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Файл:Competition theory. Учебное пособие.pdf
THE OUTLINE OF THE COURSE
"THEORY OF COMPETITION"
1. Definitions of the concept “market competition” in the
relevant literature.
2. Competition as a fundamental element of a market
economy.
3. A firm as the main agent of competition: a history,
definitions and functions of a firm.
4. A firm as the main agent of competition: a history and
lifecycle of a firm.
5. Market and market niches.
6. Fundamental and implemented market niches.
7. Approaches to define the concept of competitiveness
assessment.
8. Basic principles of product competitiveness.
9. The value of goods (for institutional consumers).
10. The value of goods (for individuals).
11. The idea of Kano’s model.
12. Characteristics of goods in Kano’s model.
13. The compensation principle for products and firms.
14. Simon's matrix "objective/subjective quality".
15. Product analysis by means of Simon's matrix
"objective / subjective quality".
16. The key characteristics of business competitiveness.
17. Levels of managing competitiveness at enterprises.
18. The efficiency base of a large-scale production.
19. Efficient boundaries of a large-scale production.
20. Mass production strategy, creation of benefits for the
consumer.
21. Mass demand and creating incentives for the
consumer.
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APPENDIX D
22. The strategy of suppressing competitors, "benefits
from the first move/action".
23. The strategy of suppressing competitors, the position
of a vice-leader.
24. Emergence of violent firms, three directions of
investments.
25. The evolutionary cycle of violent firms.
26. The developmental stages of violent firms.
27. Hinterkhuber's matrix "The production competitive
potential (value)".
28. Assessing the strategic centre of a firm by means of
Hinterkhuber's matrix.
29. Product differentiation as the basis for the strategy of
patient firms.
30. Benefits of a producer from differentiated products,
production efficiency and consumption.
31. Factors of goods differentiation, and benefit from
product differentiation.
32. Characteristics of the strategy of patient firms, the
competitive exclusion principle (Gause’s principle/Gause law).
33. The strategy of specialized firms in fighting against
competitors.
34. The competitive exclusion principle with regard to
the strategy of patient firms.
35. An evolutionary cycle of patient firms.
36. Characteristics of the pricing policy of both violent
and patient firms.
37. Radical innovations as a focus of exploring firms.
38. Theory of economic development by J. Schumpeter.
39. Characteristics of radical and gradual technological
progress.
40. Radical technological progress as a focus of explor-
ing firms, different aspects of motivation.
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41. A pre-market stage of the strategy of exploring
firms, and organizational problems of pioneer projects.
42. Venture capital as a way to solve the problem of
financing pioneer projects.
43. An evolutionary cycle of exploring firms.
44. Hemmel and Pralada matrix, the consumption value
of new goods.
45. Assessment of buyers’ conscious and unconscious
needs by means of Hemmel and Pralada Matrix.
46. Rogers's distribution and the time needed to get used
to an innovation.
47. The mass production stage of the strategy of exploring firms and the time needed to get used to an innovation
(Rogers's distribution).
48. A bridging potential role of small business in the
economy, advantages of a small firm.
49. Local needs and their role in the market.
50. The strategy of small business in fighting against
competitors.
51. Flexibility as a central element of the strategy of
commutant firms, the ideology of "guerrilla marketing".
52. Types of commutant firms.
53. Dangers of growth for a small firm, and the strategic
weakness of commutant firms.
54. Competition, and the structure of a modern market.
55. Objective laws of competition.
56. Competition and technological progress, the
innovation business.
57. Problems of the innovation business in the Republic
of Belarus.
58. The role of innovations; innovative activities in facilitating the national competitiveness.
59. Organizating transnational innovation activities.
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60. Forms of the internationalization of innovative
activities.
61. Competitiveness of firms associations, the
mechanism of creating a cluster; the structure of a cluster.
62. Transnational corporations and their competitive
advantages.
63. Influence of transnational corporations on the
economy of the Republic of Belarus.
64. The antitrust law in Belarus and its influence on
competition promotion and mainstreaming.
65. Privatization and decentralization; their influence on
competition promotion in Belarus.
66. National interests of the Republic of Belarus: threats
and the problem of prioritizing.
67. Economic trends of the Republic of Belarus.
68. Problems of ensuring competitiveness of the national
economy of the Republic of Belarus.
69. The main problems and developmental perspectives
of domestic companies.
70. National interests of the Republic of Belarus; the
problem of prioritizing.
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APPENDIX E
BASIC CONCEPTS
Flexibility of the business management system is a
compliance of the organizational structure, methods, principles
and controlling mechanisms of the ERP to the purposes, functions and strategy of an enterprise and its branches.
Direct fixed costs is a kind of fixed costs that do not rise
even if production capacities extend.
"Proud lions" is the first stage of the development of
violent firms. A lion company quickly grows thanks to the
market success of its products and has almost no by-product
production (i.e. it is poorly diversified). As a rule, it takes the
technological lead in the industry.
Diversification is a process of the development of adjacent industries (industrial subsectors) exercised by a firm.
Product differentiation is a process of creating product
varieties that differ in quality, service, advertizing and market-
ing, as well as of focusing on different groups of consumers.
Natural monopoly is a market situation when one domi-
nating firm is making goods or services more effectively than
some rival companies.
Goods competitiveness stock is a difference between the
consumption value of goods and the price for which it has been
really sold. For a consumer, it represents an unpaid (free) share
of the consumption value, for a supplier, it is a quantitative
measure of his or her goods competitiveness.
An innovation is a resulting effect of implementation of
the innovation into the production, which brings more profit
than a simple extensive growth connected with investment of
additional labor, land or capital resources.
245
A cluster is a group of geographically adjoining intercon-
nected companies and related organizations characterized by
common activities and complementarity in a certain industry.
