Managing competitive advantages as factor in ensuring the competitiveness of enterprises in the market of Ust-Kamenogorsk
Table of contents: The Kazakh-American Free University Academic Journal №8 - 2016
Kunin Alexey, Kazakh-American Free University, Kazakhstan
Iskenderova Fatima, Kazakh-American Free University, Kazakhstan
In modern economic conditions, when
economic growth of the national economy gave way to a sharp drop, an important
role plays a factor painstaking and careful management of the enterprise in any
industry. This event is an important tool in a changing competitive market conjecture.
Given the unstable economic situation in the country and the tough competitive
conditions for doing business is urgent measures to control the competitive
advantages of enterprises. The fact of management of competitive advantages
implies the existence of a highly advanced business management system.
Availability of competitive advantages in
the economic downturn and competition allow exist to enterprises in competitive
activity. In itself, competitive advantages gives company a certain position in
the market, provides an opportunity to overcome the competition in the market,
resulting in higher levels of attractiveness to buyers.
Due to professional and skilled management
of the enterprise, competitive advantages tend to potential growth, develop
businesses, and increase profits.
Process of managing competitive advantages
is determined by its capacity, and at the same time - global. Capacity process
determines by its structure, process stages. It is driven by global processes
of the analysis, as the external environment and internal environment of the enterprise.
To manage the competitive advantage, it is
necessary to analyze the state of the external and internal environment of the
enterprise. American scientist - economist Michael Porter was put forward
stages of analysis of the competitive environment of enterprises. The
composition of these steps included:
- Structural analysis;
- Finding a firm position on a global
- Definition of company strategies;
- Determination of the value chain of the
- Analysis of factors holds competitive
advantages of the company;
- Analysis of the determinants of the
competitive advantages of the country;
- Development, validation and harmonization
of measures to improve the competitiveness of the country, industries,
- Audit and motivation to achieve the
planned results .
To determine the factors of competitive
enterprises and thus the competitive advantages of enterprises requires a structural
analysis of the industry.
The composition of the structural analysis,
Michael Porter has included:
- Analysis of «Porter Five Forces»;
- «PEST» analysis;
- «SWOT» analysis;
According to the analysis of Porter five
forces highlights the main threats to the enterprise, which are ranked
according to the degree of danger for him.
Results «PEST» analyzes show the main
factors that are important for enterprises, thereby affecting them.
«SWOT» analysis is essential for
businesses, since it demonstrates the strengths and weaknesses, opportunities
and threats for them. With a combined analysis of all models, the overall
result obtained by enterprises. The result consists of the strongest factors of
competitiveness, weak factors, that means weaknesses of the companies that need
To assess the competitiveness of the
strongest factors deemed appropriate to use the method of «polygon of competitiveness».
This method compares the competitive factors between several companies. By
using the method of expert estimations, the relevant points are set for each
factor, each enterprise. Therefore, the factors with the highest number of
points are similar as competitive advantages for companies.
According to the results of the first phase
of analysis there emphasize core competitive advantages of the enterprise. To
analyze the competitive advantages of the company management considered direct
action related to the management of the enterprises. According to the analysis,
it is the second phase of the competitive advantages management process of enterprises.
The final stage of the management process is focused on control phase .
According to the Michael Porter’s stages of
the analysis of the competitive environment, market research was made on the
sale of construction materials and in particular the study of enterprise «Megastroy
In the construction materials market of the
town of Ust-Kamenogorsk competitive environment of enterprise develops around
such competitors as: «StroyMart», «Comfort», «Beakris Mercury», «TNP».
1. Analysis of competitive environment by
the Porter model.
Analysis and evaluation of the threat from
Construction materials market in Ust-Kamenogorsk has a wide range of goods. For the most part, all the competing companies
sell similar products, so there is the probability of finding a substitute product.
Consequently, we find that the level from the substitute products is high.
Analysis and assessment of the level of
intra-industry competition was held in the parameters: number of players,
market growth rate, level of differentiation of the product on the market,
restrictions on price increases.
According to the analysis revealed that the
number of existing players in the region is about 3-10 enterprises. Due to the
current economic situation as a whole in the world and in the country in particular,
the rate of growth of the market of construction materials in 2014, gradually
decreased. However, since the end of 2015 there was a tendency to slow growth.
The level of product differentiation in the
market is great. However, it is worth noting that there are distinctive
features of the goods. The increase in prices is a natural measure to maintain
profits and reducing labor costs. In general, the level of intra-industry
competition is average.
Analysis and assessment of threats to the
market entry of new players was determined by identifying the height of
barriers to entry. An economy of scale at the initial stage of implementation
of the activity is a significant factor for new businesses, as it implies
additional costs for the implementation of an increase in scale.
