Competitive advantages: a review of strategies and ways of development in a crisis. Competitive advantages of the company

14.10.2019

Talk about the number of completed projects, the volume of products released, publish successful cases. It is very important not to slide into self-praise, but to show how much real value your products or services have brought.

Are your services useful? Tell about it!

Post testimonials from real customers with links to their social media profiles/company websites so that a potential customer can get confirmation. 90% of people won't verify the authenticity of these reviews, but being open on your part will build their trust.

High level of quality/service

And the standard continuation: "Our company employs highly qualified specialists who have undergone special training."

Generally qualification of specialists does not speak about the level of service, unless your employees were trained in courses "How to lick a client."

Take an example from hotels for which international service standards have been developed. A person, entering a three-star hotel, already roughly imagines what awaits him: a room with an area of at least 12 square meters. m, free bottled water, bathroom with towels, soap and toilet paper.

What awaits the client in your company?

Write to him how quickly they will repair or deliver the goods. Explain how a personal manager will work on solving his problem - step by step, from receiving an application to the result. Convince him that even after completing the order you are always ready to help.

Imagine that you are calling a company about a major contract, and the sales rep replies, "We're having lunch, call me later." And hangs up. Will you call him back or find another supplier?

If the employees of the company are not polite and friendly, your “high level of service” is worthless.

What are your employees good at?

And if you want to brag about the professionalism of your employees, tell us about them separately: where they got their qualifications, how long they have been working in their specialty and what they can do.

Individual approach

This expression has not convinced potential customers for a long time, it is so hackneyed. Most often, they simply don’t notice him, and if they notice him, they grin skeptically, mentally saying “well, well, of course.”

Don't believe? Look at your competitors' websites - 99 times out of 100 you will find this phrase, if not on the "About" page, then on some other.

Replace common phrases with specific information.

List everything you rely on when developing a project or completing an order. Explain what you mean by " individual approach».

For sure, put the fulfillment of the wishes of the customer in the first place. But you understand that others do the same. Agree, it is difficult to imagine a designer who makes a red kitchen for clients who dream of green.

Show HOW you fulfill the desires of customers

write, What is included in your customer relationship system? →

How do you meet the needs of each client, depending on the characteristics of their tasks. What exactly do you consider when developing a project or completing an order.

What kind additional terms cooperation at the discretion of the client, you can include in a standard contract: different payment schemes, individual discounts, delivery, assembly.

How broad is the authority of the client who wants to participate in the process or observe it with the possibility of adjustment. At what point wishes are no longer accepted.

Low prices and/or great deals

Another "nothing" stamp. And if you consider that not only low, but also high prices can drive sales with equal success, then this advantage becomes completely useless.

Trying to hook a customer with low prices? Do not do it this way!

Instead of empty words use honest numbers.

For example: we offer Scandinavian-style kitchens at a price of 20,000 rubles per square meter, the basic package includes standard sections, a countertop, a sink, and a dish dryer.

Or: in January, we reduce the cost of the Shikardos collection by 30% - when ordering a kitchen 3 meters long, you save 25,000 rubles.

Most often, low prices are spoken by those companies that have nothing else to hook the client with. Do not deny the buyer the minimum mathematical ability. Believe me, he will do a great job comparing prices on his own.

When choosing a product, the buyer compares several alternative (not identical!) Options:

wooden houses - with brick and aerated concrete
white gold jewelry - with silver and platinum
facial mesotherapy - with sculptural massage and plasma lifting.

Make a comparison table, according to the results of which your offer wins as the safest, fastest, most durable (warm, prestigious, comfortable - pick the advantages of your product or service). And then the price will fade into the background.

A wide range of

These 18 characters without spaces will only become an advantage when the client sees them as a solution to their problems →

Decipher what gives a wide range

Possibility to choose from a certain assortment group. You can offer dozens or even hundreds of gold rings, but the buyer is interested in a specific size. And if it does not appear on the showcase of an online store, for the client the slogan about the richness of the assortment will remain zilch. Initially, a loyal visitor will go to competitors next time, so as not to be disappointed again.

Opportunity to purchase related products- a lid for a frying pan, a brush for collecting animal hair - for a vacuum cleaner, wipes for cleaning the screen - for a monitor. This is beneficial for both parties. The client buys everything in one place and saves on delivery, the seller increases profits by 5-15%.

