Business Administration

Lecture No. 7: Concept of Competitivenessand Its Factors
1.Concept of Competitiveness2.Factors of Competitiveness
CostQuality
DeliveryFlexibility
Takahiro Fujimoto
Department of Economics, University of Tokyo
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1.Concept of Competitiveness
Competitiveness =Power of an individual product or a group of products offered bya certain company satisfies existing customers, and also attractspotential customers to purchasing.
Competitiveness is a dynamic concept. A favorable cycle between
customer satisfaction and customer attraction.

Dynamics of Competitivenessproduct
Competitiveness(satisfy existing customers)

satisfaction level ofexisting customers(attract potential customers)

reputation

attraction level ofpotential customers

repeat customers
increase in user
population

increase in newcustomers

Takahiro Fujimoto 'Introduction to Production Management' Nihon Keizai Shimbun, Inc. 2001 (Ⅰp96 figure.4.1) ‡Competitiveness = persuasive power held by a bundle of designinformation
Product = bundle of design information (message)
Consumers process this information and create own
satisfaction/expectation.
Competitiveness = power of product (bundle of information) that
persuades potential customers,
and makes exiting customers consent.
---Actually, however, competitiveness is difficult to be measured.
In many cases, an overall evaluation has to be made based on
measurements of plural number of indices.
Competitiveness is measured at the levels of “product”, “brand”,“business”, “industry”.

Competitiveness of Cannon? ---- Camera? Printer? Copy?

Competitiveness of Toyota?

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岩屋磁器の例： 主要事業の比較：製品、市場、競争力
Business beginning timeRelief.
1960'sPorcelain tile painting for

Product backgrounddecoration in wall of publicbuildingSelah.
1970'sUmbrella setting up.
Ashtray stand. Chair.
Flower pot etc.Objet madeof porcelain for outdoor
Furniture retail store.

The main customer

The main characteristic
demanded from product
Price elasticity

Municipal offices. Design

Furniture wholesale store.

office.

Design office. Department
storeArt. Weather resistance
Small

Fine sight. Weatherresistance.
Small

Tradition porcelain.
The 18th century
Magnetic vase. Tableware
whisky bottle. Adornment
etc.
Individual guest. Municipal
offices. Foreign drinks
manufacturer etc.

Fine sight
Small

Share of I company ofdomestic pottery productpottery product market.

Porcelain tile for decoration of

Brick made of porcelain ofwall outside building forweather resistance. Fillingcommerce(Include it inthing for chemical plant such

construction. )as balls and saddles etc.

Municipal offices. Building

Sei system manufacturer.

owner. Design office

Steel manufacturer.
Electric power company

Science manufacturer.

Fine sight. Accuracy. Strength.
Weather resistanceMiddle80%｡80%｡

0.10%｡

10%(Only the building market for

OT Co. Individual writer

Strong point of I company

Shigaraki scorch
manufacturer

Many

Large porcelain
Sculpture technology.

manufacturer
Weakness of I company
product to competing
manufacturer.
The main competition andsubstitution fortunes

Corrosion resistance.
Adiabaticity. Abrasion
resistance
Large
80%

commerce :)IX Co. (tile sales 73 billion yenin 1985).
DT Co. (tile sales 17 billion yenin 1985).

product to competing

Product related to science.
1920's2% (tile market).

market.
The main rival in domestic

Tile.
1950'stechnology. Processing

Large porcelain technology.

technology.
Time divided into a lot ofHeavy.

tiles

Easy to crack.

Cost

Earthenware.
no wall decoration.

Tree.

Earthenware

Plastic

Special order. Wind combination.Strength.

Cost

NG Co. (Japan).
DW Co. (United States).
ST Co.(Germany)
Raw procurement power.
Corrosion resisting systems
engineer ring power.
Cost(Compared withoverseas products. )Earthen tile. Stone.

FRP (fiber reinforced plastic).

Metal

Metal..titanium.

60%

80%

Weather resistance. Strength

Adiabaticity. Abrasion
resistance.

Ratio of porcelain wares inwhole including alternative

10%

15%

Strength. Externals.
Color goodness

Weather resistance
Externals color goodness

n.a.

fortune market
Weather resistance.
Strong point of porcelain
ware to alternative fortune.

