Position Some Important Factors: 1. The definition of competitiveness. 2. The key elements of competitive advantage. 3. The role of the nation relative to companies that compete successfully on a global basis. 4. The role of government within a nation. While contemplating the idea that information technology might make a difference.
Competitiveness is the Pivotal Issue Until and In the 21st Century For Whom?
Presidential Commission Letter to President Reagan Mr. President, it has been a great honor to serve you and the Nation. The competitive challenge calls for the leadership only you can provide. We thank you for your vision, interest and initiatives in making competitiveness a priority on our national agenda. John A. Young Chairman President’s Commission on Industrial Competitiveness
Competitiveness Definition The degree to which a nation can, under free and fair market conditions, produce goods and services that will meet the test of international markets while simultaneously maintaining or expanding the real income of its citizens. Source: President’s Commission on Industrial Competitiveness
Competitiveness: A Link to National Goals Human Resources Capital Technology Improved Domestic Performance More and Better Jobs Increased Standard of Living Stronger National Security Decreased Budget Deficit Trade Policy New Competition Increased Competitiveness in World Market Reduced Trade Deficit Figure 2-1
Presidential Commission Recommendations 1. Create, apply and protect technology. 2. Spur new industries and revive old ones. 3. Pursue productivity gains through technology. 4. Reduce the cost of capital to American industry. Increase the supply of capital available for investment, reduce its cost and improve its ability to flow freely to its most productive uses.
Who is going to make it happen? 1. Government cannot legislate competitive success. 2. Government should highlight the importance of competitiveness. 3. Everyone must recognize the competitive challenge and its significance.
How Does a Company Compete? If the bottom line to a business is profit, then the top line is value to customer.
The Best Alternative Strategy? To produce quality products and services through effective leadership of skilled employees using advanced methods through the innovative use of technology.
A Good Competitor: 1. Knows its products and services. 2. Knows its customers. 3. Knows its competitors.
Business Environment The global market will come to you, if you don’t go to it.
Competitiveness of Nations The striking internationalization of competition in the decades after World War II has been accompanied by major shifts in the economic fortunes of nations and their firms. 1. Why did this happen? 2. What should companies and countries do about it?
Competitiveness of Nations Why are companies in a particular nation able to gain a dominant competitive position in a specific industry against the world’s best competitors?
Seventeen industries where Germany has 33% or more of the world’s export market.
Germany BASF AG - Chemicals (1861) Bayer AG - Chemicals (1863) Bayerische Motoren Werke AG - Autos, Motorcycles (1913) Bertelsmann AG - Publishing (1835) Daimler-Benz AG - Autos and Aerospace (1882) Henkel KGaA - Detergents and Chemicals (1876) Hoechst AG - Chemicals (1863) Friedrich Krupp GmbH - Steel, Engineering, Trading (1587) Mannesmann AG - Steel Tubes, Auto Parts, Etc. (1885) Robert Bosch GmbH - Electronic Auto Equipment (1886) Siemens AG - Electrical and Electronics (1847) Volkswagen AG - Automobiles (1937)
Deal with customers on a family-like and personal basis.
Combine product design with innovations in process technology.
Are generally not successful where standardization, high-volume mass production, or heavy investments in fundamental research are involved.
Most companies are privately owned and owners, managers and workers are closely attached to an industry.
These factors lead to a long-term orientation and a commitment to sustained investment.
Business is important and a magnet for talented individuals.
Entreprenuership thrives in Italy--they are risk takers who are individualistic and desire independence.
Benefited from a shift from standardized, mass-produced products toward more customized, higher-style, higher-quality goods. In many cases style was combined with investment with state-of-the-art production equipment.
Serve as a challenger and catalyst to companies to
Focus on specialized factor creation.
Avoid intervening in capital factor and currency markets.
Enforce strict product, safety and environmental standards.
Limit cooperation among industry rivals.
Promote goals that lead to sustained investment.
Enforce domestic antitrust policies.
Reject managed trade.
Companies gain an advantage against competitors by responding to pressures and challenges.
The Company Agenda 1. Creating pressure within the company for innovation. 2. Seeking out the best, most successful competitors 3. View as a positive factor the presence of domestic competition. 4. Staying alert to customer, market and competitor trends. 5. Emphasizing the home base as the place to strengthen competitiveness. 6. Selectively pursuing international advantage opportunities. 7. As a company, playing a role in strengthening the national competitive diamond. :
They energize their people to innovate continuously.
They recognize the need for pressure and challenges to accomplish this.
Not Everyone Agrees Kenichi Ohmae: The Borderless World The key global economic entity is the true multinational company.
Ohmae Contentions Four factors are usurping economic power once held by nations: 1. Capital. 2. Corporations. 3. Consumers. 4. Communication.
Putting Global Logic First Although political leaders will resist acknowledging the demise of the nation- state, only those who can accept it and promote region-states within and across their borders will be able to provide the best quality of life for their constituents. Kenichi Ohmae