Possibility to order a turnkey service. When you talk about a wide range of company services, list them. Specify which of them you provide separately, and which - only in the complex. For example, a consulting company performs naming exclusively as part of a multi-stage company registration service, while assistance in preparing documents may be outside of it.

Often a list of useless benefits is placed in the "About Us" section. Already fixed? Excellent! Now check if you used all the methods of persuading customers on the "About" page. Look for arguments that are right on target.

And in the comments, admit it, often professional professionals with an individual approach work in your companies? 😉

About the author.

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.

Universal for everyone
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 software market.

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

The low price strategy and the ability to maintain, strengthen and develop it provided the Wall-Mart retail chain with 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 mobile internet banking and increase the technological level of service delivery
making shopping easier and lowering commissions with bank cards(including the creation of payment cancellation guarantees 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 compare the criteria for the provision of services by your hotel company and rivals. More successful examples of competitive advantages for the hospitality industry:

service level leadership
low cost advantage (subject to the ability to generate higher profits than competitors)
provision of 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
the 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 retail industry (using the example of a retail store): breadth of assortment, exclusivity of sales in a certain area, ability to set low prices, leadership in warranty and after-sales service, availability of free prizes for the buyer, leadership in promotional attractiveness -offers, leadership in quality, freshness, modernity of 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 of a profitable development plan for 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 reform of the functioning system should create a basis for the effective development of the factors of the company's competitive advantages, as well as create a strong relationship between this process and existing market conditions.

What are the types of competitive advantages of a company?

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

Artificial competitive advantages: individual approach, advertising campaigns, guarantee and so on.
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 correctly work out strategic competitive advantages that will provide customers with a profitable 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:

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).
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”).
An 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.
Special conditions. They may include the following: exclusive supply offers (discount system, convenient location of the company, extensive warehouse program, included gifts, payment after delivery, and so on).
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 the status of a professional expert, which involves the participation of your employees at various conferences, in advertising interviews, and on the Internet.
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.
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:

The firm has a set-up similar to competitors (competitive advantages of companies in a particular field of activity are the same).
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).
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:

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.
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.
A 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.
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).
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.
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.
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 themselves or to potential buyer, or to an existing client on a mutual basis. Then you will receive a case that will show the level of professionalism of your company.
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 of employees they need. 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:

Competent organization of the activities of employees.
The interest of employees in the successful achievement of tasks.
Formation of the desire of the team to actively participate in the process of obtaining high results.
Support for the personal qualities of employees necessary for the company.
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. It assumes the desire of employees to invest their own strength, 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.
Dedicated employees have more a high degree respect not only for yourself, 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 basic ones, introduce new methods of doing business, put both personnel 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 both with the internal management of the organization and with the development of a strategy that ensures a strong position of stable competitiveness and allows you to keep track of changing market conditions. 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:

Goal setting:
- Formulation of the goals and objectives of the company ( First stage to form 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).

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.

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.

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).

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).

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.

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.

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 company aims to produce good impression on clients. 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:

intangible criteria. This includes everything that has to do with brand information: its idea, degree of popularity and distinctive features.
Tangible criteria. Here, the influence on the sense organs plays a very important role. These criteria are functional ( special form for more convenient use, for example), physical, as well as visual (displaying a trademark on promotional materials). Both tangible and intangible criteria are essential in developing a company's competitive advantage.
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.
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:

Elements of service components (large stickers, 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 raising customer awareness of all the positive aspects of a 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:

Technology. 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, comfort in use and elegant appearance of devices play an important role. 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.
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. It also saves on unskilled labor and child labor costs at Inventec and Foxconn supplier plants.
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 the international company 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.
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.
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

.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.
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.
Innovation(this includes the competitive advantage of the company in the field of ecology):
- The company wants to increase low level sales using 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 great, because the company strives to produce an environmentally friendly product. In addition, Coca-Cola is developing a program to use eStar cars that run without harmful emissions due to electric motors.
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.

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. Competitive advantage Nestle is to create a national strategy that is based on the needs of the people. For example, Nescafe coffee drink, which has a different manufacturing structure for different countries. It all depends on the needs and preferences of the buyer.
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.
Innovation. The company's most significant competitive advantage is that it is the largest investor in scientific projects and technological innovations, which contribute to the development of the company through the introduction of technologies that satisfy customer needs, product differentiation, and improved 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.
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.
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

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.
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.
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 the constant work of services for technical support. The company's cars can be purchased under the Trade-In program, which simplifies the purchase due to favorable offers from Toyota.
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.
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

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.
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.
Technology. This competitive advantage of the company lies in the fact that it works with high technologies. 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.
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.
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 market situation analysis. 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! Even the most challenging tasks We solve it 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 on a computer operating system and all major programs).
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:
It was: Experience - 15 years.

