MEASURING THE COMPETITIVENESS OF A FIRM

Prof. Dr. Dilek Çetindamar Sabancı School of Management

Sabancı University&

Hakan KilitçioğluArge Consulting

June 2013

Dilek Cetindamar, Hakan Kilitcioglu, (2013),"Measuring the competitiveness of a firm for

an award system",Competitiveness Review: An International Business

Journal incorporating Journal of Global Competitiveness,

Vol. 23 Iss: 1 pp. 7 - 22

Contents

• Goal

• Model

• Advantages

• Next

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.

• 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 measuring competitiveness at the:• national, • sectorial, • company level.

• 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

Goal

• Measuring competitiveness at the firm level

Literature review

• 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.

• Measurements are at the national level.

• Best examples:

• Institute for Management Development (IMD)’s World Competitiveness Yearbook and

• World Economic Forum’s Global Competitiveness Index (GCI) (since 1979)

WEF:Publicly available data & the Executive Opinion Survey

12 major pillars/measurement categories:

1. well-functioning public and private institutions2. appropriate infrastructure3. a stable macroeconomic framework4. good health and primary education 5. higher education and training 6. efficient product markets 7. efficient labor markets 8. efficient financial markets9. the ability to harness the benefits of existing technologies10. market size11. producing new and different goods using the most

sophisticated production processes12. through innovation

Lack of academic studies at firm level

• Few studies only

• Muhittin Oral’s brillant models but very complex

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.

Objectives of the award:

• 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

International examples?

• Deloitte “Fast Growing company competition” (only IT)

• “The Porter Prize” considers one dimension of the firm in competition: strategy. Since 2001 (in Japan only)

• 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 (European firms)

3 Pillars of: “The Most Competitive Firm of the Year”

1. OUTCOME since company needs to show performance in all aspects of what it does to compete.

2. RESOURCES an umbrella term to describe competencies of a firm.

3. MANAGERIAL PROCESSES AND CAPABILITIES to include a capability term in order to include the role of management in the transfer of inputs into outputs.

Leadership

Sust

ain

abili

ty o

f

stra

teg

ies

Ab

ility

to d

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p

pro

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es

and

sy

stem

s

Human Resources

Technology,

Innovation,

Design

Financial Resources

Outcome Indicators (%40)

Resources (%30)

Managerial Processes and Capability (%30) (which provides effective and efficient use of

resources)

Customer & Society

Growth Export Value added & Profit

Outcome Indicators

Advantages

• One of the first complete model

• One of a few award models at operation

Advantages1. 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

2. 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.

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

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EXAMPLE: HUMAN RESOURCES PERFORMANCE

Relevance 2007 2008 2009

Employee Satisfaction Percentage RealizedGoalComparison

In-house Training Hours per Employee RealizedGoalComparison

Number of Improvement Proposals per Employee RealizedGoalComparison

Please answer the following questions about the Human Resources approaches (qualitative

measures) 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?

…… 

Results (objective measures):

Results score= [(the scope of each criteria x

realized performance)/2] x (targets) x (benchmarking)

Approach score=(appropriateness and

development level of the approach) x (implementation) x

(achieving sustainability)

Results Score %

Approach Score %

Total Score

OTURCOME INDICATORS

1. GROWTH A: 0 100% (A*10): 0

2. EXPORT A: 0 100% (A*10): 0

3. VALUE ADDED & PROFIT A: 0 100% (A*10): 0

4. COSTUMER & SOCIETY A: 0 50% B (costumer) 0 30% (A*5+B*3+C*2): 0C (Society) 0 20%

RESOURCES

5. HUMAN RESOURCES A: 0 40% B: 0 60% (A*4+B*6): 0

6. FINANCIAL RESOURCES A: 0 30% B: 0 70% (A*3+B*7): 0

7. TECHNOLOGY, INNOVATION, DESIGN A: 0 40% B: 0 60% (A*4+B*6): 0

INFRASTRUCTURE

8. LEADERSHIP A: 0 40% B: 0 60% (A*4+B*6): 0

9. SUSTAINABILTY OF STRATEGIES A: 0 30% B: 0 70% (A*3+B*7): 0

10. ABILITY TO DEVELOP PROCESSES AND SYSTEMS A: 0 40% B: 0 60% (A*4+B*6): 0TOTAL SCORE 0

AWARD SCORE TABLE

CUSTOMER & SOCIETY B (Customer)

MANAGERIAL PROCESSES AND CAPABILITY

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Evaluation Process(1)Application Prosess

Selecting the Assessors

Handing over the Application Forms to the Assessors

Individual Evaluations* Positive aspects* Improvement opportunities* Questions

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Evaluation Process(2)Reaching a consensus and site visit planning

Site Visits

Reaching a consensus and Scoring

Announcing the Prize Winner• Jury meeting• The Award Ceremony• Sending the final evaluation reports to the applicants

Next• Customize the model for SMEs

• Work on the Category 2 award:“The Fastest Growing Company with its International Operations”

Contact:Prof. Dilek Cetindamar, dilek@sabanciuniv.edu

Hakan Kilitçioğlu, hkilitcioglu@arge.com

www.ref.sabanciuniv.edu

www.rekabetkongresi.org