Competitiveness

The theoretical framework of this work focuses on showing how the goods markets where small and medium-sized companies operate adjust, from a microeconomic point of view. It then seeks to compile the main approaches that have been used to define and measure competitiveness.

Subsequently, an attempt is made to answer the questions: Do nations compete?; Only companies ?; Do both compete?

Later, the concept of competitiveness that an economic system or policy must offer is linked.

Finally, an attempt is made to analyze the survival of the company and the competition.

This analysis is based on the most practical and appropriate definition of business competitiveness is to achieve and maintain profitability equal to or greater than rivals in the market.

Otherwise, the business will not survive and the time of agony will depend on the sadism and need of the strong in the market and the financial capacity and obstinacy of the victim in question.

1. A theoretical framework for competitiveness

The theoretical framework of this work focuses on showing how, from the microeconomic point of view, the goods markets where small and medium-sized enterprises - SMEs - operate in an open economy situation as a consequence of the opening of the economy Colombian. The following deductions on the conditions for competitiveness XE «competitiveness» are taken from Cesar Ferrari XE «Cesar Ferrari”.

In any XE «market», the balance is given by the demand and supply conditions. Usually the offer is determined by the conditions of the costs of the companies. Demand refers to consumer behavior.

If the XE «market» is faced with a situation of international competition, the price equation is given by the international prices (p *) nationalized by the exchange rate (f), tariffs ™, affected by financial costs (ia) and the minimum expected profit, given by the passive interest rate (ip). In economies with free flows of international capital, said passive cost could be given by the international passive interest rate (ip *):

If there are two types of producers, each with a different level of competitiveness XE "competitiveness", each corresponds to a different level of cost (c1 and c2) and a different level of production capacity (x1 and x2). The cost equations have national (cn) and imported (cm) components.

They include the different elements that intervene and generate costs in the production process: wage (w) multiplied by the productivity XE «productivity» of labor, defined by the coefficient labor product XE «product» (l), cost of capital (r) that multiplies the productivity of capital per unit of product (k), price of national inputs (pn) multiplied by the respective coefficients of input product (n), international price of imported inputs (p *) nationalized by the exchange rate (f) and import taxes ™. Said direct costs are increased by the financial cost of the invested working capital (ia) and by a minimum profit expectation that is given by the passive financial cost (ip).

If the first producer is competitive and the second is not, it is verified that: c2> pp> c1

From a theoretical point of view, if the price “p” is higher than the cost “c”, the producer and its respective product XE «product» are competitive. But if the price is less than the cost, it is clear that you cannot compete. Therefore, in an open, competitive XE 'market', a producer who offers his product at a price below cost will not be competitive, tends to bankruptcy.

That is, while (p> c1) producer 1 will be competitive, which is not the case for producer 2 that is outside the market XE «market» (c2> p). The following illustration shows the previous relationships:

In the illustration, as long as p is greater than c1 on the stepped supply curve, with differentiated marginal costs, producer 1, represented by c1, will be competitive, while producer 2, who could produce up to x2, represented by c2, being above the p curve, it will be outside the XE "market" market. Total national demand is satisfied at prices p, part with national production x1 and the balance with imports.

In conclusion, as long as the company is profitable, comparing nationalized international prices and costs, the company will be competitive. Likewise, the growth rate of prices must be greater than the growth rate of costs for the entrepreneur to become more competitive XE «competitiveness», based on prices and costs.

Regarding these aspects and with regard to the competitiveness of companies' XE "competitiveness, it is necessary to differentiate between systemic or structural factors that are beyond the control of the company and the internal elements of the companies such as available working capital, their technological level, knowledge, skills and desire to create competitive advantages.

It is clear that the former are linked and are a consequence of public policies, particularly economic policy.

From there follows the enormous responsibility of governments in relation to the XE competitiveness "competitiveness" of companies and the need for any internationalization process to be conducted with an XE "vision" not only of international policy but, fundamentally, of economic and social development.

Systemic factors include macroeconomic factors such as credit availability, interest rate, fiscal and tariff policy, and the exchange rate.