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

It 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 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 specialized center Practice 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

Strategic management is designed to ensure the survival of the company in the long term. Of course, when it comes to survival in a competitive market environment, there is no question that the company can drag out a miserable existence. It is very important to understand that as soon as someone from those who are associated with the company, this connection becomes not a joy, he moves away from the company, and after a while it dies. Therefore, survival in the long term automatically means that the company is quite successfully coping with its tasks, bringing satisfaction to those who enter into the sphere of its business interaction with its activities. First of all, this applies to customers, employees of the company and its owners.

The concept of competitive advantage

How can an organization ensure its long-term survival, which must be inherent in it so that it can cope with its tasks? The answer to this question is quite obvious: the organization must produce a product that will consistently find buyers. This means that the product must be, firstly, so interesting to the buyer that he is ready to give money for it, and, secondly, more interesting to the buyer than a product similar or similar in consumer qualities produced by other firms. If a product has these two properties, then the product is said to have competitive advantages.

Therefore, a firm can successfully exist and develop only if its product has competitive advantages. Strategic management is called upon to create competitive advantages.

Consideration of the issue of creating and maintaining competitive advantages involves an analysis of the relationship and, accordingly, the interaction of three subjects of the market environment. The first subject is “our” company that produces a certain product. ect is a buyer who may or may not buy this product. The third killer is competitors who are ready to sell their products to the buyer that can satisfy the same need that and a product manufactured by "our" firm. The main thing in this market "love" triangle is the buyer. Therefore, the competitive advantages of a product are the value for the buyer contained in the product, which encourages him to buy this product. Competitive advantage does not necessarily arise from comparing "our" firm's product with competitors' products. It may be that there are no firms on the market offering a competitive product, yet the product of “our” firm is not for sale. This means that it does not have sufficient value for the buyer or competitive advantages.

Types of competitive advantages

What creates competitive advantage? It is believed that there are two possibilities for this. First, the product itself can have competitive advantages. One kind of competitive advantage of a product is its price feature. Very often, the buyer purchases a product only because it is cheaper than other products with similar consumer properties. Sometimes a product is bought just because it is very cheap. Such purchases can occur even if the product has no utility for the buyer.

The second type of competitive advantage is differentiation. In this case, we are talking about the fact that the product has distinctive features that make it attractive to the buyer. Differentiation is not necessarily related to the consumer (utilitarian) qualities of the product (reliability, ease of use, good functional characteristics, etc.). It can be achieved at the expense of such characteristics that have nothing to do with its utilitarian consumer properties, for example, at the expense of the brand.

Second, in addition to creating a competitive advantage in a product, a firm may be trying to create a competitive advantage in its product. market position. This is achieved by securing the buyer, or, in other words, by monopolizing part of the market. In principle, this situation is contrary to market relations, since in it the buyer is deprived of the opportunity to choose. However, in real practice, many firms manage not only to create such a competitive advantage for their product, but also to maintain it for a long time.

Strategy for creating competitive advantage

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

Rational business management based on accumulated experience;

Economies of scale by reducing costs per unit of output with an increase in production volume;

Savings on diversity as a result of cost reduction due to the synergistic effect that occurs in the production of various products;

Optimization of intra-company communications, contributing to the reduction of company-wide costs;

Integration of distribution networks and supply systems;

Optimization of the company's activities in time;

The geographic location of the company's activities, which allows to achieve cost reduction through the use of local features.

Bringing to life pricing strategy To create a competitive advantage for a product, a firm should not forget that its product must at the same time meet a certain level of differentiation. Only in this case, price leadership can bring a significant effect. If the quality of the price leader's product is significantly lower than the quality of similar products, then creating a price competitive advantage may require such a strong price reduction that it can lead to negative consequences for the firm. However, it should be borne in mind that the price leadership strategy and the differentiation strategy should not be mixed, and even more so should not be attempted to implement them at the same time.

Differentiationis the second strategy for creating competitive advantage. With this strategy, the company tries to give the product something distinctive, unusual, that the buyer may like and for which the buyer is willing to pay. A differentiation strategy aims to make a product different from what competitors do. To achieve this, the firm has to go beyond the functional properties of the product.