In the market of construction materials of Ust-Kamenogorsk, there are 4 major players, which divided about 50% of market share. Among
these companies are: «Stroy Mart», «Comfort», «TNP», «Megastroy». The entire
range of products presented in listed companies has more than 70 000 names of
the goods that mean a high level of product diversity.
Investments and costs are quite large to
enter to the niche of construction materials, and return, respectively, is
fairly take long period of time.
Access to the distribution channels of the
goods, of course, requires some investment. As example, it would be preparation
of infrastructure for the sale of construction goods. Regarding the government's
policy, it is conditioned by the laws and regulations of the Republic of Kazakhstan (constitution, labor code, customs legislation, tax regulations, etc.).
Existing players are adapted to regulate
the pricing policy if it is necessary. The emergence of new enterprises, as an
option, can lead to an additional regulation of pricing policy. However, it is
worth noting that the major market players, under certain economic conditions
will not be able to reduce prices due to high labor costs.
In general terms, the threat of entry of
new players in the construction materials market in Ust-Kamenogorsk is not significant
and level is average.
Analysis and assessment of the market power
of buyers in the market.
This step demonstrates how customers are
committed to the sold goods of "Megastroy Oskemen" LLP and how high
is the risk of loss of the current customer base.
Analysis and evaluation of customer loss
risks are analyzed in terms of:
- The proportion of customers with a large
volume of sales;
- A tendency to switch to substitutes
- Low sensitivity (using elasticity);
- Satisfaction with product quality.
Part of the customers, who has a large
volume of the sales, accounted to wholesalers, construction companies. They get
most of the products of «Megastroy Oskemen» LLP for construction of facilities
on the East Kazakhstan region. There is propensity to switch the substitute
goods, due to a diverse selection of goods on the market of construction
materials in Ust-Kamenogorsk. Goods of «Megastroy Oskemen» LLP presented by
30,000 name of goods and each of them is unique in its segment, causing
interest among customers.
Price regulation of «Megastroy Oskemen» LLP
enterprise is one of the most important control measures. Attractive prices of
enterprise help to attract customers from outside and from other competitors.
It is necessary to say, that the analysis
and assessment of customers threats is defined as the average, but very close
to the high level.
The third stage is the analysis and
assessment of threats to the «Megastroy Oskemen» LLP from suppliers.
Analysis and evaluation of suppliers of
«Megastroy Oskemen» LLP conduct in terms of stability, reliability and the
ability to raise prices.
The main suppliers of «Megastroy Oskemen»
LLP are companies from Europe and Asia, which together create a group more than
30 suppliers of goods. Suppliers are always providing required volume of the
goods. These volumes of goods are always available for order from suppliers.
The main threat is the change of supplier, since it is related to the costs of
labor and getting empty warehouses.
Central Asian direction is priority for
suppliers and chance to create a cooperation and is the key for partners -
suppliers, because the economy is growing, not taking into account a slowdown
due to the economic situation around the world.
In general terms, it appears that the level
of threat posed by suppliers is an average, and is nearing a low. The reason
for this is confidential and honest relationship management with suppliers and
«Megastroy Oskemen» enterprise.
Summarizing the results of the analysis on
the model of the five forces of Porter:
- Threat from substitute products is high,
since its saturation in the market. There is a predominance of a similar
product on the market.
- Level of threat of intra-industry
competition is mean, as the company is a young, competitive and promising
market of the city of Ust-Kamenogorsk.
- Level of threat from new players in the
middle level, as the emergence of new players is rare in view of the existing
- Threat of losing customers exist, but not
- Threat from suppliers is large, but not
significantly. Cost of the search for new suppliers is considerable.
2. "PEST" analysis of «Megastroy
Oskemen» LLP - analysis of the factors of external environment of the
Legislative regulation of commercial
activities in the Republic of Kazakhstan (Law of the Republic of Kazakhstan dated April 12, 2004 № 544-II regulation of commercial activities; program of
support of small and medium-sized businesses).
- Rate of inflation in 2015 year - 13.6%
- Devaluation of the national currency;
- Purchasing power of consumers.
- Changes in the structure of income and
- Changes in population (slight increase).
- Development of competitive technologies;
- Introduction of new software;
- Information and communication, internet
Of course, not all of these macro factors
have equal influence on the activity to «Megastroy Oskemen» LLP. For determining
the most significant factor was produced an expert evaluation method, showing
the degree of influence on the activity of the enterprise.
In evaluation of analysis, it was concluded
that only 6 macro factors are relatively more important for the functioning of
the analyzed organization. As we see that the maximum positive impact on the
functioning of the organization belongs to such factors as: effective demand,
changes in the population, as much as possible the negative impact related to
factors such as inflation and the rate of inflation.
3. «SWOT» analysis of «Megastroy Oskemen»
LLP - analysis of the internal environment of the enterprise.
