductors. But they relied on watches with LED indication (LDI), and LEDs were inferior to both liquid crystal indicators (LCD) in cheaper models of watches, and traditional hand indication combined with a quartz movement in more expensive and prestigious models. The company Seiko decided not to produce watches with LED, but from the very beginning it focused on watches with LCD and quartz clocks. The introduction of LCDs and quartz movements has given Japan the lead in mass watch sales and Seiko the world leader in the industry.

Spot what's new and implement it

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

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

"Outside" people or firms are often more likely to see new opportunities or have different skills and resources than long-standing competitors - just the right ones to compete in new ways. Leaders of innovative firms are often outsiders also in a hidden, social sense (not in the sense that they are the dregs of society), they just do not belong to the industrial elite, they are not even recognized as full-fledged competitors, and therefore they will not stop before to break established norms or even use not too fair methods of competition.

With rare exceptions, innovation comes at the cost of enormous effort. Success in applying new or improved methods of competition is achieved by the firm that stubbornly bends its line, in spite of all difficulties. This is where the lone wolf or small group strategy comes into play. As a result, innovations are often the result of necessity, and even the threat of collapse: the fear of failure is much more stimulating than the hope of victory.

For the above reasons, innovations often do not come from recognized leaders or even from large companies. The economies of scale in R&D that play into the hands of large firms are not so important, since many innovations do not require complex technology, and large companies, for various reasons, are often unable to see a change in the situation and quickly respond to it. In our study, along with large firms, smaller ones were also analyzed. In cases where large firms have been innovators, they have often acted as newcomers to one industry while having a strong foothold in another.

Why are some firms able to recognize new ways of competing while others are not? Why do some firms guess these ways before others? Why do some companies better guess the direction in which the technology will develop? Why is there such a huge effort to find new ways? These intriguing questions will be central to later chapters. The answers must be sought in terms such as the choice of direction for the firm's main efforts, the availability of the necessary resources and skills, and what forces influenced change. In all this, the national environment plays an important role. In addition, the degree to which domestic conditions favor the emergence of the aforementioned domestic outsiders and thereby prevent foreign firms from taking over the leadership of the country in existing or new industries largely determines national prosperity.

Hold the advantage

How long a competitive advantage can be maintained depends on three factors. The first factor is determined by the source of the advantage. There is a whole hierarchy of sources of competitive advantage in terms of retention. Benefits of low rank, such as cheap labor or raw materials, can be easily obtained by competitors. They can copy these advantages by finding another source of cheap labor or raw materials, or they can cancel them out by manufacturing their products or drawing resources from the same place as the leader. For example, in the production of consumer electronics, Japan's labor cost advantage has long since passed to Korea and Hong Kong. In turn, their firms are already threatened by the even greater cheapness of labor in Malaysia and Thailand. Therefore, Japanese electronic firms are moving production abroad. Also at the bottom of the hierarchy is the advantage based solely on the scale factor from the use of technologies, equipment or methods taken from competitors (or available to them). Such economies of scale disappear when new technology or methods make old ones obsolete (similarly, when a new type of product is introduced).

Higher-order benefits (proprietary technology, differentiation based on unique products or services, firm reputation based on enhanced marketing activities, or close ties with customers, strengthened by the fact that it will be expensive for the customer to change suppliers) can be held for a longer time. They have certain features.

First, in order to achieve such advantages, great skills and abilities are required - specialized and more trained personnel, appropriate technical equipment and, in many cases, close relationships with key customers.

Secondly, higher-order benefits are usually possible with long-term and intensive investments in production facilities, in specialized, often risky training of personnel, in R&D or in marketing. The performance of certain types of activities (advertising, product sales, R&D) creates tangible and intangible values ​​- the company's reputation, a good relationship with customers and a knowledge base. Often the first to react to a changed situation is the firm that has been investing in these activities longer than competitors. Competitors will have to invest as much, if not more, to get the same benefits, or invent ways to achieve them without such large expenses. Finally, the longest lasting benefits are the combination of large capital investments with better performance, which makes the benefits dynamic. Constant investment in new technology, marketing, the development of a branded service network around the world or the rapid development of new products makes it even more difficult for competitors. Higher-order benefits not only last longer, but are also associated with higher levels of productivity.

Benefits based on cost alone tend to be less durable than those based on differentiation. One reason for this is that any new source of cost reduction, no matter how simple, can immediately take away the firm's cost advantage. Thus, if labor is cheap, it is possible to outperform a firm with much higher labor productivity, while in the case of differentiation, in order to outperform a competitor, it is usually necessary to offer the same set of products, if not more. In addition, cost-only advantages are more vulnerable because the introduction of new products or other forms of differentiation can destroy the advantage gained by producing old products.

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

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

The main task is to constantly improve the firm's performance in order to increase existing advantages, for example, to operate production facilities more efficiently or provide more flexible customer service. Then it will be even more difficult for competitors to get around it, because for this they will need to urgently improve their own performance, which they may simply not have the strength to do.

Nevertheless, in the long run, in order to maintain a competitive advantage, it is necessary to expand the set of its sources and improve them, move on to higher-order advantages that last longer. This is exactly what Japanese automobile firms did: initially they entered foreign markets with low-cost small-class cars of sufficiently high quality, achieving success through cheap labor. But even then, while still having this advantage, Japanese automakers began to improve their strategy. They began investing heavily in building large, modern facilities and benefiting from economies of scale, then began to innovate technology by being the first to introduce just-in-time and a number of other methods to improve quality and efficiency. This gave a higher quality than that of foreign competitors, and, as a result, reliability and customer satisfaction with the goods. Recently, Japanese automotive firms have become leaders in technology and are introducing new brands with enhanced consumer properties.

Change is needed to maintain the advantage; Firms must take advantage of industry trends without ignoring them. Firms must also invest to protect areas that are vulnerable to competition. Thus, if biotechnology threatens to change the direction of research in the pharmaceutical industry, a pharmaceutical company seeking to maintain a competitive advantage must immediately create a biotechnology base that surpasses that of its competitors. Hoping that a competitor's new technology will fail, ignoring a new market segment or distribution channel are clear signs that competitive advantage is slipping away. And such a reaction, alas, occurs all the time!

In order to maintain positions, firms sometimes have to give up existing advantages in order to achieve new ones. For example, Korean shipbuilders only emerged as world leaders when they dramatically increased shipyard capacity, dramatically increased efficiency through new technologies while reducing labor requirements, and mastered the production of more complex ship types. All these measures reduced the importance of labor costs, although Korea still had an advantage in this respect at the time. The seeming paradox of giving up former advantages is often daunting. However, if the firm does not take this step, no matter how difficult and contradictory common sense he did not seem to do it for her competitors and eventually win. How the “environment” in the country encourages firms to take such steps will be discussed later.

The reason that few firms manage to maintain leadership is that it is extremely difficult and unpleasant for any successful organization to change strategy. Success breeds complacency; a successful strategy becomes routine; stop searching and analyzing information that could change it. The old strategy takes on an aura of holiness and infallibility and is deeply rooted in the firm's mindset. Any proposal to make a change is regarded almost as a betrayal of the interests of the company. Successful firms often seek predictability and stability; they are fully occupied with maintaining the achieved positions, and making changes is constrained by the fact that the company has something to lose. It is only when there is nothing left of the old advantages that they think about replacing old advantages or adding new ones. And the old strategy is already ossified, and when there are changes in the structure of the industry, leadership changes. Innovators and new leaders are small firms whose hands are not bound by history and previous investments.

In addition, a change in strategy is also blocked by the fact that the old strategy of the firm is embodied in the skills, organizational structures, specialized equipment and reputation of the firm, and with the new strategy they may not work. This is not surprising, because it is precisely on such specialization that gaining an advantage is based. Rebuilding the value chain is a difficult and costly process. IN large companies in addition, the sheer size of the firm makes it difficult to change strategy. The process of changing strategy often requires financial sacrifices and troublesome, often painful changes in the organizational structure of the firm. For firms unencumbered by the old strategy and previous capital investment, adopting a new strategy is likely to cost less (in purely financial terms, not to mention less organizational problems). This is one of the reasons why the outsiders mentioned above act as innovators.

Further, tactics aimed at maintaining a competitive advantage for firms that have gained a foothold in the industry are in many ways something unnatural. Most often, companies overcome the inertia of thinking and obstacles to the development of advantages under the pressure of competitors, the influence of buyers, or purely technical difficulties. Few firms make major improvements or change strategy voluntarily; most do it out of necessity, and it happens mainly under pressure from outside (i.e. external environment) and not from within.

The management of companies that hold a competitive advantage is always in a somewhat unsettling state. It acutely senses a threat to its firm's leadership position from outside and takes retaliatory action. The influence of the national environment on the actions of firm management is an important issue, which will be discussed in detail in subsequent chapters.