Firms do not necessarily use differentiation to gain a price premium. Differentiation can help expand sales by increasing the number of products sold, or by stabilizing consumption, regardless of fluctuations in market demand.

In the case of implementing a strategy for creating competitive advantages through differentiation, it is very important to focus on consumer priorities and the interests of the buyer. Earlier it was said that the differentiation strategy involves creating a product that is unique in its own way, different from the products of competitors. But it is important to remember that in order to have a competitive advantage, it is necessary that the unusualness of the product, its novelty or uniqueness be of value to the buyer. Therefore, the differentiation strategy assumes, as a starting point, the study of the interests of the consumer. For this you need:

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

To study consumer criteria by which a choice is made when purchasing a product (price, functional properties, guarantees, delivery time, etc.);

Determine the factors that shape the buyer's idea of the product (sources of information about the properties of the product, image, etc.).

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

A third strategy that a firm can use to create competitive advantage in its product is focus on the interests of specific consumers. In this case, the company creates its product specifically for specific customers. Concentrated product creation is associated with the fact that either some unusual need of a certain group of people is satisfied (in this case, the firm's product is very specialized), or a specific system of access to the product is created (the system for selling and delivering the product). By pursuing a strategy of concentrated creation of competitive advantages, the firm can use both price attraction of buyers and differentiation at the same time.

As can be seen, all three strategies for creating competitive advantages have significant distinctive features that allow us to conclude that the company must clearly define for itself what strategy it is going to implement, and in no case mix these strategies. At the same time, it should be noted that there is a certain relationship between these strategies, and this should also be taken into account by firms when creating competitive advantages.

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Competitiveness is the state (in statics) or ability (in dynamics) of a subject with its object to be a leader, to successfully compete with its competitors in a particular market at a particular time to achieve the same goal.

Targets can be:

a) for commodity producers - the sale of goods in a short time at the best price;
b) for staff - getting a job that satisfies their needs;
c) for the organization not as a system, but as an object of the socio-economic system - maintaining an effective reproductive policy in all areas, ensuring comprehensive security and a decent standard of living for personnel, participating in the life support of society, and solving other social problems;
d) for the country as an object of the socio-economic world system - the same as for the organization, plus ensuring sovereignty, embedding in world system relationships, etc.

Competitiveness synthesizes many factors: political, legal, technical, environmental, economic, social, psychological, managerial, etc. The number of factors taken into account depends on:

a) the complexity and individual characteristics of the object;
b) characteristics and features of the external environment for the object;
c) characteristics of a complex of processes for managing objects in space and time;
d) professional and psychological readiness the subject to effectively manage the object in a particular market;
e) the parameters of the institutional environment and infrastructure, the quality of the legal, tax, customs, financial and credit systems, the strength of competition in a particular market, and other factors.

Competitive advantage of a subject (object) is any exclusive value that it possesses.

Competition is the process of monitoring and managing competitive advantages, weaknesses and external threats to both the entity and its competitors in order to achieve the same goal, for example, to achieve actual competitiveness in a particular market at a particular time.

The concept of competitive advantages of the firm

An assessment of the industry attractiveness and competitive capabilities of a company based on a value chain analysis makes it possible to determine the position of a business in the industry, as well as to determine its real competitive advantage, which is expressed in exceeding the industry average level of profitability.

Competitive advantages of the company are provided in the process of competition with the so-called five forces (directions) of competition, that is, with other sellers of similar products, firms - potential competitors, manufacturers of substitutes, suppliers of resources, buyers of its products. They can be seen as the main market forces.

The analytical concept of the impact of the main competitive forces can be represented as the following diagram (See Annex 1).

The five forces (directions) of competition model is an effective method for analyzing the main competitive forces that affect the position of a firm in the market. This model makes it possible to more purposefully assess the competitive situation in the market and, on this basis, develop such a variant of the long-term strategy of the company, which will provide it with the greatest protection from the impact of competitive forces and at the same time will contribute to the creation of additional competitive advantages.

The competitive strength of suppliers of economic resources is determined primarily by the level of prices and the quality of the resources supplied. This direction of competition is of particular importance in the case when the share of purchased resources in the production costs is large, and the quality of the final product of the company largely depends on their quality. The position of resource suppliers is also strengthened when their supply is limited, which makes it possible to supply resources on less favorable terms for buyers. In turn, strengthening the competitive position of firms-consumers of resources contributes to the expansion of the range of suppliers, including the possibility of switching the company to import supplies of resources on more favorable terms.

