One criterion is used to assess the competitiveness of a company on the market is its turnover compared to other companies that are in the same industry. This comparison allows us to see the market share held by the company, if the company is a market leader and even see the number of client that owns the company.

Competitiveness can be defined as the ability to face competition and to be successful when facing competition. Competitiveness would then be the ability to sell products that meet demand requirements (price, quality, quantity) and, at the same time, ensure profits over time that enable the firm to thrive. Competition may be within domestic markets (in which case firms, or sectors, in the same country are compared with each other) or international (in this case, comparisons are made between countries). Competitiveness is therefore a relative measure. It is, however, a broad concept and there is no definitive agreement on how to measure it precisely. However, there is more or less a consensus on which measures could be used to assess competitiveness.

Measurement can be made according to two disciplines: i) the neoclassical economics, which focuses on trade success and which measures competitiveness with the real exchange rate, comparative advantage indices, and export or import indices; and ii) the strategic management school places, which places emphasis on the firm‟s structure and strategy. In the latter, competitiveness is defined as cost leadership and non-price supremacy, with cost competitiveness measured according to various cost indicators, as well as productivity and efficiency. Particular emphasis should be given to productivity (and its efficiency component), which is generally agreed to be a part of competitiveness, albeit not often cited as such in empirical studies.

First, competitiveness should be measured with respect to a benchmark as it is a relative concept. Firms must be compared with each other, or nations with each other. Producing absolute figures for a country or an industry is meaningless. For example, an increase in competitiveness happens when a firm lowers its costs relative to those incurred by rival firms. At the country level could happen that the competitiveness of a nation A increases, but this doesn't mean that the competitiveness of another nation B will decrease.

Second, competitiveness has a broad and a changing definition depending on the school of thought and on the level of investigation carried out. There is, however, a widely held view that it is a complex concept, that incorporates a multitude of aspects. Assessment of competitiveness should therefore be undertaken based on several components. However, it is not rare to find studies that calculate only one measure (e.g. export indices only, costs of production alone, productivity growth alone) despite evidence that competitiveness rankings may differ depending on the component measured. It would be better to measure several components and aggregate them into a single measure of competitiveness or cluster observations in groups on the basis of all components in order to get a more complete overview of competitiveness. However, in this case a delicate issue is how to weight each component of competitiveness for the aggregation.

Third, in the specific case of the agricultural sector, particular attention should be taken on the issue of unpaid inputs, such as family labor. Some studies highlight that competitiveness measurements may vary if the value of ownership factors is included or excluded, in particular unpaid labor.

Finally, the issue of measurement distortion due to government intervention should be considered carefully. Several authors stress that competitiveness components are measured under the assumption of an ideal word of no government intervention. For example, the concept of comparative advantage is based on the assumption of free trade. According to some authors, this is what distinguishes it from competitive advantage; that is to say, from competitiveness. Competitive advantage is measured with market (i.e. Existing) prices, while the comparative advantage should be measured by equilibrium (i.e. unobserved) prices. Government intervention may change the competitiveness superficially without increasing real competitiveness. In this case, where competitiveness is “bought” by public subsidies, it may be a false competitiveness.

Finally, it is important to highlight the following: The competitiveness of the agricultural sector (in terms of farm or commodity competitiveness) has so far been investigated more frequently than that of the agri-food sector. This is true for quantitative measures of competitiveness, but even more so for the analysis of the determinants of competitiveness. The sources of competitiveness in the agri-food sector have not attracted a great deal of research. One reason may be the difficulty to compare countries when the sector considered includes firms with a multinational character. Moreover, within the agricultural sector, there is a surplus of studies on the specific competitiveness component of productivity and, even more, of efficiency, even though most do not refer explicitly to competitiveness. Studies analyzing other components of farm competitiveness (e.g. cost measures) are rare. Finally, there is a research gap regarding the assessment of competitiveness of food-chains, that is to say taking into account both the agricultural and the agri-food sectors.

Second, the existing literature has focused mostly on price or cost competitiveness. The non-price component of firms‟ or farms‟ competitiveness is usually forgotten, although several authors stress it is an important aspect in gaining market shares and sustaining profits. Product differentiation, product and service quality and variety, design, novelty, reputation and reliability, are all competitiveness aspects that need to get more interest from researchers. In the case of product quality in particular, specific care should be given to international comparison: product quality may vary between countries due to differences in consumers‟ preferences and requirements.

The issue of government intervention could be given more attention in the context of trade negotiations and agricultural policy reforms. The main question is whether government funds used to protect a country‟s agriculture or agri-food sector and to support its competitiveness could generate greater social welfare if they were used differently, either in other policies or in other sectors of the economy. Some studies highlight the fact that public expenditure in R&D, extension and infrastructures may have a larger impact on farm productivity than commodity programs or direct subsidies also stresses that the obsession with competitiveness may result in a misallocation of resources due to wrong government interventions. Instead of comparing competitiveness measures as such, research should focus on the past or potential effect of policies in order to evaluate whether an alternative use of public resources could increase a nation‟s welfare. Infrastructure and public expenditures may for example be more crucial in developing countries in particular to enhance competitiveness. In addition, the influence of other types of government intervention such as labor or fiscal policies has not been assessed so far, and maybe an interest area for further research.

