Company Strategy and Competition, Standard Model of...

Company strategy and competition

In ensuring national competitive advantage, an important role is played by the corporate structure and the competitive environment within the country, resulting from the competition of firms, especially domestic ones. M. Porter categorically denies the potential utility of concentrating production at one national firm, all the more protected by state support. Most of these firms are characterized by low efficiency, wasteful use of resources, low productivity. Sharp competition in the domestic market encourages the company to go abroad, contributes to the search for foreign markets. Successful firms hardened in home struggle, use the competitiveness acquired in this struggle on tougher (and burrowing and cruel) world markets. The more bitter the struggle at home, the more likely that such firms will stand the test of time and will dominate overseas.

Competition, in terms of Porter, should be global in nature. It is necessary to sell your goods all over the world, and not only in the domestic market. An important place in ensuring the competitiveness of domestic products Porter devotes a firm strategy and organizational structure. At the same time, in his opinion, it is impossible to single out any universal corporate strategy or management system that would be equally applicable for all firms in all countries. Italian firms, leading in the production of furniture, lighting devices, shoes, are characterized by the absence of rigid forms of management and the ability to rapidly change management structures. For German companies that effectively specialize in the field of optics and precision engineering, a rigid centralized control system is typical.

In addition to those discussed above, M. Porter also includes the role of random events in the overall system of parameters that determine competitive advantages, which can either strengthen or weaken the existing competitive advantages of the country. Random events are those that have little in common with the conditions for the development of the country's economy and which often firms or the government can not influence. The most important events of this kind include new inventions, major technological changes (breakthroughs), sharp changes in resource prices (for example, the "oil shock"), significant changes in world financial markets, wars, etc.

The government of the country plays an important role in shaping the national competitive advantage. With its monetary, fiscal and customs policies, it directly affects the parameters of demand and factors of production. Carrying out antimonopoly regulation, the government has an impact on maintaining an optimal competitive environment in the leading sectors and sectors of the national economy, promoting the development of related and related industries that interact with the leading export industries.

Thus, M. Porter's theory now most fully reflects all the most important parameters of national economies that determine in their totality the competitive advantages of a country.

Standard Model of Foreign Trade

Consider the following: when analyzing foreign and international trade it is impossible to proceed from the use of any one approach (model). Practical economic life and conditions in which real economic processes are carried out are diverse, complex and interdependent, they are developing so dynamically, creating new conditions not provided for by any theoretical models of the past. Therefore, to achieve an objective objective, it is necessary to apply, firstly, all or almost all known approaches in the field of foreign trade, and secondly, new methods and techniques, since previously described are often not adequate to new processes and phenomena. The basis for developing a standard model of foreign trade can identify several levels.

The first level includes the following basic principles:

• principles that operate in open market economies;

• types of economic growth;

• The production potential of the national economy.

The production potential of the national economy is described by the limits of production opportunities, the essential differences of which are not only incentives, but also the most fundamental base for foreign trade. Further, the production capacities of any country determine the nature of the aggregate relative supply (including the production of the external sector of the economy).

Equilibrium in the world market is determined by worldwide relative demand and worldwide relative supply. The presence of common basic features in these concepts (approaches, models) gives grounds to consider them as particular cases of one, more general model, acting as its own elements.

The second level covers the analysis of the following relationships:

• between the production capability boundary and the relative supply curve;

• between relative centers and relative demand;

• between world equilibrium prices through global relative supply and demand;

• between the welfare of the country and the conditions in foreign trade (the ratio of the average price of the country's exports to the average price of imported goods).

The third level. The used qualities of the basic factors are subject to identification in the world, sectoral, country aspects. These factors include:

• features of the economic growth of countries;

• trading conditions existing in countries;

• trade policies of countries;

• Tariffs and export subsidies in countries;

• Redistribution or international transfer of income.

Pragmatic approaches

Specific trade and economic realities have an impact on various theoretical designs and approaches to international trade, which is formed under the determining influence of foreign trade policies of specific states and their agents in the field of foreign trade operations. This means that practical approaches are dominated by pragmatic approaches, often formed on the basis of the synthesis of many theories, sometimes seemingly quite contrary in the nature of the regulation of international trade. They become predominant, especially during periods of crisis development of the world economy and, accordingly, world trade or under conditions of some uncertainty in the prospects for the future deployment of the world economic situation.

When looking for solutions it is considered necessary to turn to the experience of previous generations, this is usually a sign of troubled times. So, today recall, for example, the "Marshall Plan" or Tobin tax to counter pollution, financial instability, or the Keynesian model of spending stimulation to combat the deflationary hazard. The source of trouble is, as indicated in one UNCTAD report, "... in the gap between rhetoric and the reality of the liberal international economic order." Nowhere is this gap so obvious as in international finance and international trade. While extolling the virtues of free trade, governments have a burning desire to intervene in this process to protect their populations and their producers from the destructive winds of international competition. Such vestiges of theories of neo-mercantilism, for example, largely contributed to the loosening of the balanced package of agreements reached during the Uruguay Round. "

Of course, the conclusion of UNCTAD specialists that in "loosening" Uruguay Round are guilty "survivals of mercantilism", it seems a strong exaggeration. The main reasons for the lack of progress in international trade after the conclusion of the Uruguay Round, in particular during the Doha Round, are concealed in the selfish interests of the world's largest trading powers who wish to consolidate trade regimes that would benefit their large companies at the expense of developing and other countries (transitional). Of course, they relied on modern economic theories, and above all, on the theory of neoliberal international monetarism, which rest on the fundamental idea of ​​removing all barriers to the internationalization of goods, trade, cash flows, and so on. trade and economic powers preserve the "protective barriers" in respect of those domestic producers who are involved in the production of "special kind of products" (for example, in agriculture - USA, Canada, EU). These contradictions were revealed during the new stage of WTO negotiations (Round Doha, Qatar, 2001) for thirteen years after the announcement of this new round of international trade negotiations.

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