One of the most effective methods of strengthening the position of firms-buyers of resources is the conduct of a strategy aimed at establishing control over firms producing raw materials or suppliers of components through the creation of vertically integrated companies. The positive aspects of vertical integration include: greater protection from fluctuations in resource prices, greater reliability of supply, as well as more efficient coordination of various stages of production, combined into a single technological chain. In the conditions of modern Russia, vertical integration is being developed significantly through the creation of holdings or financial and industrial groups.

The competitive power of buyers arises from the fact that buyers (trading and intermediary firms, enterprises-consumers of investment goods, as well as individuals- end buyers of consumer goods) have an impact on manufacturing firms in many cases seek to deepen the differentiation of their products in order to occupy new niches in the market and reduce their dependence primarily on buyers of large quantities of goods.

Of no small importance, especially in Russia, is the expansion of direct deliveries from enterprises, bypassing the trade and intermediary network, the provision of deferrals for payments for products purchased by customers, the use of various schemes for preferential lending to physical end consumers of goods.

One of the most effective means of strengthening the position of manufacturing firms in relation to buyers is the use of a strategy to expand the scope of firms by acquiring trading and intermediary companies or establishing control over the structures located between firms and the final consumers of their products, that is, the distribution network (sales channels) .

The strength of firms potentially ready to enter a given market of goods and services is determined by the fact that the emergence of new firms in it leads to a redistribution of the market (or its segment), increased competition and lower prices. The reality of the penetration of new firms into the market depends on the level of entry barriers that prevent such penetration. The essence of them is that they can cause an increase in the size of the initial investment or an increase in the degree of risk for new firms. Entry barriers include market monopolization, economies of scale (with an increase in output, the total cost of producing a unit of output decreases), patent and license protection key technologies and know-how, control over limited economic resources and better distribution channels. In the conditions of Russia, additional barriers are associated with criminal influence on the market, including the division of spheres of influence between criminal structures.

The competitive strength of firms producing substitute goods depends primarily on the ratio of prices for original and substitute goods, as well as on differences in their qualitative characteristics. Countering competition on the part of substitute goods is, first of all, improving the quality of manufactured products, maintaining prices for original products at an acceptable level, as well as giving them such unique properties that make it difficult to switch to substitute products. In Russia, the greatest threat from substitute goods is caused by the expansion of imports of goods whose production has not been mastered by domestic producers, and in particular certain types of food products, medicines, audio and video equipment, and industrial equipment.

The strength of rivalry between companies producing similar goods and services is the main force (direction) of competition, since in the most concentrated form it reveals the successes and failures of the company in providing additional competitive advantages. At the same time, competition between firms acquires specific features depending on a number of factors. It has the most creative and fruitful character if the market has already developed competitive environment, since under these conditions, competition leads to the release of new types of products by firms, the expansion of the range of services they provide, and the introduction of new technologies. However, in Russia the competitive environment is just beginning to take shape, and in many sectors of the economy the oligopolistic market structure inherited from the administrative command system is still preserved.

Competition takes on a clearly pronounced offensive, aggressive character, when with the advent of new types of goods, new market segments are formed, penetration into which promises the opportunity to receive high profits. Under these conditions, larger firms, seeking to increase their market share, act aggressively, buying up smaller firms, introducing new technologies to them and expanding the production of products under their own brand. In Russia, a similar nature of competition acquires in those so far few sectors of the economy that have emerged from the crisis earlier than others (the so-called points of growth), are focused on real effective demand, and where, in this regard, the competitive struggle takes on an aggressive character. Finally, competition is most fierce and dramatic in depressed industries with high exit barriers, that is, when the costs of leaving the market (mothballing production, compensating laid-off personnel, etc.) exceed the costs associated with continuing to compete. Caught in hard financial position firms are forced to pursue a defensive strategy, trying to stay afloat, maintain their niche in the market even in the face of falling profitability and lack of capital returns. This situation is typical for many branches of modern Russia.

All the main directions of strengthening the competitive positions of firms are reflected in the development of their long-term strategy, which in modern Russian conditions has a number of features compared to the strategies of firms operating in a developed market economy. First, the goal of firms is often not only to ensure sustainable profits, but also to maintain employment in order to avoid exacerbating social tensions. Secondly, a sharply increased degree and specific nature of the risks of decisions made, which primarily include private changes in the state financial and credit, tax, customs policy, as well as the low solvency of buyers of the company's products, including government departments and institutions.