Thank you very much for the answer. I'll try to take into consideration at my research, all the moments you have noticed at the competitiveness evaluation. If you have some interesting information about competitiveness evaluation, especially at the level of companies (farms, my field of research is competitiveness of high value added horticultural products) you may send at the following mail address: [email protected]. Thank you very much for the answer.

Perhaps this additional information could help:

Given the dynamic nature of the concept of competitiveness evaluation , all the proposed parameters should be considered in the medium-long term. However, comparative international statistics at the company level are limited. The industry lags behind other sectors in developing and utilizing mechanisms to collect the data needed for strategic management of the industry. In addition, the broad definition of competitiveness that many experts use needs that many factors other than financial should be considered. These factors require innovative approaches to data collection and evaluation. Two complementary types of data — statistical and questionnaire survey—are used to overcome the above mentioned difficulties. Statistical data about industries, for example, help quantify the problems of the industry, and are important components of competitiveness evaluation.

Feedback from industry professionals is very useful for competitiveness evaluation and is a major component of the evaluation. Professionals often provide a more pragmatic and current outlook than the statistical data. The perceptions of the respondents are based on their experiences and intuition. Such feedback supplements statistical data, because of the inherent ability of human beings to consider many non-quantifiable yet important factors.

Export of an industry is a good indicator of its international performance. International performance (‘ex post’ competitiveness) could be measures through the following indicators:

•International market share: such parameter, however, does not have an absolute value. In fact, a rapid growth in the international market share could be achieved at the expense of the firm’s profitability. In order to jointly consider profitability and market share, some experts suggest the adoption of ‘profitable market share’ as an indicator of international performance. Through the concept of profitable market share, they argue that we should consider market share “whilst sustaining at least the industry norm of profitability;

• Rate of growth of the ratio ‘foreign sales/total sales’ (given a non decreasing trend of a firm’s total sales);

•Return on foreign investments:

On the other hand, the measure of ‘ex ante’ competitiveness could rely on the following factors:

•Quality of international customers: such indicator could be measured in terms of dimension, notoriety, reputation and rate of fidelity of foreign customers;

•Brand recognition in international markets: such indicator measures an intangible resource, which is increasingly considered as a key determinant of a firm’s competitive potential;

• Listing in foreign stock exchange: such parameter is a proxy of the capability of attracting financial resources at the international level;

• Number of international patents and trademarks.

Both qualitative and quantitative variables are necessary to define and measure international competitiveness at firm level. However, qualitative factors raise some operationalization problems as they largely respond to managers’ perceptions rather than to objective parameters. Further qualitative indicators that could measure international competitiveness are:

•Capacity of attracting skilled human resources at the international level;

• Imitation attempts by competitors;

•Quality of international partners;

•Quality of management staff involved in international activities.

The World Economic Forum lists the following indicators of competitiveness:

•Effective institutions - which create an economic environment in which businesses can develop, and consumers have confidence. These should be ‘sound, honest and fair’.

• Effective infrastructure – which provides an effective transport and energy supplies.

•A sound macro-economic environment, including sound public finances, and low and stable inflation.

• A healthy and educated labor force, with an emphasis on higher education, and the continuous upgrading of skills.

•Efficient goods markets, with high levels of competition, and low levels of regulation.

•Efficient labor markets, which are flexible, and provide effective incentives to work and effort.

•An effective financial market, which provides a continuous flow of capital to business, effectively manages financial risk, and is trustworthy and transparent.

•The ‘readiness’ of firms to adopt new technology.

•The extent to which firms operate in large global markets, which enable them to gain from economies of scale.

•Business sophistication, which relates to the effectiveness of business networks, the quality of supporting industries, and advanced business processes.

•Continuous innovation, which counteracts diminishing returns to existing technology.

Types of competitiveness. There are two types of competitiveness. These are:

1.Price competitiveness

Price competitiveness refers to how well a country exports compare in terms of price. This is affected by a number of factors, including:

•Relative inflation - even small annual differences can build-up over time and become significant.

•The relative real exchange rate (RER) – which is the nominal exchange rate deflated by an index of prices.

•Labor costs - including wage and non-wage costs, such as employer contributions to pensions.

2. Non-price competitiveness

Non-price competitiveness refers to how well a country exports of branded goods and services do in overseas markets in aspects of competition not associated with price, such as:

•Product quality and design;

•Business Research and Development (R&D), especially new product development; Product reliability;

•The strength or weakness of ‘local’ brands;

•The effectiveness of marketing in overseas markets;

•Levels of productive and dynamic efficiency of firms;

•Levels of ‘x’ inefficiency, including poor management, excessive bureaucracy, and government failures;

•How effective the economic and political system is in allowing markets to form - are there missing or incomplete markets?;

Investment in new technology, which helps improve quality and reliability;

•Investment in human capital, which improves skill levels and reduces skill shortages – low skills, and labor shortages, can both seriously reduce competitiveness.

Thank you very much for the recommendations of competitiveness evaluation.

There are many factors that may affect the country’s ability to successfully compete in world markets. We can focus on three determinants that may help us identify key elements, shaping country’s competitive capacity in the critical and growing sector of high value added agricultural products:

1. Relative Prices.

2. Relative Instability of Production.

3. Efficiency of Export Performance.

1. Level of market access with high quality products

2. Returns on investment

Studing MBA strategic management. Expert in agricultural Crop Protection, PhD