WHEN you think about restaurants, stores and retailers near you, why do some seem to thrive whereas others are empty and ready to close down? The answer lies in competitiveness.
A competitive business refers to a business entity which uses all of its resources to outperform its competitors. These businesses do so in a sustainable way rather than just over the short-term. In the Saint Lucian context, there are some markets where firms must compete in order to succeed. Those who battle to succeed are generally those who are competitive.
Competition in the business environment not only has a positive impact on consumers but on the local economy as a whole. Domestic rivalry supports productivity and international competitiveness of the business sector and promotes dynamic markets and economic growth. That is, when local businesses are competing with each other, they strive to keep down their operating costs which makes it is easier to pass on competitive prices to consumers. Lower prices means that the disadvantaged segment of the population are now able to enjoy lower prices. Therefore, these businesses can now reach more customers and can thus increase their market share. This in itself means that those firms are achieving increased productivity while competing.
In addition, competitors in the same market are always trying to increase their share of the market. In doing so, they may export goods and services to foreign markets. This has the advantage of helping them get more sophisticated clients overseas. Of course increased market share overseas can translate to increased profits. These local businesses are then able to expand and employ more workers. If this happens collectively, this will translate to increased employment, competitiveness and thus economic growth for the country.
Michael Porter, the competitiveness guru has stated that industries that are competitive internationally are those in which domestic rivalry is the strongest. He suggests that domestic rivalry contributes to the success of a country in a particular industry. For example, Korea’s electronics sector is globally recognised and highly competitive. The sector’s high performance resulted from rivalry between domestic companies like Samsung and LG. Therefore, when firms aggressively compete with each other locally this means they are more prepared and better able to compete and sustain competitive advantage in the international market.
Business leaders must understand that the never-ending search for competitiveness is, therefore, a search for competitive advantages. All firms in the same line of business are chasing the same thing, so you can see that the concept of competitiveness is a moving target. The complacent business that has enjoyed advantages in the past soon finds that it is overtaken by hungrier, fast-moving competitors.
Competitive businesses usually have one or more competitive advantages. Competitive advantage refers to the factors that allow a business to outperform its competitors. In order for a company to use those advantages to work effectively, they need to be sustainable. A business which has achieved a competitive advantage means that:
1. The company has been able to add more value to its customers than its rivals and has been able to attain a greater market share than other firms.
2. The company has an advantage over its competitors by offering a superior value, quality or service.
In conclusion, it is important that our local businesses know how to compete. They have to implement strategies to enable them to be more competitive. These entities have to strive for excellence in order to face fierce competition and more importantly for survival. This effort to outperform their competitors supports productivity and competitiveness which contributes to overall economic growth.
(For more information contact the National Competitiveness and Productivity Council on Second (2nd) floor, Financial Centre Building, Bridge Street, Castries. We can also be contacted at 468 -5571/5576/5552 or visit the Council’s Facebook page at https://www.facebook.com/stluciancpc or email at [email protected])