Sources of Competitive Advantage

Competitive advantage is achieved based on how the firm organizes and performs certain activities. 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 this activity, firms create certain values for their clients. 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 competitors, but produce a product at a lower cost (lower cost strategy), or operate in such a way as to give customers a product with greater value, for which you can get a big price (differentiation strategy).

The competitive activities in any given industry can be divided into categories (See Appendix 2). They are grouped together in a so-called value chain. All activities in the value chain contribute to customer 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 implications for achieving competitive advantage.

But the firm is not only the sum of all activities. A firm's value chain is a system of interdependent activities that are interconnected. These links occur when the method of one activity affects the cost or efficiency of others. Relationships often lead to the fact that the additional costs of "fitting" individual 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, it is necessary that production, ensuring the supply of raw materials and components, and auxiliary activities are well coordinated. A clear coordination ensures the timely delivery of goods to the customer without the need to have expensive means of delivery (i.e. a large fleet of vehicles when you can get by 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's the same effective way cut down total time necessary to perform different activities, which is increasingly important for competitive advantage.

Careful relationship management can be a critical source of competitive advantage. Many of these links are subtle and may not be noticed by competing firms. Benefiting from these connections 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 intersect (such cases are rare).

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 individual firm's value chain as applied to competition in a given industry is part of a larger system of activities that can be called a value system (See Appendix 3). 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. In the end, the product becomes an aggregate element in the value chain of the buyer, who uses it in the performance of his business.

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 can reduce a firm's operating costs and allow for lower 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, cost-leading firms 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 relations 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 consumer properties that he cannot get by buying a competitor's product. In essence, differentiation is the result of how a product, ancillary services, or other 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 these shows how the product affects the customer's activity in which the product is used (say, a computer used to take orders, or 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 the buyer. 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.

In different industries, the basis for differentiation is different, and this has 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. On the other hand, targeting a broad market can provide a competitive advantage if the firm is able to operate in different industry segments or even in several related industries. Thus, German chemical companies (BASF, Bayer, Hoechst, and others) 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.

Quite a few important reason competitive advantage - in that the company 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. 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.

Retention of competitive advantages

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. Low rank advantages such as cheap work force or raw materials, competitors can get quite easily. 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.

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

Firstly, in order to achieve such advantages, greater skills and abilities are required - specialized and more trained personnel, appropriate technical equipment and, in many cases, close ties with key clients.

Secondly, high-order benefits are usually possible under the condition of long-term and intensive capital investments in production facilities, in specialized training of personnel, often associated with risk, in R&D for marketing. The performance of certain activities (advertising, sales of products) creates tangible and intangible values - the company's reputation, good relations with customers and a base of special knowledge. Often the first to react to a changed situation is the firm that has invested 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 not to be as persistent as those based on differentiation. One reason for this is that any source of cost reduction, no matter how simple, can rob the firm of a cost advantage all at once. Thus, if labor is cheap, it is possible to outperform a firm with much higher 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, which determines the 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. The company's presence more advantages over competitors significantly complicates the latter's task.

The third and most important reason for maintaining a competitive advantage is the constant modernization of production and other activities. If 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 company's performance in order to strengthen existing advantages, for example, to operate production facilities more efficiently or to 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. 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.

In order to maintain positions, firms sometimes have to give up existing advantages in order to achieve new ones. 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.

The reason that few firms manage to maintain leadership is that any successful operating organization it is extremely difficult and unpleasant to change the strategy. Success breeds complacency; a successful strategy becomes routine; the search and analysis of information that could change it ceases. 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 seen as almost a betrayal of the firm's interests. Successful firms often seek the predictability of 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. It 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 strategies. The process of changing strategy often requires financial sacrifice and troublesome, often painful, restructuring of the firm. Firms that are not burdened by the old strategy and previous investments will likely find it cheaper to adopt the new strategy (in purely financial terms, not to mention less organizational problems). This is one of the reasons why the outsiders mentioned above act as commodities.

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 contribute significant benefits or change strategy voluntarily; most do it out of necessity, and it's mostly under pressure from outside (ie. external environment) and not from within.

The management of companies that hold competitive advantages 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 situation in the country on the actions of the management of firms is an important issue.