Prerequisites and sources of formation of competitive advantages of the mining and chemical companies

As it has been noted, search, formation and strengthening of competitive advantages of the companies is one of key elements of management of the company in the market. Nevertheless, branch and market features of functioning of the companies in the market impose certain specifics on these processes. Adaptation of traditional approaches to formation and management of competitive advantages to conditions of the companies of a mining and chemical complex is necessary.

Prime stage is process of search of competitive advantages which needs to be carried out on a certain technology. In the figure 3.3 the technology of search of competitive advantages is presented. Certain analytical information which provides the management of the company of necessary data for making decision on strategy and tactics of the mining and chemical company in the market is result of each of the presented stages.

Important aspect is search and formation of steady competitive advantages. In case of the mining and chemical companies, steady competitive advantages exert the defining impact on development of the company; they often unite the main competitive advantages (for example, maintenance of the status of the producer with low expenses by use of capacity of the scientific organizations of holding and implementation of technological development of mining production).

As for classification of competitive advantages of the mining and chemical companies, it can be expanded in view of specific features of branch and the market. The classification of competitive advantages adapted to features of a mining and chemical complex is given in table 3.4. Classification of competitive advantages is presented on various classification signs.

Fig. 3.3. Technology of Search of Competitive Advantages

Classification of competitive advantages of the mining and chemical companies

Table 3.4

Types of competitive advantages

Examples of competitive advantages to the enteiprises of a mining and chemical complex

1

2

1. In relation to system

External

Favorable mining-and-geological and climatic conditions. The developed infrastructure of regions of presence.

Internal

High level of automation of productions. Presence of highly qualified personnel.

2. On the sphere of emergence of advantages

Climatic

Existence of rich deposits of mineral

Political

Political stability of the country of presence

Technological

Existence of access to the latest technologies.

Types of competitive advantages

Examples of competitive advantages to the enteiprises of a mining and chemical complex

Enough resources for financing of research and development.

Organizational and economic

Effective management of the company

Welfare

Existence of the developed social infrastructure in regions of presence

3. On the maintenance of a factor

Quality of goods

High content of a useful component in a product.

Goods price

High content of a useful component in a product. Low expenses in comparison with competitors (at the expense of more favorable mining-and- geological conditions or scale effect)

Expenses at the consumer

Smaller expenses at producers of complex fertilizers for further processing of a product.

Profitability of use of fertilizers at agricultural consumers.

Quality of service of goods

Formation of the special centers in agro-industrial regions for service of consumers and closer interaction with the end user.

4. By a method of obtaining advantage

Hereditary

High-quality resource base

Acquired as a result: training introductions of innovations

movements

Presence of highly skilled personnel.

Existence of effective innovative technologies.

5. In the place of realization of advantage

Workplace

Introduction of the ergonomic principles of the organization of working space

Company

The effective management of the company providing increase in competitiveness of the company.

Region of presence

Closeness of the region of presence to the main points of sale, ports, etc. Existence of developed infrastructure in the region for transportation of mineral fertilizers.

Branch

High extent of scientific and technical progress in mining and chemical branch.

Country

Existence of state programs of development of industries. State support of agricultural producers.

6. On advantage realization time (validity period)

Strategic

Existence of the reasonable long-term development strategy of the company.

Considerable capital investments in innovative activity.

Tactical

Existence of effective system of motivation of personnel.

The effective system of scheduled preventive maintenance providing uninterrupted production.

7. By the form the gained effect of realization

Scientific and technical

Existence of the patented technologies of production and processing of mineral raw materials

Economic

High level of profitability

Ecological

Admissible number of emissions of pollutants in the environment. Rational use of natural resources.

Social

Existence of good working conditions and rest for employees of the enterprise.

Types of competitive advantages

Examples of competitive advantages to the enteiprises of a mining and chemical complex

Existence of a social package.

8. On life cycle of competitive advantage

Al an origin stage

Diversification of activity due to rendering of services on service of agricultural territories

At growth stage

Use of the latest technologies of production. Automation of processes of production.

At a maturity

Low expenses due to scale effect

Al a destruction stage

The vertically integrated business model

9. On the nature of dynamics

1

2

Steady

Any competitive advantages capable to be implemented and bring effect in the long term

Unstable

Bad productivity in territories of consumers

10. Whenever possible imitations

Unique

The unique source of raw materials of mining and chemical raw materials causing high quality and low costs of production.

Imitated

Highly skilled personnel.

11. On the sphere of manifestation

Production

Low production expenses. Uninterrupted production.

Trade

Existence of effective marketing network, enough traders for sales promotion of all made production.

Existence of long-term contracts with key consumers.

Marketing

The wide range of products from simple fertilizers to complex.

В оказании услуг

Existence of the special centers of service of consumers, providing consulting and information and analytical services.