Competing in the global market

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

Forms of international competition in different industries vary significantly. At one end of the spectrum of forms of competition is a form that can be called "multi-national" (multidomestic). Competition in each country or a small group of countries, in fact, proceeds independently; the industry under consideration exists in many countries (for example, there are savings banks in Korea, Italy and the United States), but each of them competes in its own way. The reputation, customer base, and capital of a bank in one country have little or no effect on the success of its operations in other countries. MNCs may also be among the competitors, but their competitive advantages in most cases are limited to the borders of the country in which these companies operate. Thus, the international industry is, as it were, a set of industries (each within its own country). Hence the term "multinational" competition. Industries where competition traditionally takes this form include many types of trade, food production, wholesale, life insurance, savings banks, simple hardware and corrosive chemicals.

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

In the extreme expression of the "multi-national" industry, achieving national advantage or competitiveness in the international market is not even a question. Almost every country has such industries. Most (if not all) of the firms competing in these industries are local, because when each country has its own rules of competition, it is very difficult for foreign firms to gain a competitive advantage. International trade in such industries is modest, if not non-existent. If the firm is owned by a foreign company (which is rare), there is very little control from the foreign owner from its headquarters. The provision of jobs in the foreign affiliate, the status of "local corporate citizen" and the location of the necessary research (at home or abroad) are not his concern: the national affiliate controls all or almost all of the activities necessary to ensure competitive status. In industries such as trading or metal fabrication, there is usually no heated debate about trade issues.

On the contrary, global industries are the arena of struggle of firms from different countries, where competition is conducted in ways that significantly affect the economic prosperity of countries. The ability of a country's firms to gain a competitive advantage in global industries holds great promise for both trade and foreign investment.

In global industries, firms willy-nilly have to compete internationally to gain or not lose competitive advantage in critical industry segments. True, there may well be purely national segments in such industries, because of the unique needs in such segments, only firms of this country can flourish. But focusing primarily on the domestic market, operating in a global industry, is a dangerous business, no matter in which country the company is based.

Achieving competitive advantage through a global strategy

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

With a global strategy, the firm sells its product in all countries (or, in any case, in most countries) that are important market marketing for its products. This creates economies of scale that reduce the burden of R&D costs and enable the use of advanced manufacturing technology. The main issue becomes the placement of different links in the value chain and ensuring that it works so that the company's product can be sold around the world.

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

On the contrary, activities such as production and supply of raw materials, etc., as well as ancillary activities (development or acquisition of technology, etc.) can be located regardless of the location of the client - such activities can be performed anywhere. As part of a global strategy, the firm locates these activities to benefit from lower costs or differentiation on a global scale. It can, for example, build one large factory for the global market, benefiting from economies of scale. As such, very few activities need only be performed in the firm's home country.

Decisions inherent only in the global strategy can be divided into two essential areas:

1. Configuration. In which and in how many countries does each value chain activity take place? For example, do Sony and Matsushita manufacture VCRs at the same large plant in Japan, or are they building additional plants in the US and UK?
2. Coordination. How are dispersed activities (that is, activities carried out in different countries) coordinated? For example, do different countries use the same brand and marketing tactics, or does each branch use its own brand and tactics adapted to local conditions?

In multinational competition, MNCs have autonomous branches in each country and manage them in much the same way that a bank manages securities. With global competition, firms try to gain a much greater competitive advantage from their presence in different countries, placing their activities with a global focus and clearly coordinating it.

Global strategy activity configuration

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

Activity concentration. In some industries, a competitive advantage is gained by concentrating activities in any one country and exporting finished products or parts abroad. This takes place in the following cases: when there is a large scale effect in the performance of a particular activity; when there is a sharp drop in production costs as the development of a new product, due to which it is profitable to produce products at one plant; when it is advantageous to place related activities in the same place, thus facilitating their harmonization. An export-focused, or export-based, global strategy is typical of industries such as aircraft, heavy engineering, structural materials, or consumer goods. Agriculture. As a rule, the activity of the company is concentrated in the home country.

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

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

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

In some industries, the state can very effectively induce the firm to choose a strategy of dispersal through tariffs, non-tariff barriers, purchases on a national basis. Very often, the government wants the firm to locate the entire value chain in its country (they say, this will give the country an additional benefit). Finally, dispersing some activities sometimes makes it possible to benefit from the concentration of others. Thus, by carrying out final assembly in one's own country, one can "appease" one's government and obtain freer imports of components from large-scale centralized component factories located abroad.

Ultimately, the choice between concentration and dispersion depends on the type of activity performed. In truck manufacturing, leaders such as Daimler-Benz, Volvo and Saab-Scania do most of their R&D in-house and assembly is done in other countries. The best options for concentration-diffusion in different industries are different, they can be different even in different segments of the same industry.

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

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

Location of activities. In addition to choosing the locations where a particular activity will be carried out, it is also necessary to select a country (or countries) for this. Usually, all activities are first concentrated in the home country. However, with a global strategy, a firm can perform assembly operations, manufacture components and parts, or even conduct R & D in any country of its choice - where it is most profitable.

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

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

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

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

Firms locate their activities abroad and in case this is a necessary condition for their business operations in the respective countries. In some industries, assembly, marketing, or service activities by a firm in a given country are essential to the sale of its products and services to customers in that country. Good example- high technology industrial air conditioner manufacturing: industry leaders (American firms such as Carrier and Trane) operate in many countries to best adapt products to local conditions and meet high maintenance requirements.

Government directives also affect the location of activities. Thus, many Japanese investments in the US and Europe (in industries such as the production of automobiles and spare parts for them, consumer electronics, etc.) are caused by current or possible restrictions on imports to Japan. Likewise, many Swedish, Swiss, and American firms moved their operations abroad before World War II because then trade restrictions were more important and transportation costs were higher (which is why their activities are often more dispersed than Japanese or German firms in that period). the same industry). Once a dispersed firm, it is difficult to bring it under a single control, as branch managers in different countries try to maintain the power and autonomy of their branches. The resulting inability of the firm to shift to the more focused and coherent strategies needed to gain competitive advantage is one reason why competitive advantage is lost in some industries.

However, this is not all the reasoning about the best placement of a particular type of activity. In the end, choosing the best location for the activities that define a firm's home country (primarily strategizing, R&D, and the most complex manufacturing processes) is one of the main issues addressed in this book. Suffice it to say that the motives for choosing countries to carry out this or that activity are by no means limited to the classical explanations given here.

Global coordination

Another important means of achieving competitive advantage through a global strategy is the coordination of firm activities in different countries. Coordination (coordination) of activities includes the exchange of information, distribution of responsibility and coordination of the firm's efforts. It may provide some benefits; one of them is the accumulation of knowledge and experience gained in different places. If the firm learns how to better organize production in Germany, the transfer of this experience may be useful in the plants of this firm in the US and Japan. Conditions in different countries are always different, and this provides a basis for comparison and the possibility of assessing the knowledge gained in different countries.

Data from different countries provide information not only about a product or its production technology, but also about customer requests and marketing methods. By coordinating the marketing activities of all its divisions, a firm with a truly global strategy can get early warning of expected changes in industry structure, see dotted industry trends before they become obvious to everyone. Coordination of activities during its dispersal can give economies of scale by dividing the task into separate tasks for branches that determine their specialization. For example, the SKF company (Sweden) produces different sets of ball bearings at each of its foreign plants and, by organizing mutual deliveries between countries, ensures the availability of the entire range of products in each of them.

The dispersal of activities, if agreed upon, may allow the firm to respond quickly to changes in exchange rates or factor costs. Thus, a gradual increase in production in a country with a favorable exchange rate can reduce overall costs; this tactic was used in the late 1980s by Japanese firms in a number of industries because the Japanese yen was then high.

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

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

Dramatically different customer needs and local conditions from country to country make it difficult to harmonize activities across countries, making experience gained in one country not applicable in others. Under such conditions, the industry becomes multinational.

However, while there are significant benefits to coordinating, achieving it in a global strategy is organizationally challenging due to its scale, language barriers, cultural differences and the need to share open and reliable information at a high level. Another serious difficulty is the coordination of the interests of the managers of the firm's branches with the interests of the firm as a whole. Let's say the German branch of a firm doesn't want to inform the US branch of its latest technology advances for fear that the US branch will, well, overtake it in the annual recap. In other words, branches of a firm in different countries often see each other not as allies, but as competitors. These annoying organizational problems make full coordination in global firms the exception rather than the rule.

Advantages due to placement and due to the structure of the company

The competitive advantage of a global firm can be usefully divided into two types: based on the location of activities (in which country it is located) and independent of location (based on the system of activities of the firm around the world). Advantages based on the location of activities in a particular country come either from the home country of the firm or from other countries in which the firm operates. The global firm seeks to use the advantages gained in the home country to enter foreign markets, and may also use the advantages gained from performing certain activities abroad to enhance the advantages or offset the disadvantages in the home country.

The advantages based on the structure of the firm stem from the overall volume of the firm's trade, the speed of product development at all of the firm's plants around the world, and the firm's ability to coordinate activities "at home" and abroad. Economies of scale in production or R&D are not in themselves tied to a country - a large factory or research center can be located anywhere.

