The Factors Affecting Competitiveness of Companies

National and Corporate competitiveness

In any economy all corporations operate within a macro economic, social, political and cultural systems. These differ from country to country regarding the role of markets

even in the era of globalization. That is the role of market and government interventions in the market differs from country to country. However, in the era of globalization and trade liberalization most countries allow market forces to determine economic affairs to a greater extent.

In the 21st century the technological developments became more rapid compared to the previous centuries particularly in the information technology. This to some extent has an impact on changes in business practices and business models and enabled companies to embark business on a global scale. This also enabled the companies the ability to co-ordinate activities and to share information on real time and plan international operations. This also enabled the emergence of international capital flows. This gave rise to the emergence of multinational corporations and transnational corporations operating in many countries. In addition, the liberalization of trade and the dismantling of trade barriers increased trade between countries. It also changed the nature of competition. That is the competition became dynamic than static in nature. For example e-commerce, business networks, alliances, joint ventures and changes in decision about inbound logistics, outbound logistics, when where to produce at what scale, marketing and sales, distribution channel strategies to gain cost leadership, differentiation and focus became vital for sustainable profitability in the long-term by corporate entities of small, medium and large enterprises.

In the context of nations, governments are to provide a stable economic and political environment and prudent regulation of the financial system. As well, build social capital by improving knowledge base and skill development. Government also must provide a stable social climate so that market can work efficiently and attract capital and allocate capital efficiently where the economy can reap the maximum benefit and continue to upgrade its competitive potential by technological innovation and investment in research and development. This addresses the ability to improve the efficiency and productivity and quality of its products and service on a continuous basis. That is, the government can encourage innovation in the private sector by private public partnership in research and development and commercialization and provide incentives and fiscal measures for that to happen.

In addition, it can encourage entrepreneurship in the private sector so that the economy as whole encourages new branch of industries to emerge and provide a dynamic business environment. In addition, the nations can improve its competitive potential by investing in physical infrastructure developments like roads and rail network. communication

networks, energy and electricity infrastructure and assist in the development and application of information technology in small and medium firms to improve their productivity and competitiveness. These initiatives are vital particularly to developing countries at various stages of development to participate as quickly as possible in international trade opportunities as well to gain competitive potential to enable to increase their standard of living and the quality of life in general for the majority of citizens and reduce income disparities. In summary, the role of government is to provide an environment in terms of regulation, institutional structure and policy initiatives in micro and macro economic level to enable corporations to make economic decisions and to facilitate to have the possibility to enhance its productivity, provision of quality human resources, provide and improve the physical and communication infrastructure. Above all, to assist corporations to continually gain competitive advantage by reforming its processes and products and innovate new process and products on a continual basis. Governments must also provide rules for effective corporate governance to be socially responsible.

In essence, the role of government in this era of globalization, is to provide the corporations a dynamic market environment, where technical progress and innovation takes place in a dynamic manner to continually upgrade their competitive edge in industries and sectors, which has the maximum benefit as an economy as whole.

In addition, it can make the labor market more flexible to improve the productivity and the cost competitiveness of firms and their fore contribute to sustainable profitability of enterprises of all sizes and control inflationary pressures. This is also vital to gain

competitive advantage to become more cost effective and there fore improve their ability to compete dynamically in an international market place.

Corporate competitiveness depends on the corporation internal strengths and weaknesses and the opportunities and threats it faces in its immediate microenvironment as well as the opportunities and threats faced by the macro environment. In other words, the competitive advantage of a corporation depends on its strategic planning and its effective implementation. That is, the corporation business model must able to develop appropriate and effective strategies analyzing its competitive forces, from new entrants, substitutes, supplier bargaining power, intensity of rivalry of existing corporations in an industry, consumer bargaining power as well as recognizing the dynamic nature of market in the contemporary global market environment. It must also take in to consideration the role of government and regulation and the environmental and social impact of its operations particularly if the corporation is operating on a regional or global level.