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Competitive factors that
determine dynamics of the market
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Competitive factors that
determine dynamics of the market
Doct. econ.sci. Aimen Anuarbek
Talhauli
Taraz State University named
after M.Kh.Dulati , Taraz (Kazakhstan)
Competition accomplishes several priorities in a market system. It helps
to organize economic activity and to answer such fundamental questions as what,
how much and how to produce, how to allocate goods and services. Competition
produces prices that affect behavior of buyers and sellers and allocation of
resources. Further, competition is a mechanism to direct activities of
companies pursuing profits in the public interest. Finally, competitive
activity is an important factor causing changes in the markets: it stimulates economic
organization of production and development of new technologies, products and
marketing strategies.
The course of market reforms requires proper accounting and strategic
use of real opportunities for competition. However, related issues remain unresolved,
and apparently will ever be complex and not always theoretically transparent.
As in the past, "one of the most difficult and poorly understood aspects
of the concept of comprehensive systems is related to competition, as a part of
the environment of the organization” [1]. This study confirms that the existing
interpretation and definition of competition vary over a fairly wide range.
The most common definition of competition is given by the well-known
researcher M. Porter: "Competitive strategy must be based on a
comprehensive understanding of the industry structure and the process of its
change. In all sectors of the economy - whether it acts only on the domestic
market or on an external - the essence of competition is expressed by five
forces:
1. threat of new competitors;
2. threat of substitute products;
3. ability of suppliers of components to bargain;
4. ability of buyers to bargain;
5. rivalry between existing competitors.
The value of each of the five changes varies from industry to industry and
determines the profitability of industries [2].
In other studies, the notion of competition is determined from other
positions. So, R. Makonel and L. Brue believe that the mandatory conditions of
competition are: "the presence in the market of a large number of buyers
and sellers of any particular product or resource" and "freedom for
both buyers and sellers to act on those or other markets, or leave them”.
In the second revised edition of Dictionary of the market economy states:
"The competition is contest between the speakers on the market,
enterprises, aiming to provide the best opportunity of marketing their products
to meet the diverse needs of customers. There are always the tough
competition producers in the world market. A substantial increase of competitiveness
of domestic goods requires for successful performance in foreign markets. When
you import the same use of foreign seller’s competition allows reaching more
favorable terms of purchase ".
Different
definitions of competition usually complement each other. At the same time,
each of them, taken separately, can not be considered sufficient. This is
reflected in the fact that, in characterizing some very important signs of
competition, they overlook general theoretical aspect of the problem - the
essence of its inherent economic relations.
Results of the analysis provide a basis to assert that the competition has
the following defining characteristics:
1. manifested in the reproduction of product’s technical and economic
parameters at all stages of its design, manufacture, and after sales services
and consumption (operation);
2. is the backbone component of market relations, defining the totality of
the inherent elements (production costs, the formation of prices, adaptability
of enterprises and organizations to market needs, the needs for goods and
services, etc.);
3. is the foundation of market-based farming, of the basis of the formation
and manifestation of competitiveness, of economic law, which expresses the
objective categories of competition (consistency) between the market subjects,
influences to the nature and form of the relationship between them, defines
problems of federal and regional levels.
"Competition
is an incentive for growth and development; competitor's enthusiasm to update,
search, selection and promotion to the target; knowledge of competitors, the
ability to select partners, the thirst for success" [3].
Translated
from Latin “to compete” means “collision, clash". In fact, competition is a
struggle.
Price competition is a battle between manufacturers to receive additional
profits by reducing production costs and consequently lower prices for the
products of the same quality. Types of price competition - price controls,
price leadership, setting of share of influence on the market, the agreement,
include the secret, etc. Types of non-price competition - raising the technical
level and quality of goods, ensuring its market innovation, advertising,
after-sales service (service), etc.
Infrastructure changes encourage firms to apply the relevant competitive
mechanisms. Capture of the domestic market of Kazakhstan by foreign
corporations leads to a loss of competitive advantages of kazakhstani industry.
A domestic product, such as electronic equipment, was
ousted from the market because of the massive supply of equipment by foreign
firms. This has led to chronic shortages of working capital of enterprises and
organizations of the kazakhstan electronic industry, and most importantly,
to almost-complete dismantlement of works on research and development, without
which the creation of a competitive technology impossible. At the same time, foreign
corporations, mastering the kazakhstan market, began to receive
additional funds and opportunities to improve the efficiency of their production.
It should be noted that various factors contribute to different kinds of
competition.
Competition begins at the stage of development of new products that will be
delivered on old or new market. Direct competition occurs in the case of
competitive relations without intermediaries. Competition can be caused by both
natural factors (oil at shallow depths, the iron content in ore, etc.) and
geographical actors (the costs of transporting goods, etc.).
Functional competition arises from the fact that different goods and
services can meet the same requirement in different ways (for example, the
necessary transport can be carried by road or rail). Species competition arises
in cases where the goods that must meet to same needs, different from each
other by their properties, which affect to the extent of such satisfaction.
Subject competition manifests itself in the case when companies offer customers
virtually identical goods (cars of same class). Subjective competition occurs
between firms, chosen field of their activity provides them stable position in
the market.
Unfair
competition is aimed at discrimination against competitors by spreading false
rumors about them, forging products, misappropriation of competitor’s
trademark, its trade name or mark, the distortion in advertising information
about the real properties of products, unauthorized use or disclosure of
another's confidential scientific, technical, manufacturing, marketing or other
information, delivery patent "impure" products (they can be arrested
and fined).