To start global competition, it is necessary for some firms to achieve an advantage in their countries that allows them to enter foreign markets. Competitive advantage achieved exclusively in the home country of the firm is enough to start global competition. However, over time, successful global firms begin to combine the advantages achieved "at home" with the advantages of locating certain activities in other countries and from the system of the firm's activities around the world. These additional advantages, combined with the “home” achieved, make the latter more resilient, and at the same time compensate for the disadvantageous moments of the situation in the home country. Thus, the advantages of different sources are mutually enhanced. The overall economies of scale from global locations have enabled, for example, the German firms Zeiss (optics) and Schott (glass) to allocate more funds to R&D and better take advantage of technology and demand in their home country.

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

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

Choosing a global strategy

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

The degree of globalization often differs across industry segments, and the optimal global strategy varies accordingly. For example, in the production of lubricating oils, there are two distinct strategies. In the production of automotive motor oils, competition is multinational in nature, that is, in each country it is carried out separately. Character traffic, climatic conditions and local legislation are different everywhere. During production, different brands of base oils and additives are mixed. The economies of scale here are small, and transport costs are high. Distribution and distribution channels, which are very important for competitive success, vary greatly from country to country. In most countries, domestic firms (eg Quaker State and Pennzoil in the US) or MNCs with stand-alone subsidiaries (eg Castrol in the UK) lead the way. In the production of oils for marine engines, everything is different: here - a global strategy; ships move freely from country to country, and it is necessary that every port they enter have the right brand of oil available. Therefore, the reputation of the brand has become global, and successfully operating companies producing oils for marine engines (Shell, Exxon, British Petroleum, etc.) are global companies.

Another example is the hotel industry: competition in many segments is multinational, as most links in the value chain are tied to the location of the client, and the difference in needs and conditions between countries reduces the benefits of coordination of activities. However, if we consider hotels of the highest class or designed primarily for businessmen, then here the competition is more global. Global competitors such as Hilton, Marriott or Sheraton have properties scattered around the world but use the same brand, the same look, the same standard of service and the same room booking system from anywhere in the world, which gives them the advantage of serving businessmen, constantly traveling all over the world.

When the production process is broken down into stages, there are also often different degrees and patterns of globalization. Thus, in the production of aluminum, the initial stages (enrichment and smelting of metal) are global industries. The further stage (the production of semi-finished products, such as castings or stampings from aluminum) is already a number of industries with multinational competition. Demand for different products varies from country to country, transportation costs are high, customer service requirements on site are also high. The economies of scale in the entire value chain are quite modest. In general, the production of raw materials and components is usually more global than the production of finished products.

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

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

A global focus could be the first step towards a broader global strategy. A firm enters global competition in a given segment when it has unique advantages in its home country. For example, in industries such as automobiles, forklifts, and televisions, Japanese firms initially gained footholds by focusing on a neglected market segment—the most compact product in each of these industries. They then expanded their product range and became world leaders in their respective industries.

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

Small and medium-sized firms tend to build their strategy mainly on exports - foreign direct investment is modest. Nevertheless, the number of MNCs of the middle hand is growing. For example, in Denmark, Switzerland and Germany, there are many relatively modest-sized MNCs that focus on certain segments of their industries. With limited resources, small firms have difficulty entering foreign markets, identifying needs in those markets, and providing after-sales service. In different industries, these problems are solved in different ways. One way is to sell goods through sales agents or their importers (typical for Italian firms), the other is to act through distributors or trading firms (typical for Japanese and Korean firms). Another way is to use industry associations to create a common sales infrastructure, organize trade shows and fairs, and engage in market research. Thus, without cooperatives, the success of the agricultural industries in Denmark would not have been possible. Recently, small firms have been making alliances with foreign firms in order to be able to compete globally.

Industry globalization process

The globalization of industries occurs because changes in technology, customer demands, public policy or infrastructure within a country enables firms in one country to "break away" from competitors in other countries, or increases the value of the benefits arising from a global strategy. Thus, in the automotive industry, globalization began when Japanese firms achieved a significant competitive advantage due to quality and productivity, the needs for cars in different countries became more similar (in no small part due to higher fuel prices in the United States), and transportation costs international transport fell (and these are just some of the reasons).

The strategic innovation itself often opens up opportunities for the globalization of an industry. International leadership in an industry is often the result of a firm discovering a way to make a global strategy viable. For example, it may find a way to cost-effectively adapt a product designed and manufactured in one place to the conditions of different countries (say, modifying a standard product to a different voltage in the local power grid). So, in the production of intercom systems, computer and other systems used in telecommunications, Northern Telecom, NEC and Ericsson won thanks to the design of the manufactured equipment, which allows the use of modular software and requires only minor alterations to be combined with the local telephone network. In addition, the firm may develop a new product that is widely popular, or a marketing method that makes this product popular. Finally, innovative solutions can be found to remove obstacles to a global strategy. For example, American firms were not only the first to produce plastic disposable syringes, which immediately gained wide popularity, but also reduced transportation costs compared to glass syringes and gained economies of scale by manufacturing products at one world-scale factory.

Emerging leaders in global industries always start with some advantage achieved "at home", whether it's better design, better workmanship, new method marketing or gain in factor costs. But as a rule, in order to maintain the advantage, the firm must go further: the advantage achieved “at home” must become a tool for reaching overseas market. And once established there, successful firms build on the initial advantages with new ones, based on economies of scale or brand reputations gained from operations around the world. Over time, the competitive advantage is strengthened (or the disadvantages are offset) by locating certain activities abroad.

Although the advantages achieved in the home country are difficult to sustain, a global strategy can complement and enhance them. A good example is consumer electronics. Matsushita, Sanyo, Sharp and other Japanese firms initially focused on low cost with simple portable televisions. By entering the foreign market, they have gained economies of scale and further reduced costs by reducing the cost of developing new models. Through trading all over the world, they were then able to invest heavily in marketing, new equipment and R&D, in technology ownership. Japanese firms have long since moved away from a cost-focused strategy and are now producing a wide range of increasingly differentiated televisions, VCRs, and the like, using the highest quality materials and technology. And today their Korean competitors - Samsung, Gold Star, etc. - have adopted the strategy of focusing on costs and are releasing simpler, standard models using cheap labor.

Factor cost is a low order advantage and is also highly variable for both a domestically competitive firm and an internationally competitive one. This can be seen in industries such as tailoring or construction. By outsourcing, a firm with a global strategy can neutralize or even exploit changes in factor costs that harm its country's interests. For example, Swedish firms that produce heavy trucks (Volvo and Saab-Scania) have long moved part of their production to countries such as Brazil and Argentina. In addition, firms whose only advantage is factor cost gains rarely emerge as new industry leaders. The strategy of emulating leaders is too easy to be rendered ineffective by transferring to offshore production or offshore provisioning. Firms with low factor costs will be able to become leaders only if they combine this advantage with a focus on some industry segment ignored or unoccupied by the leaders and/or with capital investment in large factories equipped with the most modern technology at the moment. And they will be able to keep their advantage only by globally competing and constantly strengthening this advantage. The influence of country conditions on the initial advantage of firms, the ability of firms to develop these advantages through a global strategy, the ability and will of firms to achieve new advantages over time are the main topics of subsequent chapters.

Leading the way in global strategy

An immediate response to any change in the structure of an industry is just as important in global competition as it is in domestic competition, if not more so. Ultimately, the leaders in many global industries are those firms that are the first to recognize a new strategy and apply it globally. For example, Boeing was the first to apply a global strategy in the production of aircraft, Honda - motorcycles, IBM - computers, and Kodak - photographic films. American and British firms, producing a wide variety of packaged consumer goods, retain their leadership in no small part because they were the first to adopt a global strategy.

Global competition amplifies the benefits of a quick response to change. Early Birds are the first to spread their activities around the world; this added value, in turn, leads to reputational, scale, and uptake advantages. And already the positions won on the basis of such advantages can be held for decades and even longer. Thus, in the production of tobacco products, whiskey and high-quality porcelain, English firms have been leading for more than a century, despite the decline in the British economy as a whole. Similar examples of long-term leadership can be found in Germany (printing machines, chemicals), the US (soft drinks, movies, computers) and virtually every other developed country.

The reasons for changing the positions of countries in the competitive race are the same as in the more general cases discussed above. Established international leaders lose ground if they do not respond to changes in the structure of the industry, giving other firms the opportunity to bypass them through the rapid transition to new technologies or products. Thus, economies of scale, reputation and connections with the distribution channels of established leaders are lost. Thus, the traditional leaders of some industries have given way to Japanese firms in those industries that have been greatly changed by the advent of electronics (for example, the production of machine tools and tools) or where mass production has replaced the traditional small-scale production (production of cameras, forklift trucks, etc.). Existing leaders also fail if other firms discover new market segments that have been ignored by the leaders. Thus, Italian firms producing electrical household equipment saw an opportunity to produce compact, unified models using mass production and sell them to newly emerging trading networks so that they sell them under their own brand. By actively developing this rapidly growing new segment, Italian manufacturers of household appliances have become European leaders. Firms that are the first to exploit changes in industry structure often become new leaders because they benefit from the next change in industry structure. The home country significantly affects the ability of firms to respond to these changes, and, as already mentioned, firms in one or two countries often become global leaders in the industry.

