MEASURING THE COMPETITIVENESS OF A FIRM

2. MEASURING THE COMPETITIVENESS OF A FIRM Prof. Dr. Dilek Çetindamar Sabancı School of Management Sabancı University & Hakan Kilitçioğlu ArgeConsulting June 2013

3. Dilek Cetindamar, HakanKilitcioglu, (2013),"Measuring the competitiveness of a firm for an award system",Competitiveness Review: An International Business Journal incorporatingJournal of Global Competitiveness, Vol. 23 Iss: 1 pp. 7 -22

4. Contents • Goal • Model • Advantages • Next

5. Origins of the model • TUSIAD - Sabancı University Competitiveness Forum (REF) is a research center formed in Istanbul in 2003 by: • Turkish Industrialists’ and Businessmen’s Assoc.and • Sabancı University.

6. REF’s mission is; • to help improve the competitiveness of Turkish private sector in international markets by conducting and supporting research on competitiveness, innovation and technology management and benchmarking. • Specialized in measuringcompetitiveness at the: • national, • sectorial, • companylevel.

7. Collaborate with SEDEFED (the Federation of Industrial Associations) on Competitiveness Congress • Develop and launch the award together • Project start: 2009 November • 10 applicants • Project ends: 2010 November

8. Goal • Measuringcompetitiveness at thefirmlevel

9. Literaturereview • Competitiveness: to utilize a nation’s human, capital, and natural resources in their ultimate productivity. • Nations compete with each other to supply an environment to attract investments, keep high productivity, high wages and sustainable growth.

10. Measurementsare at thenationallevel. • Bestexamples: • Institute for Management Development (IMD)’s World Competitiveness Yearbook and • World Economic Forum’s Global Competitiveness Index (GCI) (since 1979)

11. WEF: • Publicly available data & the Executive Opinion Survey • 12 major pillars/measurement categories: • well-functioning public and private institutions • appropriate infrastructure • a stable macroeconomic framework • good health and primary education • higher education and training • efficient product markets • efficient labor markets • efficient financial markets • the ability to harness the benefits of existing technologies • market size • producing new and different goods using the most sophisticated production processes • through innovation

12. Lack of academicstudies at firmlevel • Fewstudiesonly • Muhittin Oral’sbrillantmodels but verycomplex

13. Model • Competitiveness refers to a firm’s capacity to compete in a specific market, to increase its market share, to enter international markets by exporting, and to achieve sustainable growth and profitability.

14. Objectives of theaward: • Raising awareness on sustainable global competitiveness • Reward those who have achieved sustainable global competitiveness • Raising awareness on basic criteria that enhances competitiveness • Increasing the companies’ ability to compete by way of spreading the exemplar practices of the successful companies

15. Internationalexamples? • Deloitte “Fast Growing companycompetition” (only IT) • “The Porter Prize” considers one dimension of the firm in competition: strategy. Since 2001 (in Japanonly) • The UK award model is developed and given by a magazine called “Real Business” since 1997 (for UK firms) • The Belgium award: “The European Business Awards” sponsored by the Dutch bank HSBC and other business organizations (Europeanfirms)

16. 3 Pillars of: “TheMostCompetitiveFirm of theYear” • OUTCOME since company needs to show performance in all aspects of what it does to compete. • RESOURCESan umbrella term to describe competencies of a firm. • MANAGERIAL PROCESSES AND CAPABILITIESto include a capability term in order to include the role of management in the transfer of inputs into outputs.

17. Outcome Indicators Growth Export Value added & Profit Customer & Society Ability to develop processes and systems Sustainability of strategies Human Resources Technology, Innovation, Design Financial Resources Leadership Outcome Indicators (%40) Resources (%30) Managerial Processes and Capability (%30) (which provides effective and efficient use of resources)

18. Advantages • One of the first complete model • One of a few awardmodels at operation

19. Advantages • Multi-faceted evaluation • Only the last year is evaluated but the last three years’ performance is taken into account. • “Goal” and “Accrued” data from the company records • “Comparison” data from the company’s competitors or the best in their field, or market performance average • Compatibility to All Sectors and Flexibility • “Relevance” title gives the company to rate the performance for its relevance to their sector. • Each company is given an “open ended question” to guide us on how to evaluate their performance • The award comprises questions for “all sectors” from manufacturing to service.

20. Considering performance data within a context by evaluating it with its connections to company resources and infrastructure

21. EXAMPLE: HUMAN RESOURCES PERFORMANCE Results (objectivemeasures): Please answer the following questions about the Human Resources approaches (qualitativemeasures) in your company 1. Is your human Resources Management compatible with your company’s strategies? How do you achieve this compatibility? 2. Does your company use performance based salary system? …… 21

22. Resultsscore= [(the scope ofeach criteria x realized performance)/2] x (targets) x (benchmarking)

25. Approachscore=(appropriatenessand development level of the approach) x (implementation) x(achieving sustainability)

28. CUSTOMER & SOCIETY B (Customer) MANAGERIAL PROCESSES AND CAPABILITY

29. Evaluation Process(1) 29

30. Evaluation Process(2) 30

32. Next • Customizethe model forSMEs • Work on theCategory 2 award:“TheFastestGrowingCompanywithitsInternationalOperations”

33. Contact: • Prof. Dilek Cetindamar, dilek@sabanciuniv.edu • Hakan Kilitçioğlu, hkilitcioglu@arge.com • www.ref.sabanciuniv.edu • www.rekabetkongresi.org