From the
above we can conclude that the competition - a competition between actors
(competitors) who are interested in achieving the same goal. Economic sense of
competition is competition between entrepreneurs for getting the highest
profit.
The main factors of competitiveness are: domestic macro-economic
potential, level of management from the perspective of innovation; profitability
and responsibility; scientific and technical potential; the degree of
participation in the international division of labor, trade and investment
flows; quality and efficiency of the financial system; the infrastructure; the
state and qualifications of human resources; socio-economic and political
situation.
We give some definition of "competitiveness."
"The competitiveness of the goods - is the ability of products to be
more attractive to the consumer (buyer) in comparison with other products
similar type of destination due to better match its quality and cost
performance requirements of the market and consumer's evaluation" [3].
«The
characteristic of the goods reflecting its difference from the goods-competitor
on a degree of conformity of certain public demand, on the one hand, and with
another,-on expenses for satisfaction of this demand refers to as competitiveness»
[3].
«Competitiveness - capacity to carry out the
activity in conditions of market attitudes and to receive thus profit,
sufficient for scientific and technical perfection of manufacture, stimulation
of workers (their work) at a high qualitative level » [3].
It is necessary to note especially, that in
the economic literature, about volume number and in foreign, competitiveness is
interpreted differently depending on character of object to which this concept
concerns. Signs and factors of competitiveness dynamic on levels of management hierarchy
are specific: enterprise - branch - region - national economy.
The
concept of competitiveness is studied most full and structured at a level of
the enterprise which activity is carried out in conditions of the open market. The
concept of competitiveness gives in to perception more difficultly at a
macrolevel, that’s why it reflects positions of national economy and its
capacity to strengthen of them - to step up economic growth, to raise an
occupation level of the population and to increase actual incomes of citizens.
Despite of already continuing for a long time
discussions about concept « national competitiveness » its uniform definition
is not found yet. Important factor is that quality of
production and efficiency of its manufacture were investigated basically at the
prereform conditions in our country. A variety of competitive fields requires
formation of methodology research of competitiveness in all areas of its
display, in various economic and tax modes.
At a
level of micro-economics competitiveness of production (services) is defined by
a parity of its quality and the price, conditions of delivery, forms of
payment, a type of transportation and other factors. Revealing of stable
interrelations between made expenses and quality of production, as well as parity
between other parameters of compared objects activity is a challenge of their
competitiveness analysis. Using of parametrical investigative techniques
approaches to an assessment of competitiveness on mesolevel (a level of
branch). There are used such parameters as labor productivity, research
intensity and a capital intensity of manufacture, a technological level of
production, a level import substitution, degree of the
international cooperation communications etc.
From the
above we can conclude: as a lever and a means of competition, competitiveness -
a category of social development is manifested in the rivalry between objects
to achieve specific goals.
As for
competitiveness, it is techno-economic category, estimated by a set of
technical and economic indicators, factors and conditions.
The technical
indicators, factors and conditions include the quality of products, including
its reliability, ergonomics, environmental friendliness, safety, also design
and the conditions before and after sale services.
Economic indicators, factors and conditions are as follows: rating
(prestige) of the product in domestic and foreign competition on the basis of
good information and advertising, novelty, demand, production costs,
profitability, price, leasing, efficient of capital using, payment terms and
delivery, the efficiency of innovation and investment processes, selection
factors of the market and technology marketing to promote products on the
market, the value of exports, the level of customs duties, income etc.
The main factors of competitiveness are: personnel
and their qualifications, the quality of labor, effective organizational and
economic production management, quality management systems of innovation
processes and product manufacturing, advanced manufacturing and equipment
technology, maintain quality (maintenance services, service), technology
acquisition and processing, standardization and certification of products,
mortgage lending, investment, use of information and marketing system for
forecasting market conditions, risk management, value analysis.
Reference
1. Ronald H. Coase, The institutional structure of production / / The
nature of the firm, trans. from English - M.: Delo, 2001, p.342
2. Trubilin A. Market of agro production / / Agriculture economics of
Russia, 2002, ¹ 10, p.29
3. Porter M., International Competition. - M., 1993. - p.
38-182
Resume
The article deals with various
definitions of competition, key factors of ensure the competitiveness of
products. Also on the basis of the study identified the defining
characteristics of competition and competitive
factors that determine dynamics of the market.
Different definitions of competition usually
complement each other. At the same time, each of them, taken separately, can
not be considered sufficient. This is reflected in the fact that, in
characterizing some very important signs of competition, they overlook general
theoretical aspect of the problem - the essence of its inherent economic
relations.
Results of the analysis provide a
basis to assert that the competition has the following defining
characteristics:
1. manifested in the reproduction
of product’s technical and economic parameters at all stages of its design,
manufacture, and after sales services and consumption (operation);
2. is the backbone component of
market relations, defining the totality of the inherent elements (production
costs, the formation of prices, adaptability of enterprises and organizations
to market needs, the needs for goods and services, etc.);
3. is the foundation of market-based
farming, of the basis of the formation and manifestation of competitiveness, of
economic law, which expresses the objective categories of competition
(consistency) between the market subjects, influences to the nature and form of
the relationship between them, defines problems of federal and regional levels.