BASIC ISSUES ON COMPETITIVENESS AND EXPERIENCE
Competition and roles of competition in a enterprise
1.1.1 Concept and classification of competition
Competition has been a fundamental aspect of business since its inception, playing a crucial role in the establishment and growth of enterprises Despite its significance, there remains a multitude of inconsistent definitions of competition both in Vietnam and globally.
Karl Marx (1978) described competition as a fierce struggle among capitalists to secure advantageous conditions for the production and consumption of goods, ultimately aimed at achieving excess profits He identified that the fundamental principle of capitalism is the competition law, which regulates the average profit rate and shapes the market price system This principle hinges on the discrepancies between production costs and the ability to sell products below their value while still generating profits.
According to the Vietnamese dictionary (2002), competition is defined as the effort to achieve superiority and attract others among individuals and organizations striving for the same advantages.
According to Nguyen Huu Huyen (2003), competition involves the actions of individual enterprises and their rivals in supplying products and services to meet similar consumer needs This dynamic is reflected in the ability to attract or lose a significant number of loyal customers.
Competition can be defined as the fierce struggle among businesses in the market offering similar or substitute products, aiming to capture market share and increase sales and revenue.
In summary, through the definitions, competition can be considered in terms of the following viewpoints:
First, mentioning competition is mentioning the battle to gain the victory of many participating subjects
The primary goal of competition is to vie for a specific target, such as a product, opportunity, or project, while leveraging favorable conditions like market dynamics and customer preferences, ultimately aiming to achieve substantial profits.
Third, competition happens in a specific environment, with common bindings that the participating parties must follows including: product characters, market, legal conditions and business practice, etc
During the competition, participants can utilize various strategies, including competing based on product characteristics and quality, enhancing the art of consumption, and optimizing sales services and payment options.
To foster a positive approach to competition, companies must recognize its significance and leverage it to enhance their internal processes, ultimately improving customer service quality Conversely, businesses should steer clear of reckless competition that could undermine community welfare and weaken their own position in the market.
In accordance with Hoang Trung (2015a), based on the different concepts and roles of competition, competition can be classified into various form: a) Based on the subjects participating competition
Competition between buyers and sellers is driven by the desire to maximize benefits, following the principle of purchasing low and selling high Sellers aim to achieve the highest possible price to enhance their profits, while buyers seek the lowest price that guarantees quality Ultimately, the final price is determined through mutual agreement between both parties.
When demand exceeds supply in the market, competition among buyers intensifies, leading to shortages To fulfill their desires, buyers are often willing to pay higher prices, which subsequently drives up the overall price of goods.
In a market economy characterized by an oversupply, competition among sellers becomes extremely fierce, as customers hold significant power in influencing business success This dynamic positions customers as the primary drivers of enterprise existence and growth, highlighting the critical importance of understanding their needs and preferences.
Competition within an industry refers to the rivalry among companies that produce and sell similar products This competitive landscape often leads to acquisitions, prompting enterprises to adopt various strategies to maximize profits To achieve excess profits, businesses must focus on enhancing techniques, increasing labor productivity, and minimizing specific costs associated with their goods.
Competition among various economic industries revolves around the pursuit of maximum profits This rivalry can occur between individual enterprises or among alliances within a specific industry, as they strive to outperform one another.
Countries engage in competition to showcase their strengths and develop competitive advantages that enable them to dominate the global market This rivalry varies in character and intensity, influencing how nations position themselves in the international arena.
Based on this criterion, competition can be classified into two types:
Perfect competition is a fundamental market structure where neither buyers nor sellers have the power to influence market prices In this scenario, buyers adapt to the prevailing price levels, as market demand is freely established, leading to prices determined by overall market dynamics.
Competitiveness and the necessity to promote the competitiveness of the
1.2.1 Concept of competitiveness of the enterprise
The concept of competitiveness emerged in the USA in the early 1980s, as highlighted by the Aldington Report (1985), which defines a competitive enterprise as one that offers superior quality products and services at lower prices than both local and international rivals Competitiveness also encompasses the long-term benefits for the enterprise and the financial security of its employees and owners This definition was reiterated in the White Book on the Competitiveness of England (1994).
In 1998, the Ministry of Commerce and Industry in England defined enterprise competitiveness as the capability to produce the right products and set appropriate prices at the right time This definition emphasizes the importance of meeting customer demands more effectively and efficiently than competing businesses.
Competitiveness, as defined in economic terms, refers to the capacity to secure significant market shares ahead of competitors and the ability to recover market shares that may have been lost to them.
The Organization for Economic Cooperation and Development (OECD) defines competitiveness as the capacity of companies, industries, regions, countries, or supranational regions to generate higher employment and income while facing international competition, all grounded in sustainability principles.