Goods competitiveness is a degree of its attractiveness
for the consumer making real purchases.
Competition is an availability in the market of a large
number of independent buyers and sellers, an opportunity for
buyers and sellers to freely enter the market and to leave it.
Competing firms are the firms having a wholly or partly
coinciding fundamental niche.
A measure of efficiency for a specialized production:
product specialization can only be effective if the goods value
of specialized goods is higher (from a consumer’s point of
view) than additional production costs.
Simon's Matrix "objective/subjective quality": goods
competitiveness depends not on its objective technical characteristics, but rather on the value subjectively ascribed to the
product by the consumer (the so-conscious value). This circumstance serves as a stumbling block in many companies’
operation. In order to avoid problems like those, it will be useful to analyze the products by means of Simon's Matrix.
H. Hinterkhuber’s Matrix "competitiveness/the value
of production is a matrix that is used to assess the conditions
of the strategic centre of a company and elaborate recommen-
dations on how to strengthen it.
Hemmel and Pralada's Matrix "conscious / unconscious needs" is a matrix helping to analyze buyers’ conscious
and unconscious needs. Unconscious needs make up one of the
most important activity fields of exploring firms. In the case of
success, these needs provide the latter with great opportunities.
"Mighty elephants" is a second stage of the develop-
ment of violent firms. Elephant firms are characterized by an
especially large size, average but steady growth, vast diversifi-
cation, and a network of foreign branch offices. Under favour-
246
able conditions, a violent firm can function as "a mighty ele-
phant" for many decades.
A morphological analysis is one of the most widespread
methods of a product differentiation consisting in conscious
searching for various combinations of different characteristics
of goods for the purpose of a subsequent market introduction of
goods that have not been produced by the competitors yet.
"Slow hippopotamus" is a final stage of the develop-
ment of a violent firm. The hippopotamus firm is still big in
size but it loses its developmental dynamism. It is characterized
by an excessive diversification (it is dissipating its efforts) and
gradually increasing lack in technology.
The consumption value of goods is a good price for a
buyer to pay for the product.
"Benefits from the first move" is a principle according
to which a firm that is taking the lead in the industry, gains so
many advantages over its competitors that it is usually capable
to hold its dominating positions for many decades.
The compensation principle (for goods): if you are im-
proving some characteristics, it makes other characteristics de-
grade to some extent.
The compensation principle (for firms): if a firm gains
success at certain market segments, it loses its control over
other market segments or has to face a reduction in opportuni-
ties to achieve success there.
The competitive exclusion principle is a principle im-
plying that two or more firms never occupy a completely coin-
ciding market niche. If this happens, a long-term competition
rejects (excludes) the weak. The latter can survive only if it
changes the segment of the market.
Rogers's distribution: American economist Everett Rogers divided the time interval of a product (starting with the in-
troduction of an innovation to the market finishing with its
transforming into a common product) into five equal periods.
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These periods appear to be different for different products in
terms of their absolute value. However, buyers starting to use
goods during the first, second and subsequent periods are guided by the same principle. It has to do not with the features of a
specific product, but rather with people’s social psychology.
An implemented niche is a part of the fundamental market niche that the firm managed to both occupy and held while
fighting against its competitors.
A market is a public institute that brings together the
seller and the buyer for making transactions about purchasing
and selling certain goods and/or services.
Market competition is a struggle of firms for limited solvent demand of consumers on available segments of the market.
Market segmentation is a division of a single market of
certain goods into a number of rather independent markets of
product varieties differing in both price and/or quality and on
their focus on different groups of consumers.
Fixed costs are costs that do not change if the current
production volume changes. However, most types of fixed
costs still grow if the production capacities expand; that is why
they are often referred to as "conditionally fixed costs".
"McKnight's philosophy" is a policy of the company
which is implemented in the form of two rules:
1. The company applies different methods that help assess the progress of inventors and managers. After all, negative
results of the performance of the former cannot be considered
as an absolute failure, otherwise people will simply stop looking for something new.
2. "The rule of 15 %": with the managers’ official ap-
proval, companies spend no less than 15 % of the working
hours on the development of their own innovative ideas. They
do not only have enough time for the development of the idea,
but in certain cases they are given money to buy the necessary
equipment.
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A firm is an organization concentrating their resources
on and using them for production of goods and/or services for
the purpose of profit earning.
A fundamental market niche is the number of market
segments that are comfortable with the goods and/or services
made by this firm.
An economy of scales is a reduction in costs required to
produce a product item, which is possible when an enterprise
grows in size. It can be observed until an enterprise reaches
some optimum, after which the costs start growing.
A competence center of the firm is the body of abilities,
knowledge, technologies that provide the firm with competitive
advantages in comparison with other firms.
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APPENDIX F
TESTS
TEST 1
Variant 1
Answer the questions:
1. Name the advantages of the individualistic character
of a market economy.
2. In what way is the selective character of the competi-
tive mechanism revealed?
3. What is the major function (of the five ones) to influ-
ence a firm’s market success?
4. What does the intra-branch competition cause?
5. What factors can increase the profit of institutional
consumers?
6. What is the main difference between the value of
goods for individuals and that for institutional consumers?
7. List competition methods.
8. What defines the sales volume within an oligopoly?
9. What do we call the limits that make a transaction
possible or impossible for a consumer?
10. Name the main segments of Simon’s matrix.
11. List the key characteristics of an enterprise using tac-
tical methods of managing competitiveness.
Say whether the statement is true or false. Give your
reasons:
1. Mass sales are affected by the competitiveness degree
of the goods.
2. If the answer to both the positive and negative questions satisfies the buyer, we deal with the quantitative characteristics of the goods.
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