Operational

Existence of more hi-tech product, easy-to-work

At the same time under the influence of various factors of external and internal environment competitive advantages of the mining and chemical companies can decrease or at all disappear. The main reasons for loss of competitive advantages can become:

  • - deterioration in various factorial conditions (growth of costs of production, decrease in qualification level of shots, etc.).
  • - decrease in investment appeal of the company and its innovative potential (owing to unwillingness to reduce the current income and to make investments in future development of the company);
  • - decline in the ability to adaptation (bureaucratization, use of the obsolete equipment, long terms of creation of new production, slow response to requirements of the market, etc.);
  • - ensuring access by competitors to sources of competitive advantages;
  • - state policy in the countries of presence of the companies and some other.

For formation of competitive advantages first of all it is necessary to define their

sources. For the mining and chemical companies specific features of branch can be sources of competitive advantages. Following the results of a research the author has made the map of formation of competitive advantages of the companies of mining and chemical branch with allocation of the segments, most suitable for realization, (table 3.5).

Prerequisites and sources of formation of competitive advantages of the mining and chemical companies

Prerequisites to formation of competitive advantages

Source of formation of competitive advantages

competitive

advantage

Result of realization

The most suitable segment for realization

1

2

3

4

5

Steady competitive advantages

Limitation of resources

Mineral resources

Existence of access to unique resources=> raw independence on potash and phos- phatic raw materials

The availability of inexpensive raw materials causing low production expenses

Phosphoric,

potash

Tendency of integration into branches

Possibility of formation of the large integrated structure with existence of assets for implementation of all production chain independently

The vertically integrated business model of all largest companies

Effective planning and management of all chain of value creation, use of advantage of synergy and achievement of low level of expenses

Phosphoric,

potash

High

knowledge intensity of branch and the NTP high level in branch

Possibility of direct participation in development of innovative technologies and their use for increase in competitiveness

Cooperation with the scientific organizations or their existence in structure of structure

Realization of CA will allow to carry out development, introduction and scientific support of innovative projects

Phosphoric,

potash,

nitric

Remoteness of places of consumption from production

Possibility of formation of a logistic way with the smallest distance and expenses

Existence of effective logistic infrastructure (with own transport assets), own marketing network

Low expenses of transportation, timely deliveries of goods

Phosphoric,

potash,

nitric

Seasonal fluctuations of demand for production

Possibility of transformation of system of production and sale depending on demand

The flexible business model allowing to change quickly structure of production

High production efficiency, sale and sales

Phosphoric,

potash,

nitric

Prerequisites to formation of competitive advantages

Source of formation of competitive advantages

competitive

advantage

Result of realization

The most suitable segment for realization

High capital intensity of new projects

Possibility of an osvaivaniye of new projects only as a part of large holdings

Presence at holding of enough means for financing of new projects.

A large number of the extracting and overworking assets as a part of holding

Phosphoric,

potash

City-forming, budget forming and socially important companies

Possibility of participation in social and cultural development of the region of presence

Implementation of programs for development of social facilities, development of social infrastructure.

Good reputation of the company, involvement of labor, increase in level of corporate and social responsibility

Phosphoric,

potash,

nitric

Need of entering into the soil of all types of mineral fertilizers

Opportunity diversification of production and release of all types of mineral fertilizers

The wide product range including all types of mineral fertilizers and complex

Ability to satisfy demand of a large number of consumers, high profit level

Phosphoric,

potash,

nitric

Unstable competitive advantages

Political and economic instability in the country

Колебания курса валют и расчет международных операции в иностранной валюте

Низкая себестоимость по отношению к мировому рынку

Получение дополнительной прибыли/ увеличение объемов сбыта за счет снижения цен

Phosphoric,

potash

Export-orientation of branch

Possibility of expansion of sales markets, presence of solvent consumers

Product sales to foreign consumers at the high dollar prices

High margin of the companies, stable cash Hows

Phosphoric,

potash

Increase in demand in key areas of consumption

Possibility of sales of products to certain regions

Sale of additional volumes of production

Receiving additional profit on realization

Phosphoric,

potash,

nitric

Apparently from the table, possess the most similar characteristics and sources of formation of competitive advantages a potash and phosphoric segment.

Thus, competitive advantages of the mining and chemical companies are formed proceeding from branch and market features taking into account own capacity of the concrete company.

Often the result (competitive advantage) achieved by the company is result of joint action of a number of sources. Intensity and duration of action of various sources of competitive advantage often happen changeable and depend both on specific features of the company, and on market conditions.

On the present many mining and chemical companies are engaged in release of several types of mineral fertilizers, and also complex that causes need of creation of the uniform mechanism of formation of competitive advantages to the mining and chemical companies, and also systems of an assessment of level of their force (competitive potential).

Nevertheless, despite general characteristics, each segment of mining and chemical branch has the specific features causing individual approach to formation of competitive advantages.

 
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