Contemporary Management Issues

Introduction:

With more and more fierce market competition, much attention has been paid to the research on corporate competitiveness.

Enterprise Competitiveness can be tracked back to 1776. Adam smith raised the division of labor theory. But the academia by conscious researches this theory at the start of the 1980's.

Concept of Enterprise Competitiveness

Business community and economy community thought enterprise competitiveness played an important role in ensuring the survival and development of their respective enterprises. Enterprise competitiveness is based on industries competitiveness and country competitiveness. And this theme is central to our competitiveness study.

Argument from the America side: A. M. Spence from Harvard University thinks that enterprise competitiveness means one

enterprise in a single country can power of trade in international market. George MпјЋCпјЋFish chairman of the America committee for competitiveness thinks that enterprise competitiveness means the enterprise has stronger ability to generate and apply knowledge than competitor. The enterprise competitiveness is as a kind of knowledge.

Argument from the Europe side: In 1990, World Economic Forum (WEF) definitions in enterprise competitiveness: An enterprise has produce more wealth in an optimal state of balance than competitor in international market.

Michael Porter represents school of market structure. The industrial organization theory is the mainly fundamental principle. Michael Porter thinks that industrial competition structure is on the premise that enterprise gains competitiveness advantage. This is a fundamental viewpoint of Michael Porter is the business enterprise wants to gain competitiveness advantage lie on how to confirmation and actualization the competition strategy in industrial competitiveness environment.

1. Michael Porter’s Five Forces Model

An Enterprise’s competitiveness is correlative with the competitors in the same industry.。

To foster and form enterprise competitiveness have to investigate internal and external industry factors.

He puts forward five kinds of basic competitive forces: threat of substitutes. He has identified five forces that determine the state of competitiveness in a market. The forces also influence the profitability of firms already in the industry. The fifth force is the degree of rivalry that currently exists among firms already in the industry. These five forces are summarized in below diagram.

Figure 1: Porter’s Five Forces

From Michael Porter, Competitive Advantage, Simon & Schuster, New York, 1985, p. 5

(1)Barriers to Entry

(2)Bargaining Power of Suppliers

(3)Threat of Substitutes

(4)Bargaining Power of Buyers

(5)Rivalry Determinants

This material is a summary drawn from Porter’s Competitive Advantage (1985). The material in question is on pages 5 – 8.

2. Three general of Strategy

Michael Porter thinks that the enterprise can adopt different ways to gain the five forces.The main three strategies are (1) Overall cost leadership strategy; (2) Differentiation strategy; (3) Focus strategy. He argues, can be used singly or in combination to create a defendable position and to outperform competitors, whether they are within an industry or across nations.

Differentiation strategy means that the enterprise’s price, brand, service and so on are quite different with the other enterprises. It through unique products attracts customers to enlarge market share.Differentiating the product or service, requires a firm to create something about its product or service that is perceived as unique throughout the industry.

3пјЋCore competencies

Hamer and Plamhled, business strategists, initiated the new concept, core competence, in Harvard Business Review in 1990,which