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

Alliances and global strategy

Strategic alliances, which can also be called coalitions, are an important vehicle for pursuing global strategies. These are long-term agreements between firms that go beyond ordinary trading but do not go as far as merging firms. The term "alliance" refers to a number of types of cooperation, including joint ventures, sale of licenses, long-term supply agreements and other types of intercompany relationships24. They are found in many industries, but are especially common in automotive, aircraft, aircraft engines, industrial robots, consumer electronics, semiconductors, and pharmaceuticals.

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

Companies enter into alliances for the sake of gaining advantages. One is economies of scale, or reductions in development time and costs, achieved through collaborative efforts in marketing, manufacturing components, or assembling certain models of finished products. Another advantage is access to local markets, necessary technologies or satisfying the requirements of the government of the country in which the company operates that a company operating in the territory of the country belongs to that country. For example, General Motors Corporation's alliance with Toyota - NUMMI - was conceived by General Motors in order to learn from Toyota's manufacturing experience. Another benefit of alliances is risk sharing. For example, some pharmaceutical companies have entered into cross-licensing agreements in the development of new drugs to reduce the risk that research in each individual company will fail. Finally, firms armed with complex and Hi-tech often use alliances to influence the nature of competition in an industry (for example, by selling licenses for technology that is in high demand to achieve standardization). Alliances can offset competitive disadvantages, whether it be costly inputs or outdated technology, while maintaining company independence and eliminating the need for costly mergers.

However, alliances are costly both strategically and organizationally. Take, for a start, the very real problems of coordinating the activities of independent partners with substantially different and even contradictory goals. Difficulties in the coordination order jeopardize the benefits of a global strategy. In addition, today's partners may well be tomorrow's competitors; this is especially true for partners with a stronger or more rapidly developing competitive advantage. Japanese firms have confirmed this idea many times. To top it off, the partner gets a share of the firm's profits, sometimes quite substantial. Alliances are fragile and can fall apart or collapse. Often everything starts out great, but soon the alliance breaks up or ends with a merger of companies.

Alliances are often a temporary measure, they are common in industries that are undergoing structural changes or intensifying competition, and managers of firms fear that they can not cope alone. Alliances are the result of firms' lack of confidence in their abilities and are most often found in second-tier firms trying to catch up with leaders; at first they give hope to weak competitors to remain independent, but in the end it may well come to the sale of the company or its merger with another.

As can be seen from the above, the alliance is not a panacea. And to stay ahead of the competition, a firm must develop internal reserves in the areas most important to achieving competitive advantage. As a result, world leaders rarely, if ever, rely on partners when they need the funds and skills they need to gain a competitive edge in their industry.

The most successful alliances are very specific. The alliances forged by world leaders such as IBM, Novo Industry (the insulin company) and Canon are narrowly focused, focused on entering certain markets or accessing certain technologies. Alliances are generally a means of increasing competitive advantage, but they are rarely an effective means of creating it.

Influence of National Conditions on Competitive Success

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

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

To gain a competitive advantage in complex industries, improvements and innovations are required - the search for new, better ways competition and the application of these methods everywhere, as well as the continuous improvement of products and technologies. A country is successful in these industries if its conditions are conducive to such activities. Gaining advantage requires anticipating new ways to compete and a willingness to take risks (and invest in risky ventures). And countries that succeed are those whose environments give firms a unique opportunity to recognize new competitive strategies and an incentive to immediately apply these strategies. Those countries whose firms do not properly respond to changes in the situation or do not have the necessary capabilities, are the losers.

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

The constant change required to maintain competitive advantage is both inconvenient and organizationally difficult. Countries succeed in industries where firms are under pressure to overcome inertia and engage in continuous improvement and innovation rather than sitting idle. And in those industries where firms stop improving, the country loses.

The country excels in those industries where its advantages as a national base carry weight in other countries and where improvements and innovations precede international needs. To achieve international success, firms must transform domestic leadership into international leadership. This makes it possible to strengthen the advantages gained “at home” with the help of a global strategy. Countries thrive in industries where domestic firms compete globally, encouraged by the government or under duress. In looking for the determinants of a country's competitive advantage across industries, one needs to identify the conditions in a country that are conducive to competitive success.

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

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

Creating an advantage

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

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

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

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

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

Creating a competitive advantage should not take huge company budgets, so it is necessary to use a certain methodology that allows not only creating a competitive advantage, but also significantly reducing the costs of this process.

In this methodology, four main stages can be distinguished, each of which is an integral part of the entire process of creating a product advantage:

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

Segmentation

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

Carrying out (individuals), as parameters of the segmentation process, signs of gender, age characteristics, place of residence, presence of vehicle And so on.

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

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

After determining the signs of segmentation and identifying the future competitive advantage, it is necessary to apply the usual marketing tools to promote the product: advertising products, direct introduction of the product in the company, sending letters asking to purchase the product, and other methods.

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

Surely, in every business there is a bottleneck that arises from the fact that consumers cannot find what they need. For example, clients butcher shop they want a certain type of meat to cost not 300 rubles, but 250.

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

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

Specialization

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

In particular, time, money and personnel are the determining criteria in choosing a particular problem. Indeed, with a large budget, an unlimited amount of time and specialized personnel, any problems can be solved. Therefore, before choosing, it is necessary to correctly assess the available resources.

An equally important step is to assess the importance of this problem. The relevance and severity of a particular problem determine the success of the competitive advantage. Don't pick a problem that other organizations can easily fix. And, of course, we should not forget about the eternal problems that exist in every market segment.

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

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

Evaluating all the above factors and criteria, you need to choose the most appropriate problem that you can handle. At the same time, it is important to remember that the more acute the problem, the more effective it will be to create a competitive advantage, and the longer this advantage will last. In this matter, the difficulty of the whole process of creating a competitive advantage is only a plus, and not vice versa.

Differentiation

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

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

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

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

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

Concentration

The stage of concentration is no less important in creating a competitive advantage, since it is negligence, relaxation and absent-mindedness that can cause failure. For the most effective creation competitive advantage is recommended to make this task paramount by informing all employees of the company. It is this pace and daily work on this problem that guarantees the continued success of the products.

Do not forget about re-segmentation, which is recommended to be carried out annually. It will not only help identify new problems in a particular market segment, but will also determine current position cases regarding the previously chosen competitive advantage, which will allow you to more accurately assess the strategy of the company's behavior in the market and draw the right conclusions.

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

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

In the article we will talk about the likely areas of competitive advantages using the examples of world-class companies, consider the features of creating business advantages in different industries: in the banking sector, in the tourism and hotel markets, we will separately tell about the specifics of creating competitive advantages for wholesale and retail stores. retail taking into account current global trends.

1. Universal for everyone
2. Advantages in the field of trade

Universal for everyone

Let's start our list of examples of competitive advantage with 12 best practices for creating competitive advantage, which are prepared by analyzing leading industries, global brands and large markets. The point of all the examples outlined below is that there is no single correct formula for creating competitive advantage. Any market can be beaten. It is important to find that feature of the business that will be able to provide the highest level of profit for the company.

Research and innovation

The IT branch is the most technologically equipped business area. Each player in this market strives to become a leader in innovative solutions and developments. In this industry, those who set the pace for the development of innovations and technologies are leading and making super profits. Apple and Sony are a striking example of two companies that have achieved leadership in the IT market through the use of innovation as a sustainable competitive advantage.

brand awareness

Global recognition, fame and reverence for the brand has allowed companies such as Coca-Cola and Virgin to maintain their market share and dominate the market for many years. High brand awareness and a positive brand identity have also reduced the cost for Virgin to capture new parts of the market.

Corporate reputation

The highest level of corporate reputation can also serve as a source of competitive advantage in the market. Price Waterhouse (consulting and auditing) and Berkshire Hathaway (investment, insurance) have used this competitive advantage to establish their companies as world class.

Patents

Patented technologies are assets that can provide a company with a long-term competitive advantage. In world practice, methods of buying companies due to the ownership of patents and other protected technologies are widely used. General Electric is known for becoming one of the most powerful companies in the world through its ownership of patented designs.

Economies of scale

Dangote Group has become one of the leading manufacturing conglomerates in Africa due to its own ability to create products in large quantities and keep prices uniform throughout the trading area.

Rapid access to reverse capital

In world practice, OJSCs win over private companies due to their ability to attract the highest level of investment in a very short period of time. For example, Oracle has raised investments to buy more than 50 companies in just 5 years.

barriers to entry

Restrictions from the country for rivals, protectionist policies of the country can serve as a competitive advantage for local companies. For example, Telmex (telecommunications company, Mexico) or Chevron (energy, USA).

The highest quality product and level of service

The highest level of service is always a strong competitive advantage of the product. IKEA has gained a strong position in the market by being able to provide the highest product features at a low cost and the highest level of after-sales service.

Exclusive

Coscharis Group has taken the lead in the Nigerian market by holding exclusive rights to distribute BMW vehicles throughout West Africa.

Elasticity

The ability to quickly adapt to market changes has provided Microsoft with a leading position in the global market software.

Speed ​​and time

Concentration of all efforts on achieving top speed and reduced turnaround times have given companies like FedEx and Domino Pizza a growing and solid foothold in the industry.

