How does productivity affect competitiveness?


What is the effect of productivity on competitiveness?

In order to know how productivity affects competitiveness , several important economic concepts must be identified, namely productivity and competitiveness, and then knowledge of how productivity affects competitiveness. All of the above are terms in economics that concern many and various sectors. The beginning is the effect of productivity on competitiveness is:

  •  profitability 

Productivity affects competitiveness in production, in overcoming its competitors in terms of long-term profitability, in the year two thousand and fifteen, Brazil lost eighteen places in the ranking of the World Economic Forum , which annually evaluates the competitiveness of countries.

 However, other emerging countries showed economic growth and increases in competitiveness in the same period, this information, presented as an example.

So that it highlights the importance of understanding the dimensions that involve competitiveness, and therefore, it is necessary to coordinate between the private sector in the country and public bodies to reverse this trend and expand the industry's ability to compete in the international market.

 In this scenario, competitiveness is among the factors that influence the status of companies and make them organized to compete better in the market. A competitive company can market products and services efficiently and effectively, with suitable prices and quality to customers.

Therefore, competitiveness at the company level can be considered as a sustainable position for the company to confront the forces of competition in a particular business sector, to overcome its competitors in terms of long-term profitability.

  • competitiveness through factors of production

Competitiveness  can be visualized from different perspectives or dimensions. Competitiveness can be measured according to the level of analysis in the country, sector, and company. The competitiveness of a company depends on the relationship between competitiveness at the country and sector level, as well as its level of competitiveness.  

  • productivity by reducing costs

The impact on productivity is the only relevant measure of competitiveness, therefore, an increase in productivity means an improvement in competitiveness .

  • Systemic thinking by providing local employment

 Systematic thinking can be defined as a way of perceiving reality. In twentieth-century science, the total perspective is known as perspective. The way to understand the relationships between the different elements that make up a system is known as systemic thinking, including concern for the human element.

So, the bottom line is how productivity affects competitiveness , according to the study, which confirms the systematic literature review of the direct relationship between productivity and competitiveness, as well as the relationship between the measure of production efficiency and productivity.  

It should be noted that by identifying these elements and their relationships, companies can define specific actions, even in their most operational procedures, but with a significant impact on increasing their productivity and competitiveness. 

 Finally, productivity has emerged among the other drivers of firm competitiveness, confirming its importance in determining competitiveness per se. Future studies can be directed at analyzing other aspects identified in this study, as well as in emphasizing it and including more elements. 

Productivity refers to the physical relationship between the quantity produced (output) and the amount of resources used in the course of production (inputs), “It is the ratio between the output of goods and services and the resource inputs consumed in the production process.”

As for competitiveness , it is the apparent ability to design, produce and market an offer that fully, uniquely and continuously meets the needs of the target market segments, while connecting and withdrawing resources from the business environment, and achieving a sustainable return on the resources used. 

The difference between competitiveness and competitive advantage

Competitiveness is the five forces model which is centered on competition, which is synonymous with competition. In any industry, many companies compete with each other for customers by offering better or cheaper products than their competitors. 

Companies use software to understand consumers' interests and use methods to assess their own resources and capabilities so that they can figure out how to provide products and services that match consumers' interests and are better in quality and price than those offered by their competitors.

As for the competitive advantage, it is cost leadership. When following a cost leadership strategy, a company offers customers its products or services at a lower price than its competitors can. To achieve a competitive advantage over competitors in the industry, a successful cost leader controls costs tightly in all activities of its value chain.

The difference between competitiveness and competitive advantage is that competitiveness is based on providing the best service or commodity, while competitive advantage is offering discounts, or providing features that compete with others and distinguish them to attract customers. 

types of competitiveness

Three types of competitiveness can be distinguished , namely:

Competition in performance : The system is considered competitive in performance in terms of its ability to perform the same tasks compared to competing systems. If it is better than any competing system in the same tasks, then it is competitive performance.

Cost competition : the system is considered competitive in terms of cost to the extent that it costs less to build and operate, or in one of them to build or operate at a lower cost than its competitors, if it is more expensive, then it is less competitive in terms of cost, and if it is more expensive They are not competitive at all in terms of cost.

Competition at all: It is the third type of competitiveness, and it includes everything that has been missed so that the company competes in everything, whether performance or cost.

Increase competitiveness

Increasing competitiveness can be done by following the following guidelines:

  • Focus on core competencies

 Today, companies in every industry are racing to add more value than their competitors. To do this, many are deepening their core competencies and outsourcing more and more non-core functions to other premium producers.

  •  Attracting and retaining the necessary talent

 As companies focus on their core competencies in hopes of becoming the best in the world at what they do, they increasingly require highly skilled employees with the ability to think critically, solve complex analytical problems, and manipulate cutting-edge technologies, and therein lies the catch.

A skills deficit is emerging at all levels which will only become more acute as unemployment rates decline in the world. This point is best illustrated by the fact that although the unemployment rate in the United States was around 9 percent during 2011.

But 600,000 manufacturing jobs in the United States, for example, are not being filled, says the University of Michigan. If companies cannot find workers with the necessary skills, the company's growth potential will be limited.

  •  The trend is more towards customer focus

 There is no doubt that the customer is paramount today. Consumers in every country usually have access to a greater range of products and services at increasingly attractive prices. As a result, producers of both goods and services need to become more customer-centric and cater to needs and wants. Jupiter changing to an ever greater extent. 

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