Strengths were identified according to the
- Organizational structure;
- Location and scale;
- Increase the number of employees
- The range of goods (30 000 names);
- Quality of service;
- Product quality;
- Price policy;
- Events and activities;
- Decentralization of trading activities
(trading room, wholesale, warehouse);
- Internal controls;
- Accounts dept;
- Staff turnover;
- Infrastructural dependence;
- Development of new market segments;
- Improving staff communication culture
with visitors, the formation of an atmosphere of hospitality and kindness;
- Reduction of debts receivable;
- Implementation of a unique product;
- Strengthening the position of existing
- Changes in customer preferences;
- Active advertising campaign of
- Expansion of the product range
As a result of «SWOT» analysis obtain the
strengths of the enterprise, which can be attributed to the competitive factors.
In addition, it is worth considering the weaknesses that are to some extent
able to influence the company's competitiveness factors. Therefore, it is
necessary to apply the management weaknesses for their change in a positive
According to the analysis, the matrix was
compiled, which includes factors of opportunities and threats for the company.
As a result, to increase the competitiveness of the enterprise, company’s management
can use the factor to increase the enterprise culture and the development of a
4. The results of analysis of competitiveness
based on a "polygon competitiveness" identified the main
competitiveness factors that have been identified in previous models of
- Range of goods;
- Commitment to the customer;
- Carrying out of actions;
- Sales area;
- Quality of service;
- Product quality;
- Price policy;
By ranking factors in the degree of their
impact on the company, we identified the major competitive advantages of the
Competitive advantages for the «Megastroy
Oskemen» LLP are the range of goods, advertising, promotions, pricing, quality
of service, quality of the goods.
The study on the management of the above
competitive advantages highlighted the main actions and measures which the
company carries out in order to maintain its competitiveness:
The range of goods covers large areas of
the enterprise. Management process of a variety of goods consists on the steps
and enters the competitive advantages of the control system. Consistent and thorough
implementation steps allow the company to competently manage the entire volume
of the existing product.
Advertising and marketing enterprise
«Megastroy Oskemen» LLP is based on the monitoring of the environment. The main
areas of advertising is television, newspapers, radio, outdoor advertising.
Marketing activity is caused by market research economic conjectures, searching
for effective ways of selling goods. One of them is now held shares. Their importance,
both for the enterprise and for the population of the city is very high.
The pricing policy of «Megastroy Oskemen»
LLP is based on the cost method. The essence of the method is that it takes
into account all the costs of the enterprise and includes them in the overall
cost of the product.
The quality of visitor services is one of
the main areas of the enterprise, which has received considerable attention. Human
resources management division is engaged in the activities of training and development
of employees by means of regulations. Documents are included in a single list
of enterprise, personnel management standards and referred to as "Common
Management Standards" .
Product Quality of «Megastroy Oskemen» LLP
confirmed the existing quality certificates. «Megastroy Oskemen» LLP makes
business only with partners who are responsible for its quality.
According to the results produced by the
study, it can be concluded that the process of managing competitive advantages
of the company is not possible without a thorough analysis of the competitive
environment of the company that put forward by Michael Porter. These test
results demonstrate the presence of specific competitive advantages of the
enterprise. Management in «Megastroy Oskemen» LLP makes clear existing
enterprise management system as a whole. Competitive advantage management
process in the competitive construction materials market allows being the most
Approach of competitive advantages
management process enables «Megastroy Oskemen» LLP promptly and adequately
respond to change in the environment of their operation and create a
competitive advantage in the long run will ensure the growth cost of the
business units and to achieve strategic goals.
Management relies on human potential as the
basis of organization, directs production activities to consumer demands,
flexibly responds and conducts timely changes in the organization, meets the
challenges from the environment and allows to achieve competitive advantage,
which together allows the organization to survive in the long term, while
achieving that its objectives.
Current economic conditions in construction
material market are determined by the dynamism and complexity of market
conditions, increased competition, changes in legislation. All this leads to
the development of a competitive approach to enterprise management process.
Analysis of the competitive advantages is
the initial step in the development strategy of the enterprise, which is based
on the study and evaluation of internal and external environment.
Consequently, it is the fact that the
management of the competitive advantages of the enterprise is a factor in increasing
the competitiveness of enterprise. This identity is clearly set out in the current
study on «competitive advantage management of company at the stage of growth.
1. Competitive Strategy:
Methodology of Analyzing Industries and Competitors / I. Minervina; - M.:
«Alpina Publisher», 2011. - 454 p.
Advantage: How to achieve high results and ensure its sustainability/ E.
Kalinina. - M.: «Alpina Publisher», 2008 (2nd ed. 2008) – 720p.
3. Data from portal
4. Data from the enterprise «Megastroy Oskemen»
Table of contents: The Kazakh-American Free University Academic Journal №8 - 2016