Low prices

Strategy low prices and the ability to hold, strengthen and develop it provided retail network Wall-Mart world leadership and the highest level of capitalization of the company.

Database processing improvements

GTBank, AT&T, Google, Facebook have achieved world leadership due to perfect technologies and advances in the field of processing and managing large amounts of information.

Advantages in the banking services market

In this section, we will offer top tips for developing competitive advantages for companies in the banking sector. The weakening of the economies of European states in the modern world, the increase in the level of volatility in the world economy leads to the need to revise the basis of the competitive advantages of the monetary sector. In 2013-2015, it will be more profitable and vital for the banking sector to focus on developing the following competitive advantages:

• increase in return on capital
• achieving a leading position in profitability in one or more fronts of banking (in other words, the transition to specialization and providing the best interest rates for narrow market niches)
• improvement of banking services, speed and convenience of transactions by updating and simplifying business processes
• achieving leadership in safety, reliability and asset protection
• development of a mobile Internet bank and an increase in the technological level of service provision
• simplification of making purchases and lowering commissions with the help of bank cards (including the creation of guarantees for the cancellation of payment in the event of negligent fulfillment of sales contracts - following the example of the PayPall payment system)

Advantages in the hotel services market

In order to select the right competitive advantage, be sure to benchmark your service delivery criteria. hotel business and rivals. More successful examples of competitive advantages for the hospitality industry:

• service level leadership
• the advantage of low cost (provided that there is the ability to obtain more the highest profit compared to rivals)
• providing free meals or other additional services
• the most profitable loyalty programs that encourage repeat purchases and more frequent introduction of hotel services
• comfortable location of the hotel for certain groups of clients
• availability of all necessary additional services (conference room, wi-fi, web, swimming pool, beauty salon, restaurant, etc.)
• a unique style of decoration and hotel service, allowing the consumer to immerse themselves in a completely new environment

Advantages in the tourism market

In order to select the right competitive advantage, be sure to compare the criteria for the provision of services by your company and rivals. More successful examples of competitive advantages for the tourism business:

• service level leadership
• focusing on the quality of service for certain customer groups
• the ability to set low prices (subject to the existence of the ability to obtain higher profits in comparison with competitors)
• ease of use of the service and minimization of client time
• the most profitable loyalty programs that encourage repeat purchases
• leadership in one of the types of tourism (see the example of tourism market segmentation)
• availability of all necessary related services
• most noteworthy travel programs
• Availability mobile application and the highest technological effectiveness of the service
• most profitable flaming tours

Advantages in trading

More successful examples of competitive advantages for the trade industry (for example, retail store): breadth of assortment, exclusivity of sales in a certain area, the ability to set low prices, leadership in service warranty period and in after-sales service, the availability of free prizes for the buyer, leadership in the attractiveness of promotional offers, leadership in the quality, freshness, and modernity of the products sold; staff competence; ease of choice, convenience of choice and saving time for the buyer; business computerization and the availability of web trading; the most profitable loyalty programs; professional advice on choosing products for the buyer; convenience of the location of the retail outlet.

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From this article you will learn:

• What are the types of competitive advantages of the company
• What are the main competitive advantages of the company
• How is the formation and evaluation of the competitive advantages of the company
• How to use competitive advantages to increase sales

Over time, humanity reaches new heights, receiving more and more new knowledge. This also applies to business. Each firm is on the hunt for the most profitable marketing solutions, trying to build things differently and showcase their products in the best light. All enterprises sooner or later face competition, and therefore the competitive advantages of the company play an important role in the market, which help the consumer to decide on the choice of product.

What are the company's competitive advantages

Competitive advantages companies are those characteristics, properties of a brand or product that create a certain superiority for the company over direct competitors. The development of the economic sphere is impossible without competitive advantages. They are part of the corporate style of the company, and also provide it with protection from competitors' attacks.

A company's sustainable competitive advantage is the development profitable plan development of the company, with the help of which its most promising opportunities are realized. Such a plan must not be used by actual or alleged competitors, and the results of the implementation of the plan must not be adopted by them.

The development of a company's competitive advantages is based on its goals and objectives, which are achieved in accordance with the company's position in the market for goods and services, as well as the level of success in their implementation. The reformation of the functioning system should create the basis for effective development factors of competitive advantage of the company, as well as create a strong relationship between this process and existing conditions market.

What are the types of competitive advantages of a company?

What are the company's competitive advantages? There are two types of competitive advantage:

1. Artificial competitive advantages: individual approach, advertising campaigns, guarantee and so on.
2. Natural competitive advantages of the company: product cost, buyers, competent management and so on.

An interesting fact: if a firm does not strive to get ahead in the market of goods and services, referring to a number of such enterprises, it somehow has natural competitive advantages. In addition, it has every opportunity to develop artificial competitive advantages for the company, spending some time and effort on this. This is where all the knowledge about competitors is needed, since their activities need to be analyzed first.

Why do we need to analyze the competitive advantage of a company?

An interesting note about Runet: as a rule, about 90% of entrepreneurs do not analyze their competitors, and also do not develop competitive advantages using this analysis. There is only an exchange of some innovations, that is, firms adopt the ideas of competitors. It doesn't matter who first came up with something new, it will still be "taken away". This is how clichés like this came to light:

• Highly qualified specialist;
• Personal approach;
• Top quality;
• Competitive cost;
• First class service.

And others, which in fact do not represent a competitive advantage of the company, since no self-respecting enterprise will declare that its products are of poor quality, and its staff are newcomers.

Oddly enough, you can look at it from the other side. If the competitive advantages of companies are minimal, then it is easier for start-up firms to develop, that is, to gather their potential consumers, who receive a wider choice.

Therefore, it is necessary to competently work out strategic competitive advantages that will provide customers bargain purchase and positive emotions. Customer satisfaction must come from the enterprise, not from the product.

What are the sources of the company's competitive advantage

There is a fairly well-established structure of the company's competitive advantages. At one time, Michael Porter identified three main sources for developing a company's competitive advantages: differentiation, cost, and focus. Now in more detail about each of them:

• Differentiation

The implementation of this strategy of the company's competitive advantages is based on a more efficient provision of services to the company's customers, as well as the presentation of the company's products in the best light.

• Costs

The implementation of this strategy is based on the following competitive advantages of the company: minimum costs for employees, automation of production, minimum costs for scale, the ability to apply limited resources, as well as the use of patented technologies that reduce production costs.

• Focus

This strategy is based on the same sources as the previous two, but the company's accepted competitive advantage covers the needs of a narrow circle of customers. Customers outside this group are either dissatisfied with such competitive advantages of the company, or they are not affected in any way.

The main (natural) competitive advantages of the company

Every firm has a natural competitive advantage. But not all enterprises cover them. This is a group of companies whose competitive advantages are either, as they believe, obvious or disguised as conventional clichés. So, the main competitive advantages of the company are:

1. Price. Like it or not, one of the main advantages of any company. If the price of a firm's goods or services is lower than competitive prices, this price gap is usually indicated immediately. For example, “prices are 15% lower” or “we offer retail products at a wholesale price.” It is very important to indicate prices in this way, especially if the company operates in the corporate sphere (B2B).
2. Timing (time). Be sure to specify the exact delivery time for each type of product. This is a very important point in developing a company's competitive advantage. Here it is worth avoiding inaccurate definitions in terms (“we will deliver quickly”, “we will deliver just in time”).
3. Experience. When the staff of your company are professionals in their field, who know all the "pitfalls" of doing business, then convey this to consumers. They like to cooperate with specialists who can be contacted on all issues of interest.
4. Special conditions. These may include the following: exclusive supply offers (discount system, convenient location of the company, extensive warehouse program, enclosed gifts, payment after delivery and so on).
5. Authority. The authority factor includes: various achievements of the company, prizes at exhibitions, competitions and other events, awards, well-known suppliers or buyers. All this increases the popularity of your company. A very significant element is status. professional expert, which involves the participation of your employees at various conferences, in advertising interviews, on the Internet.
6. Narrow specialization. This type of competitive advantage is best explained with an example. The owner of an expensive car wants to replace some parts in his car and he is faced with a choice: go to a specialized salon that services only cars of his brand, or to a standard car repair shop. Of course, he will choose a professional salon. This is a component of a unique selling proposition (USP) that is often used as a competitive advantage for a company.
7. Other actual benefits. Such competitive advantages of the company include: a wider range of products, patented manufacturing technology, the adoption of a special plan for the sale of goods, and so on. The main thing here is to stand out.

Artificial competitive advantages of the company

Artificial competitive advantages are able to help the company to tell about itself, if it does not have special offers. This may come in handy when:

1. The firm has a set-up similar to competitors (competitive advantages of companies in a particular field of activity are the same).
2. The company is located between large and small enterprises (does not have a large assortment of goods, does not have a narrow focus and sells products at a standard price).
3. The company is at the initial stage of development, having no special competitive advantages, customer base and popularity among consumers. Often this happens when specialists decide to leave the workplace and create their own enterprise.

