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What do we mean by “competitiveness”?

Jim Riley

18th May 2012

Some questions for you…

• Why are Apple and Samsung performing so much better in the market place for smartphones and tablet computers than Nokia and Sony?

• Why do retailers like John Lewis Partnership and Dominos UK continue to grow and prosper when other retailers like Comet, Game Group and Clinton Cards struggle to survive?

• Why are so many people now buying from online brands such as Amazon rather than shopping on their local high streets?

• Thinking about the restaurants, cafes and other eateries near you, why so some seem to thrive whereas others are always empty and often close down?

The answer lies in the concept of competitiveness. So what does this term mean?

The clue is in the word – competitiveness is about competing – against the other firms, brands, products and services in the chosen market or industry.

Few if any firms enjoy a world in which they have no competition, so in any market there is a battle to succeed. In any battle there are winners and losers – those who win are generally those who are competitive.

A competitive business is one that performs better than the competition – ideally in a sustainable way rather than just over the short-term.

In order to be competitive, a business needs to have one or more competitive advantages.

Competitive advantages are those factors that enable a business to outperform the competition. In order for those advantages to work effectively, they need to be sustainable.

If a business can achieve competitive advantage, this means that:

• The business is able to add more value for its customers than its rivals and attain a position of relative advantage
• The business has an advantage over its competitors by being able to offer better value, quality and/or service

The never-ending search for competitiveness is, therefore, a search for competitive advantages. All firms in the same market 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.

Competitiveness and value

Many products and brands seem to enjoy competitiveness based on their actual or perceived “value for money”.

But, “value for money” isn’t necessarily the same thing as the cheapest price.

Value is what a customer is prepared to money for. A business that offers better value than competitors will enjoy an advantage.

A good way to think about value is to consider a purchase that you have made which, looking back; you considered to represent good value. What was it about that purchase that you feel happy about?

• The price you paid?
• The features or benefits that you obtained from the product
• The enjoyment or satisfaction you have gained from owning or experiencing the product?
• The time you have saved?

A customer’s perception of value is very personal. It is usually based on several intangible factors as well as tangible factors.

The hard bit for a “competitive” business is to work out what you as a customer value – and then deliver that to you!

Jim Riley

Jim co-founded tutor2u alongside his twin brother Geoff! Jim is a well-known Business writer and presenter as well as being one of the UK's leading educational technology entrepreneurs.

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