Strengthcheap. (Compared withtitanium. )Be heavy.

Weakness of porcelain

Time divided into a lot ofHeavy.

ware to alternative fortune.

tiles

Easy to crack.

none.

Cost

Easy to crack.
Expensive.(Compared withFRP. )2.Factors of Competitiveness: Surface and Depth(1) Competitiveness on Surface-- part directly visible to customers (interface), andpower of information which a company dispatches to customers“4P” of Marketing
Product (message embodied in product)
Price (price information conveyed to customers)
Promotion (advertising, etc.)
Place (communication in sales store)

Customer Interface and “Competitiveness Factors on Surface”
Bundle of Information
Product (message embodied in product)

Price (price information conveyed to customers)
Manufacturingcompany(sender ofinformation)

Promotion (advertising and other meansCustomer(receiver ofinformation)of sales promotion)

Place (sales talks at sales store, etc.)

Takahiro Fujimoto 'Introduction to Production Management' Nihon Keizai Shimbun, Inc. 2001 (Ⅰp100 figure.4.2) ‡(2) Competitiveness in Depth (QCD + F)
Cost: Cost exits behind price.
Depose into each cost factor.
Further decompose into productivity and charged factor prices.
Quality: Design quality and manufacturing quality
Delivery: Up to order-based production or prospective production
Closely related to production quantity and production capacity
Flexibility: Level of flexible correspondence tochanges/diversification in quantity and productMain Factors of Product Competitiveness
operating income
grossprofit

pricematerial productivity

material costselling expenses・
administrative expenses

cost（product cost）

material pricelabor productivity

labor cost

wage, etc.

Equipment/ tool depreciation
product development costequipment productivity
equipment pricedevelopment productivity
R&D investment priceother expenses
planning/development perioddelivery ・quantity

delivery period/ date
production capacity

production/ procurement time
distribution period

design quality
qulity(total quality)
manufacturing quality (conformance quality)
flexibility

Organizational Capability and Performance of Mono-Zukuri

other environmental factors

organizational
capability

in-depth
performanceorganization routine

productivity
production lead- time
conformance quality
development lead-time

domain of capability building competition

surfaceperformance

profitperformance

price
deliveryappeal power of product content
appeal power of advertising content

Organizational Capability and Performance of Mono-Zukuri: Evaluate in Multiple Layers
Organizational
ability and performance of the one-making
もの造りの組織能力とパフォーマンス

Other environmental
agentsその他の環境要因

Mono-Zukuri
組織能力
organizational
capability
level that competitors cannot
imitate easily, but can be attained
組織ルーチン
floor level
spruce-up/cleaning
problem solving
improvement
just-in-time
flexible production

competitiveness
深層のパフォーマンス
behind scene

表層のcompetitiveness
パフォーマンス
on surface

利益
パフォーマンス

indices to measure
生産性
floor-level's
capability
invisible
to customers
生産リードタイムindices価格
to measureproduct's ability
evaluated納期
by customers

company's profit

productivity,
適合品質
cost production lead-time
開発リードタイムdevelopment
lead-timedevelopment productivity

製品内容の訴求力
price,
performance, delivery,
brand,
advertising effect ,広告内容の訴求力
market share,level of customer satisfaction

能力構築競争の対象領域
capability building competition

Takahiro Fujimoto, University of Tokyo

profitability

stock priceProductivity of Auto Development: High in Japan‡Fujimoto, Nobeoka, Thomke ' Data of Research Project on Global Automobile Product Development (Nobeoka drawing)'

Framework of Multi-Sphere Evaluation on CompetitivenessImbalance Observed in Japanese Auto Industry
Exchange rate.為替レート、景気変動、本社の戦略的能力、その他の要因
Business fluctuations. Strategic ability of headquarters. Other factors.

もの造りのOrganizational
ability of the one組織能力
making.

Competitive edge in
裏の競争力
back.

Competitive edge in
表の競争力
table.

Profitability.
収益性高い

current Toyota
同等低いformer Nissan

Takahiro Fujimoto, University of Tokyo