In such cases, it is necessary to develop artificial competitive advantages, which are:

1. Added value. For example, a company sells computers without being able to compete on price. In this case, you can use the following competitive advantage of companies: install an operating system and the necessary standard programs on a PC, and then slightly increase the cost of equipment. This is the added value, which also includes all sorts of promotions and bonus offers.
2. Personal adjustment. This competitive advantage of the company works great if competitors hide behind standard clichés. Its meaning is to demonstrate the face of the company and apply the WHY formula. He is successful in every field of activity.
3. Responsibility. Quite an effective competitive advantage of the company. It goes well with personality tuning. A person likes to deal with people who can vouch for their products or services.
4. Guarantees. Generally, there are two types of warranties: circumstance (for example, a liability guarantee – “if you haven’t received a receipt, we will pay for your purchase”) and product or service warranties (for example, the ability for a consumer to return or exchange an item within up to one months).
5. Reviews. Unless, of course, they are ordered. For potential consumers, the status of a person who speaks about your company is important. This advantage works great when reviews are presented on a special form with a certified signature of a person.
6. Demonstration. It is one of the main competitive advantages of the company. If the company does not have advantages, or they are not obvious, then it can make an illustrated presentation of its product. If the company works in the service sector, then you can make a video presentation. The main thing here is to correctly focus on the properties of products.
7. Cases. But there may not be cases, especially for newcomers. In this case, it is possible to develop artificial cases, the essence of which is to provide services either to ourselves, or to a potential buyer, or to an existing client on the basis of netting. Then you will receive a case that will show the level of professionalism of your company.
8. Unique selling proposition. It has already been mentioned in this article. The meaning of the USP is that the company operates with a certain detail, or provides data that separates it from competitors. This competitive advantage of the company is effectively used by the company "Practicum Group", which offers training programs.

Personnel as a competitive advantage of the company

Unfortunately, today not every management sees in the staff an excellent competitive advantage of the company. Based on the developed strategies and goals, firms come to the need to build, develop and strengthen the personal qualities employees. But at the same time, companies come to the need to apply a certain combination of developed strategies (this also applies to internal management).

Based on this, you need to pay attention to a couple of important points: identify and develop the qualities of personnel, creating a competitive advantage for the company, and explain the usefulness of investing in this resource.

If the goal of management is to create a competitive advantage for the company in the face of personnel, then work on the personal characteristics of employees, as well as the concept of the essence and effectiveness of the aspects that are revealed in teamwork (emergence and synergy), are very important here.

The process of becoming a team as a competitive advantage of the company is not complete without resolving some points that the company's management should take into account:

1. Competent organization of the activities of employees.
2. The interest of employees in the successful achievement of tasks.
3. Formation of the desire of the team to actively participate in the process of obtaining high results.
4. Support required by the company personal qualities of employees.
5. Development of company commitment.

It is worth paying attention to the essence of the proposed aspects that form the competitive advantage of the company in the face of its staff.

Not a few well-known large organizations win in the competition precisely due to the effective use of personnel as a competitive advantage of the company, as well as due to the gradual increase in the level of interest of employees in achieving their goals. The main criteria for success in the process of using all possible resources are: the desire of employees to remain part of the company and work for its benefit, the dedication of the staff to their company, the confidence of the staff in success and the sharing by them of the principles and values ​​of their company.

It is characterized by the following elements:

• Identification. Assumes that employees have a sense of pride in their firm, as well as a factor in the appropriation of goals (when employees take the tasks of the firm as their own).
• Involvement. Assumes the willingness of employees to invest own forces actively participate in achieving high results.
• Loyalty. It implies a psychological attachment to the company, the desire to continue working for its benefit.

These criteria are extremely important in shaping the competitive advantage of the company in the face of personnel.

The degree of employee loyalty is closely related to the level of staff response to external or internal stimulation.

When developing the competitive advantage of the company in the face of the staff, it is worth noting some aspects that reveal the dedication of employees:

• Dedicated employees strive to improve their skills.
• Dedicated employees stand by their views without being manipulated or otherwise negatively influenced.
• Dedicated employees strive to achieve maximum success.
• Committed employees are able to take into account the interests of all members of the team, to see something beyond the boundaries of the goal.
• Dedicated employees are always open to something new.
• Committed employees have a higher degree of respect not only for themselves, but also for other people.

Loyalty is a multifaceted concept. It contains the ethics of the team, and the degree of its motivation, and the principles of its activities, and the degree of job satisfaction. That is why the competitive advantage in the face of personnel is one of the most effective. This commitment is reflected in the relationship employees have with everyone around them in the workplace.

When management wants to create a competitive advantage in the face of staff, the challenge is to build employee loyalty. The prerequisites for the formation are divided into two types: personal characteristics of employees and working conditions.

Competitive advantages of the company in the face of personnel are formed with the help of the following personal characteristics of employees:

• Reasons for choosing this field of activity.
• Motivation of work and labor principles.
• Education.
• Age.
• Family status.
• existing work ethic.
• Convenience of the territorial location of the company.

The competitive advantages of the company in the face of the staff are formed using the following working conditions:

• The level of interest of employees in achieving the maximum success of the company.
• Employee awareness level.
• The degree of stress of employees.
• The degree of satisfaction of important needs of employees (wages, working conditions, the opportunity to show their creative potential, and so on).

But it is necessary to take into account the dependence of loyalty on the personal characteristics of the staff and the atmosphere in the companies themselves. And therefore, if the management set out to create a competitive advantage for the company in the face of its personnel, it first needs to analyze how much the problems in this company are exacerbated that can negatively affect the loyalty of employees.

Brand as a competitive advantage of the company

Today, in order to fight competitors, companies include Additional services in the list of the main ones, introduce new methods of doing business, put both the staff and each consumer in priority. Competitive advantages of the company arise from market analysis, development of a plan for its development, obtaining important information. Firms in the process of competition and constant change need to work with internal management organization, and developing a strategy that ensures a strong position of stable competitiveness and allows you to follow the changing situation in the market. Today, in order to maintain competitiveness, it is important for firms to master modern principles of management and production, which will allow companies to create competitive advantages.

Trademark (brand) of the company, when properly used, can increase its income, increase the number of sales, replenish the existing range, inform the buyer about the exclusive benefits of a product or service, stay in this field of activity, and also introduce effective development methods. This is why a brand can serve as a competitive advantage for a company. Management that does not take this factor into account will never see their organization among the leaders. But a trademark is a rather expensive option for a company's competitive advantage, which requires special management skills, knowledge of the company's positioning methods, and experience in working with a brand. There are several stages in the development of a brand, related specifically to the topic of its relationship with competition:

1. Goal setting:
   • Formulation of the goals and objectives of the company (the initial stage for the formation of any competitive advantages of the company).
   • Establishing the importance of the brand within the company.
   • Establishing the necessary position of the brand (characteristics, long-term, competitive advantages of the company).
   • Establish measurable brand criteria (KPIs).

1. Development plan:
   • Evaluation of existing resources (the initial stage for the formation of any competitive advantages of the company).
   • Approval of customers and all performers.
   • Approval of development deadlines.
   • Identification of additional goals or obstacles.

1. Assessing the existing position of the brand (applies to existing brands):
   • Popularity of the brand among customers.
   • Brand awareness of potential customers.
   • Brand loyalty to potential customers.
   • The degree of brand loyalty.

1. Assessment of the state of affairs in the market:
   • Assessment of competitors (the initial stage for the formation of any competitive advantages of the company).
   • Evaluation of a potential consumer (the criteria are preferences and needs).
   • Evaluation of the sales market (supply, demand, development).

1. The wording of the essence of the brand:
   • Purpose, position and benefits of the brand for potential customers.
   • Exclusivity (competitive advantages for the company, value, characteristics).
   • Trademark attributes (components, appearance, main idea).

1. Brand Management Planning:
   • Work on the development of marketing elements and clarification of the brand management process (included in the brand book of the organization).
   • Appointment of employees responsible for brand promotion.

1. Introduction and increasing the popularity of the brand (it is on this stage that the success of the company's competitive advantages in terms of brand promotion depends):
   • Media plan development.
   • Ordering promotional materials.
   • Distribution of promotional materials.
   • Multifunctional loyalty programs.

1. Analysis of the effectiveness of the brand and the work done:
   • Evaluation of the quantitative characteristics of the brand (KPI) established at the first stage.
   • Comparison of the obtained results with the planned ones.
   • Making changes to the strategy.

A necessary criterion for the effective implementation of a trademark as a competitive advantage of a company is adherence to a single corporate style, which is a visual and semantic integrity of the company's image. The components of corporate style are: the name of the product, trademark, trademark, motto, corporate colors, uniforms of employees and other elements of the company's intellectual property. Corporate style is a set of oral, color, visual, individually designed constants (components) that guarantee the company the visual and semantic integrity of the company's products, its information resources, as well as its overall structure. Corporate style can also act as a competitive advantage of the company. Its existence suggests that the head of the firm aims to make a good impression on customers. The main purpose of branding is to evoke positive feelings in the client that he experienced when buying the products of this enterprise. If other components of marketing are at their best, then the corporate style is able to create some competitive advantages for the company (precisely within the framework of the topic of opportunities for competition):

• It has a positive effect on the aesthetic position and visual perception of the company;
• It enhances the effectiveness of collective work, can rally the staff, increases the interest of employees and the feeling of their need for the organization (competitive advantage of the company in the face of staff);
• Contributes to the achievement of integrity in the advertising campaign and other marketing communications of the organization;
• Reduces communication development costs;
• Increases the effectiveness of advertising projects;
• Reduces the cost of selling new products;
• It makes it easier for customers to navigate information flows, allows them to accurately and quickly find the company's products.