The World Economic Forum defines competitiveness with a human-centered perspective, stating that for enterprises, it involves generating new growth and delivering value to shareholders In a societal context, enhancing competitiveness translates to the creation of new jobs and improved living conditions.
Michael Porter (2009b) posits that defining competitiveness is challenging, emphasizing that successful competition requires enterprises to establish a competitive advantage This can be achieved through lower production costs or by differentiating products to command higher prices To sustain competitiveness, businesses must refine their strategies to deliver higher quality products or services and enhance production efficiency.
Local authors have provided various definitions of competitiveness, reflecting Porter’s perspective Nguyen Minh Tuan (2010) defines enterprise competitiveness as the ability to sustain and enhance competitive advantages in product consumption, expand market networks, and efficiently utilize production resources to achieve significant economic benefits and sustainable development Vu Trong Lam (2006) emphasizes that it involves the capacity to build, maintain, and innovate new competitive advantages Additionally, Le Cong Hoa and Le Chi Cong (2006) argue that competitiveness showcases an enterprise's strengths and advantages over competitors, enabling it to meet customer demands effectively and generate increasing profits.
Competitiveness can be viewed from various perspectives; however, this thesis defines enterprise competitiveness as the capacity to develop, sustain, leverage, and innovate competitive advantages that fulfill customer needs more effectively than competitors, while also achieving the organization's objectives.
The competitiveness of an enterprise primarily stems from its internal resources, which should be assessed in relation to competitors within the same industry and market, rather than in isolation based on technology, finance, human resources, or management practices In the Vietnam real estate market, the presence of numerous enterprises presents both opportunities for growth and significant challenges, as the overall specialization and competitiveness of these firms remain low, contributing to a considerable inertia within the market.
According to Nguyen Viet Lam (2014), enterprise’s competitiveness consists of several basic characters as follows:
First, enterprise’s competitiveness depends on the internal elements (strengths and advantages) and external elements (business environment)
Competitiveness of an enterprise is determined not in isolation, but through evaluation and comparison with competitors within the same industry and market.
To enhance competitiveness, enterprises must focus on leveraging their strengths and advantages to meet customer needs effectively, as this aligns with their direct objectives Ultimately, satisfying customers is crucial for achieving the overarching goal of maximizing profits.
Enterprise competitiveness is demonstrated through various metrics, including overall performance indicators such as sales, market share, and profits, as well as additional factors that highlight business strengths and advantages, such as technology, financial resources, human capital, and product or service quality.
1.2.3 Criteria to evaluate enterprise’s competitiveness
1.2.3.1 Group of criteria reflecting business results and efficiency a Revenue
Revenue represents the total income generated by an enterprise through the sale of its products or services and serves as a key indicator of competitiveness By analyzing revenue targets over various periods, businesses can assess their growth trends and overall performance However, to determine the effectiveness of business activities, it is essential to consider expenses alongside revenue If both revenue and expenses rise over time, but revenue increases at a faster rate, it indicates efficient business operations This efficiency suggests that the enterprise is effectively managing its expenses, utilizing a portion of the increased costs to expand its operations, invest in new equipment, and enhance infrastructure, ultimately contributing to its market share growth.
Market shares can be construed as the market proportion which the enterprise holds out of the total market volume The enterprise’s market shares is identified as:
The enterprise's revenue and market shares are crucial indicators of its position within the industry A larger market share signifies a greater proportion of the market occupied by the enterprise, indicating efficient business activity Conversely, a small market share reflects challenges faced by the enterprise due to competition By analyzing market share metrics, businesses can assess their ability to capture market segments relative to the overall industry, providing valuable insights for strategic positioning and growth.
To assess an enterprise's competitiveness against its rivals, the relative market share index serves as a valuable tool, comparing the company's revenue to that of its strongest competitor This method helps identify the organization's strengths and weaknesses While the relative market share index is straightforward and easy to comprehend, obtaining precise and practical competitive data can be challenging (Nguyen Thi Thuy, 2015).
- Enterprise growth speed calculated based on revenue
It is calculated in the following formula
DTt - DTt-1 GTt DT t-1 Where:
GTt: Growth rate calculated in accordance with revenue in the research period DTt: Revenue in the research period
DTt-l: Revenue in the previous period
Experience withdrawn in promoting competitiveness of a number of
1.3.1 Experience of competitiveness promotion of a number of enterprises
1.3.1.1 Vietnam Construction and Import- Export Joint Stock Corporation Vinaconex
VINACONEX boasts over 40 units engaged in five joint ventures and 14 affiliated companies across various sectors nationwide The workforce comprises more than 40,000 individuals, including skilled managers, engineers, and experts who have received training and gained extensive experience abroad, contributing specialized knowledge to the organization.
VINACONEX aims to strengthen its long-term business development by concentrating on its core competencies in construction and property investment, where it holds a competitive advantage Additionally, the corporation, along with its subsidiaries and joint ventures, engages in diverse activities such as industrial and construction material production, design consultation, labor import and export, commercial services, financial development, and education and training, among others.
