Competitive Ability as an Instrument for ex-ante Evaluation of Enterprise’s Competitiveness

Monika Mickeviciene, Leonas Zitkus

Abstract


Competition is the principal form of interaction of economic entities (in this work - enterprises) in market economy. It can be perceived statically, i.e. as a specific structural fluxion of the market which implies 'tension' between enterprises, or dynamically, i.e. as a process or 'struggle' of market participants in the course of which a new situation is formed. The position of the enterprise in the market as well as its potential in the competitive struggle is traditionally described as competitiveness.

In regard of the necessary knowledge that the companies as the participants of the market must have at their disposal, the procedure of selection of resources and actions to facilitate the acquisition of future competitiveness is of the utmost importance in theoretical and practical studies. In other words, it is necessary to define in advance the state of things which can lead to gaining competitive advantage. This state should be determined by studying the expected efficiency of actions performed on the basis of the enterprise's competitive potential and which can be regarded as the potential of successful competition.

The above mentioned circumstances are the main motif to introduce an additional element into the structure of competitiveness which can provide the possibility for all concerned (researchers, experts, managers) to identify and assess the resources and related actions which are to determine future competitiveness of the enterprise. Ability to compete consists of two interrelated parts, i.e. ability as physical possibilities to do something (resources, labor, equipment, raw materials, operating abilities, etc.) and knowledge, i.e. knowing how to efficiently make use of competitive potential (how much and, which is most important, what resources are necessary and how they are to be utilized).

This work suggests the competitive ability assessment model which consists of five successive and interrelated elements:

‒        formation of the list of resources, operational capabilities and external circumstances;

‒        identifying the importance of resources, capabilities and external circumstances within the framework of the sector;

‒        assessment of the enterprise's strength' of competitive potential elements (competition instruments);

‒        assessment of the enterprise's management competencies (i.e. knowing how to compete);

‒        synthesis of the assessed results and the formation of opinion about the enterprise's capability to compete.

The assessment of competitive ability is not an end in itself. The measured level of this ability can serve as a certain instrument to be used in making managerial decisions. The further summary of the results or the decision to make use of partial indexes depend on the needs of those applying this instrument (i.e. the goals of the planned analysis).

http://dx.doi.org/10.5755/j01.ee.22.4.717

Keywords


competitiveness; competitive ability; competitive potential; strategic resources; core competencies; assessment model; assessment methods

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Print ISSN: 1392-2785
Online ISSN: 2029-5839