The brand association consists of four elements that are also important to consider when developing a company's competitive advantages:

1. intangible criteria. This includes everything that has to do with brand information: its idea, degree of popularity and distinctive features.
2. Tangible criteria. Here, the influence on the sense organs plays a very important role. These criteria are functional (a special form for more convenient use, for example), physical, as well as visual (brand display on promotional materials). Both tangible and intangible criteria are essential in developing a company's competitive advantage.
3. emotional characteristics. A brand is a competitive advantage for a company when it inspires positive emotions and customer confidence. Here it is necessary to use tangible criteria (for example, a unique advertising campaign). Experts argue that these criteria create an opinion among customers about the intangible characteristics of the brand.
4. Rational characteristics. They are based on product performance criteria (e.g. economical vehicles from Volkswagen or Duracell batteries that last “up to ten times longer”), the way they communicate with consumers (Amazon is an example), and relationships. between customers and the company that owns the brand (promotions for regular customers from various airlines). Accounting for rational characteristics is very important in the formation of the company's competitive advantages.

When developing the competitive advantages of a company, it is necessary to know the main carriers of the corporate style components:

• Service component parts (stickers big size, large panels, wall-mounted calendars, and so on).
• Components of office work (corporate letterheads, recorder forms, blocks of paper materials for notes, and so on).
• Advertising on paper (catalogs, all kinds of calendars, booklets, brochures, and so on).
• Souvenir products (fountain pens, T-shirts, stationery for the office, and so on).
• Elements of propaganda (materials in the media, design of halls for various events, propaganda prospectus).
• Documentation (business cards, passes, certificates for staff, and so on).
• Other forms (corporate banner, packaging materials with company symbols, employee uniforms, and so on).

The trade mark also influences the competitive advantage of the company in the face of personnel, contributing to the rallying of employees who feel their importance to the organization. It turns out that a trademark is an element of the company's development process, increasing its income and sales, as well as contributing to the replenishment of the product range and increasing customer awareness of all positive aspects service or product. These conditions enhance the competitive advantages of the company.

Competitive advantages of the company: examples of global giants

Example #1. Competitive advantages of Apple:

1. Technologies. This is one of the main competitive advantages of an innovative company. Each element of software and technological support is developed within the framework of one enterprise, and therefore the components harmonize perfectly in the aggregate. This makes the work of developers easier, provides a high quality product and reduces costs. For the consumer, ease of use and elegance play an important role. appearance devices. A complete set of necessary parts and programs is not only a competitive advantage for the company, but also a fact that makes consumers buy new gadgets.
2. H.R. One of the company's leading competitive advantages is its staff. Apple hires high-quality professionals (the most capable, creative and advanced) and tries to keep them in the company, providing a decent wages, various bonuses for personal achievements. In addition, it saves costs for unskilled employees and for child labour at Inventec and Foxconn suppliers.
3. Consumer confidence. With the help of an effective PR strategy and a marketing company strategy, an organization manages to create a permanent client base for itself, as well as increase the popularity of the brand. All this increases the success of applying the competitive advantages of international Apple. For example, the company collaborates with promising musicians (YaeNaim, Royksopp, Feist, and so on). The most famous organizations (for example, SciencesPoParis) enter into agreements for the complete acquisition of their libraries with the company's products. Around the world, there are about 500 stores that sell only products from Apple.
4. Innovation. This is the main competitive advantage of an innovative company. By investing in R&D, the organization quickly responds to emerging customer needs. An example is the Macintosh, developed in 1984, which gained commercial popularity and had graphic elements that were in demand among users, and also had changes in the command system. In 2007, the first iPhone was released, which gained immense popularity. MacBookAir does not lose its position, still remaining the thinnest laptop of our time. These competitive advantages of the company are a great success, and they are undeniable.
5. Organization of the supply chain. The popularity of the Apple brand contributes to the fact that the company has entered into many productive agreements with supplier factories. This provides the firm with its own supply and cuts off supply for competitors who need to purchase the right components in the market at a higher cost. This is a great competitive advantage for a company that weakens competitors. Apple often invests in supply chain improvements that generate more revenue. For example, in the 90s, many companies transported computers by water, but Apple on the eve of Christmas overpaid about $ 50 million for transporting products by air. This competitive advantage of the company eliminated competitors, because they did not want or did not guess to transport the goods in this way. Moreover, the company maintains strict control over suppliers, constantly requesting documentation of expenses.

Example #2. Competitive advantages of Coca-Cola

1. .Main advantages The main competitive advantage of the trading company Coca-Cola is its popularity, because it is the largest brand among soft drink manufacturers, with about 450 types of products. This brand is the most expensive in the world, it includes 12 more manufacturing companies (Sprite, Fanta, Vitaminwater, Coca-Cola Lite, and so on). The competitive advantage of the company lies in the fact that it is the first supplier of all types of soft drinks.
2. Technologies from Coca-Cola(this is the main competitive advantage of the company). There were many who wanted to know the secret recipe for drinks. This recipe is located in the bank vault of the Trust Company Of Georgia in the USA. Only a few top managers of the organization can open it. The already made base of the drink is sent to manufacturing plants, where it is mixed with water using a specialized precise process. To create this basis of the drink today is far from the easiest task. The trick is that the composition of the drink contains "natural flavors", the specific elements of which are not specified.
3. Innovation(this includes the competitive advantage of the company in the field of ecology):
   • The company wants to increase the low level of sales with the help of modern equipment. Such devices are capable of pouring more than 100 types of drinks and making original mixes (light and diet cola, for example).
   • The Coca-Cola Company's environmental competitive advantage lies in the development of the Reimagine recycling program. This contributes to the fact that the management of the company will be easier to recycle and sort waste. In such a machine, you can put containers made of plastic and aluminum, excluding the sorting process. In addition, the device accrues points that are used to buy company drinks, branded bags and visit various entertainment projects.
   • This competitive advantage of the company works very well, because the company strives to produce environmentally pure product. In addition, Coca-Cola is developing a program to use eStar cars that run without harmful emissions due to electric motors.
4. Geographic advantage. The geographical competitive advantage of the company as a construction company is that it sells its products in 200 countries around the world. For example, in our country there are 16 Coca-Cola manufacturing plants.

Example #3. Competitive advantages of Nestlé.

1. Product range and marketing strategy. The competitive advantage of the company lies in the fact that it operates with a wide range of products, as well as a large assortment of brands that strengthen it in the market of goods. Products consist of approximately 30 major brands and a huge number of local (local) brands. Nestle's competitive advantage lies in creating a national strategy that is based on the needs of the people. For example, Nescafe coffee drink, which has a different production structure for different countries. It all depends on the needs and preferences of the buyer.
2. Effective management and organization structure. A very significant competitive advantage of the company. An indicator of success is the increase in sales of the company by 9% in 2008, which was considered a crisis. The organization has successful personnel management and effective financing of new projects and programs. These programs are the purchase of shares in other firms, even competing ones. Thus, the competitive advantage of the company lies in its expansion. In addition, the decentralized management system of the company and the competent management of its structures help Nestle quickly respond to market changes.
3. Innovation. The company's most significant competitive advantage is that it is the largest investor in scientific projects and technological innovations that contribute to the development of the company through the introduction of technologies that satisfy customer needs, product differentiation, and improvement taste sensations. Moreover, innovations are used in the modernization of manufacturing processes. This competitive advantage of the company solves the issue of optimization of manufacturing and production of an environmentally friendly product.
4. Global presence in world markets. An indisputable competitive advantage of the company, which is based on the history of its creation, because from the moment it appeared on the market, it has gradually expanded and improved, covering the whole world. Nestle is interested in bringing the consumer closer to the company. It allows its departments to independently appoint managers, organize the production and delivery of products, and cooperate with reliable suppliers.
5. Qualified personnel. This competitive advantage of the company in the face of personnel lies in the large costs of the company for training its employees at the international level. Nestle forms a highly qualified team of managers from its employees. The headquarters of employees in our country has approximately 4,600 people, and the global human resource of the company is about 300 thousand employees.