VINACONEX prioritizes international collaboration with reputable and experienced partners during its development process This strategy is essential for acquiring knowledge, skills, and experience while leveraging global resources to enhance the Corporation's growth Committed to expanding cooperative relationships based on equality and mutual benefits, VINACONEX has successfully established business partnerships with major companies across 60 countries and territories worldwide.
VINACONEX has significantly broadened its international cooperation activities beyond its initial focus on labor export and expert services The company now engages in various sectors, including international procurement, architectural consultation, planning, import and export of machinery and goods, research and application of new technologies, as well as international finance and credit As a result, VINACONEX has established itself as a reliable and well-respected partner among numerous international collaborators.
1.3.1.2 Experience of VINCOM Joint Stock Company
Vincom JSC is a premier real estate brand in Vietnam, boasting an equity of over 3,900 billion VND as of October 4, 2011, and a market capitalization exceeding 36,960 billion VND The company manages an extensive portfolio of projects and real estate complexes, including notable developments such as the Vincom Center in Hanoi, the Vincom Center in Ho Chi Minh City, Vincom Village, Times City, and Royal City.
Since its inception in 2002, Vincom has aimed to establish itself as a leading enterprise in Vietnam's real estate sector To realize this ambition, Vincom has implemented various strategic initiatives.
- Concentrating on the first class real estate projects of big scale and complex located in prime locations
- Continuing to expand the presence of the luxurious works with the brand and reputation of Vincom through out the country
To enhance operational efficiency, it is essential to adopt and implement modern management principles that align with both domestic and international best practices By leveraging the expertise of young and experienced managers and fostering collaboration with leading global experts, organizations can accelerate their growth and innovation.
In recent years, Vincom has consistently expanded and developed, demonstrating strong growth in revenue, profits, and financial metrics The company strategically leverages its strengths in the premium property segment, focusing on generating stable income through rental activities and maximizing revenue from the sale of high-quality properties in prime locations Vincom's competitive strategy is rooted in these principles, ensuring sustained growth and market presence.
Vincom is strategically investing in large-scale luxury real estate projects in prime locations, focusing on the development and sale of high-end apartments and villas As social income rises, the demand for quality housing increases, while the current limited supply supports property prices in both the short and medium term The introduction of bank credit assistance products for home purchases, coupled with the growth of the middle class and favorable demographic trends, positions Vietnam's housing market as a significant opportunity for investment.
Vincom recognizes that the current supply of modern commercial centers is insufficient to meet the growing shopping demands of consumers As the Vietnamese economy continues to strengthen, the demand for office spaces is expected to increase in the medium to long term The development of luxurious apartments, offices, and shopping malls featuring modern, international-standard designs will enhance the appeal of the projects that Vincom is undertaking.
- Building and developing a list of property for stable lease
Vincom is set to expand its portfolio of high-end commercial properties, including luxurious offices and shopping centers This strategic development aims to secure stable and consistent revenue streams from leasing activities, while also enhancing the efficiency of capital utilization.
Leveraging advanced customer payments for Vincom's apartments and villas serves as a crucial financing source for project development This strategy not only alleviates the pressure of raising capital through stock and bond issuance but also ensures that the company maintains adequate funds for timely investment and development of its projects.
Vincom is set to diversify its offerings by expanding into the medium and mid-range segments of the housing real estate market While the company has primarily focused on luxury property developments, it plans to launch new projects such as Eco City, Long Bien, and Green City, which will cater to a broader audience These initiatives aim to provide more affordable housing options that align with the income levels of many citizens, thereby unlocking the significant potential of Vietnam's real estate market.
Vincom is committed to enhancing its capabilities in selling, leasing, and managing real estate projects while intensifying marketing efforts for new developments This initiative involves refining processes for identifying new projects, obtaining necessary licenses, overseeing design and construction, and improving sales marketing and service quality management These strategic enhancements aim to boost the sales and leasing activities of Vincom's property offerings.
- Maintaining the substantial development direction on the foundation: develop the firm along with the positive contribution to the society and community benefits
Vincom, a prominent Vietnamese brand, recognizes its responsibility towards societal development Since its inception, the company has embraced a rich tradition of engaging in social, humanitarian, and charitable activities aimed at fostering community growth.
1.3.2 Lessons for Newland Investment Joint Stock Company
From the practical experience of the competitors, several lessons could be withdrawn for Newland Investment Joint Stock Company to promote the competitiveness as follows:
Thesis research model
The thesis research model, illustrated in Figure 1.2 (Appendix 02), examines the factors influencing the competitiveness of Newland Invest., JSC Consequently, the author developed a comprehensive system for evaluating the company's competitiveness criteria.