Example number 4. Competitive Advantages of Toyota

1. High quality products. The main competitive advantage of the company is a top-level product. In our country in 2015, about 120 thousand cars of this brand were sold. The fact that this competitive advantage of the company is decisive, said its ex-president Fujio Cho. And therefore, buying a Toyota car, the consumer is guaranteed a set of modern technological developments.
2. Wide model range. Toyota showrooms operate with all models of the brand's cars: Toyota Corolla (compact passenger car), Toyota Avensis (universal and comfortable car), Toyota Prus (new model), Toyota Camry (a whole series of cars is presented), Toyota Verso (a car for the whole family), Toyota RAV4 (small SUVs), Toyota LandCruiser 200 and LandCruiser Prado (popular modern SUVs), Toyota Highlander (all-wheel drive crossovers), Toyota Hiace (comfortable, small car). This is an excellent competitive advantage of the company, because the model set of cars is presented for consumers with different preferences and financial capabilities.
3. Effective marketing. An excellent competitive advantage of the company is the certification of cars with inspections from Toyota Tested. Customers who buy such a car in our country get the opportunity to receive round-the-clock assistance, which consists in permanent job technical support services. The company's cars can be purchased under the Trade-In program, which simplifies the purchase due to favorable offers from Toyota.
4. The client comes first. Another important competitive advantage of the company, for which Toyota developed the Personal & Premium program in 2010, presenting it at the international automobile show in Moscow. The program includes the availability of favorable loan offers when buying a car. Specialists from the New Car Buy Survey found that Russian consumers are most loyal to Toyota.
5. Effective company management. This competitive advantage of the company is expressed in the presence of an effective ERP program that can control the entire set of Toyota car sales activities in Russia online. The program was developed in 2003. The uniqueness of this program in Russia lies in its combination with the position on the market, with the various features of doing business in our country, with our existing laws. Another competitive advantage of the company is a holistic corporate structure, which helps the company and its partners to quickly operate data on the availability of certain product models in showrooms, warehouses, and so on. Moreover, Microsoft Dynamics AX contains all the documentation for the operations carried out with cars.

Example number 5. Competitive Advantages of Samsung Group

1. Consumer trust. The company was founded in 1938 and over many years of hard work has achieved tremendous results (for example, 20th place in brand value, second place in the field of equipment). Consumer trust is the most important competitive advantage of the Samsung Group. The document management organization turned out to be “the most reliable” in the world. These are indicators that demonstrate how the history of the formation of the company, its trademark and the trust of customers turn into a huge competitive advantage of the company.
2. Company management. This competitive advantage of the company lies in its vast experience in the field of management, as well as in constantly improving methods of management in a changing market. For example, the recent reform of the firm in 2009 resulted in the company's divisions gaining more independence, thereby simplifying the entire management process.
3. Technologies. This competitive advantage of the company lies in the fact that it works with high technology. Samsung Group pioneered the technology of reciprocating and rotary compressors, optical fiber, energy application and concentration. In addition, the company has developed the thinnest lithium-ion power supplies. The competitive advantages of the company as a construction company are manifested in the fact that it ranks first in the development of communication systems for business areas of activity and moves ahead in the field of creating technologies for gas and oil pipelines, as well as other areas of construction.
4. The presence of an innovative advantage of the company. This competitive advantage of the company lies in the fact that it works tirelessly in the field of equipment modernization and innovative product components. The organization contains many scientific divisions around the world. They carry out research activities in the field of chemical current resources, software and various equipment. Samsung is implementing a scheme to promote electrical engineering, and is working on ways to retain energy resources. The competitive advantage of the company is also the hiring of highly qualified employees from different parts of the world. In addition, the corporation is partnering with the best technological universities in the world, investing in their developments and ideas.
5. Successful marketing system of the company. The company's competitive advantage is also a strong marketing campaign in many areas of activity (in its competition with Apple Corporation, Samsung conducted a rather aggressive advertising policy, trying to surpass it). A division of the company called "Cheil Communications" works in this area. It works in the field of advertising, marketing analysis and analysis of the market situation. In addition, an element of the company's competitive advantage is its assistance in the field of charity, which wins over the consumer and increases its popularity. The corporation also has special departments for charity.

How is the formation of competitive advantages of the company from scratch

Of course, any organization has its pros and cons, even when it does not occupy a leading position and does not stand out in the market. In order to analyze the causes of these phenomena and develop effective competitive advantages for the company, you need to turn, oddly enough, to your own consumer, who, like no one else, is able to correctly assess the situation and point out the shortcomings.

Customers can point to different competitive advantages of the company: location, reliability, simple preference, and so on. It is necessary to compose and evaluate this data in order to be able to increase the profitability of the enterprise.

However, this is not enough. Describe the strengths and weaknesses (what you have and what you don't) of your firm in writing. In order to develop effective competitive advantages for a company, it is worth specifying all the details clearly and specifically, for example:

Abstraction	specifics
Reliability guarantee	Our reliability is our feature: we insure transportation for 5 million rubles.
Professionalism Guaranteed	About 20 years of experience in the market and more than 500 developed programs will help us understand even the most difficult situations.
We produce high quality products	We are three times ahead of GOST in terms of technical product criteria.
Personal approach to everyone	We say "no!" briefs. We work only individually, working through all the important details of the business.
First class service	Technical support 24 hours, seven days a week! We solve even the most complex tasks in just 20 minutes!
Low production cost	Prices are 15% lower than market prices due to the production of our own raw materials.

Not all competitive advantages of the company should be reflected in this block, but here it is important to indicate all the pros and cons of the organization, from which it will be necessary to build on.

Focus, divide a sheet of paper into two parts and start putting the pros and cons of your company there. Then evaluate the shortcomings and turn them into competitive advantages of the company. For example:

Flaw	Turning into an advantage
Distance of the company from the city center	Yes, but the office and warehouse are nearby. Then buyers will be able to park their car without any problems, and evaluate the quality of products right on the spot.
Price is higher than competitive	The price includes additional services (for example, installation of an operating system and all major programs on a computer).
Long delivery time	But the assortment includes not only a standard set of products, but also exclusive products for individual use.
Newcomer firm	But the company has modern qualities(mobility, efficiency, a new look at things, and so on).
Limited product selection	But confidence in the originality of a particular brand and a more detailed knowledge of the products.

Everything is not so difficult here. Then, using this list, it is necessary to develop the competitive advantages of the company from the primary to the most insignificant. They should be clear to the potential client, concise and effective.

There is also an aspect kept secret by many firms. It can be applied periodically when other competitive advantages of the company cannot be realized or when it is necessary to activate the effectiveness of its advantages. The advantages of the organization must be correctly combined with the satisfaction of the needs of the consumer.

Illustrative examples:

• Was: Experience - 15 years.

• It became: Cost reduction by 70%, thanks to many years of experience of the company

• Was: Reduced prices for goods.

• It became: The cost of production is lower by 20%, and the cost of transportation - by 15% due to the presence of their own vehicles.

How is the company's competitive advantage assessed?

The success of a company's competitive advantage can be assessed by fully evaluating the strengths and weaknesses of the company's position in the competition and comparing the results of the analysis with those of competitors. The analysis can be carried out by referring to the method of exponential assessment of KFU.

A well-designed action plan can turn the disadvantages of competing firms into competitive advantages for your company.

The criteria for this analysis are:

• The stability of the firm in protecting its position in the framework of market changes in the field of its industries, fierce competition and competitive advantages of competing companies.
• The presence of effective competitive advantages in the company or a lack or lack thereof.
• Opportunities to achieve success in the competition when operating with this action plan (the position of the company in the competitive system).
• The level of stability of the company in the current period.

Analysis of competitors' activities can be carried out using the method of weighted or unweighted estimates. The former are determined by multiplying the firm's score by a certain indicator of competitive opportunities (from 1 to 10) by its weight. The second presupposes the fact that all performance factors are equally important. The most effective competitive advantages of the company are realized when it has the highest ratings.

The last stage assumes that the company's specialists must identify strategic mistakes that negatively affect the formation of the company's competitive advantages. An effective program should include ways out of any difficult situation.

The task of this stage is to create a coherent list of problems, the overcoming of which is of paramount importance for the formation of the competitive advantages of the company and its strategy. The list is displayed on the basis of the results of the assessment of the company's activities, the situation on the market and the position of competitors.

It is impossible to identify these problems without referring to the following points:

• In what cases is the adopted program unable to protect the company from external and internal problem situations?
• Is a decent degree of protection against the current actions of competitors provided by the adopted strategy?
• To what extent does the adopted program support the competitive advantages of the company and is combined with them?
• Is the adopted program in this area of ​​activity effective in taking into account the impact of driving forces?

It is necessary to try to ensure that the competitive advantages of the company are applied by salespeople. They tend to have broad knowledge about the product and the firm, but not about the competitors of their own organization, which is a serious mistake. Knowing the competitive advantages of your company and the ability to work on competitive advantages is one of the important skills of sales managers.

Almost everyone has the opportunity to introduce a system of discounts. Proper use of the company's competitive advantages is not expressed in dumping, but in the art of strengthening the position of one's organization and its interests.

To master this art, you can participate in trainings from the Practicum Group organization. It provides services for conducting training programs that improve the performance of staff, management, the company's competitive advantages, as well as increase sales and strengthen relationships with the consumer.

Service list:

• Training program for sales managers "PROFESSIONAL".
• Trainings for managers and employees.
• Leadership training.
• Trainings in the specialized center "Practicum Group".

The founder of the Practicum Group organization is Evgeniy Igorevich Kotov. It has been operating since 2006 and during all this time has managed to train more than 40 thousand people: employees, managers, managers of all types, and so on.

The organization covers about 100 cities of the CIS countries, as well as Turkey, Moldova, Latvia, Kyrgyzstan and Kazakhstan