Other factors are of a regulatory nature, such as XE «intellectual property» intellectual property policies, preservation of the environment, competition policies and consumer protection.

It also includes infrastructural, social (education, industrial and labor security) and international factors such as the movement of capital, protection of imported technology, multilateral agreements and foreign trade policies.

For his part, Michael Porter XE «Porter» (1995) expressed that “The only significant concept of competitiveness XE« competitiveness »at the national level, is productivity XE« productivity »”.

Additionally, “to maintain the advantage, companies must achieve more refined competitive advantages over time, by offering superior quality products and services or through a more efficient production process. This translates directly into productivity growth. "

In the particular development of this study, Porter's definition of competitiveness XE "competitiveness" XE "Porter" is not shared because productivity XE "productivity" is an element that helps to be competitive, but it is just one of many other variables that affect the competitiveness of a company.

For this reason, it is necessary to understand that the competitiveness of a company is acquired when its profitability is equal to or greater than that of its rivals in the XE «market», apart from its participation in the market, its level of productivity, its level of technological, its qualities in products, and the systemic factors of the economy in which the business operates. It is obvious that if an entrepreneur is entering the market with a lower rate of return on his business than his competitors, he is simply deteriorating his financial and economic position against his rivals and whose vulnerability will be exploited by them.

Additionally, Grosse and Kujawa invite the reader to be very careful in distinguishing between the concepts of XE comparative advantage "comparative advantage" and that of XE competitive advantage "competitive advantage". In effect, the first refers to the cost of producing a good or service in one country with respect to another.

It is a concept based on the relative cost of production between nations or between regions.

The XE "competitive advantage" competitive advantage, on the other hand, refers to the knowledge, skills, abilities and desire that a company possesses to surpass its rivals in the XE "market" market.

The comparative advantage XE "comparative advantage" exists, it must be located next to it. Competitive advantage must be created. Notwithstanding the foregoing, neither excludes the other. Of course, a company can use comparative advantages by being close to cheaper raw materials, close to a port and / or close to the market it serves, achieving a cost advantage over its competitors.

There is no doubt that, from a practical point of view, this internationalization, by materializing in terms of openness and globalization, XE «globalization» have affected companies. With regard to the concepts of opening, internationalization and globalization of markets, it is important to present the theoretical concepts on the three processes, which, although they advance simultaneously, are different in their application.

Internationalization simply consists of crossing national borders, “between nations”; that is, when an XE product "product" (good or service) crosses a national border, it becomes international. The same happens with people, when they cross a national border they internationalize.

Globalization XE "globalization" is another process, which goes further than the previous ones because it refers to the worldwide assimilation of patterns of behavior and simplification through the mix of XE values "values" in the political, economic and culturally, to understand the world as a system and with the purpose of integrating things that were previously separate. Globalization has developed more rapidly through global communication through technological advances that allow buying and selling electronically, mobilize capital 24 hours a day from one country to another, and mix cultural values between the different nations of the world.

The process of economic opening refers to the removal of obstacles to free trade, both in tariff barriers and bureaucratic obstacles and specific rules that block and increase trade flows between nations.

The Colombian opening was made official in 1991 through the issuance of Law 7 of January 16 of that year and which created the Superior Council of Foreign Trade, the Ministry of Foreign Trade and the Bank of Foreign Trade -Bancoldex- to boost exports Colombian. Subsequently, it progressively decreased the tariff charges.

On January 17, 1991, Law 9 on foreign exchange reform was issued to facilitate the operations of importers through financial intermediaries authorized by Banco de la República. Consequently, the opening, as its name implies, opened the Colombian customs to facilitate the entry of imports.

2. Global competitiveness

This chapter looks at the past in order to verify that the peoples have competed for a long time before the term nation emerged, which only applies to the nationalist movements that led to the unity of Italy and German unification during the second half of the century. XIX. Then, from the current perspective, we managed to compile the different concepts on the competitiveness of nations, highlighting the model led by Professor Garelli of the IMD and the model of Professor Porter of Harvard University. Finally, we collect some views of Professor Krugman XE «Krugman» on the competitiveness of nations.

Do nations compete?; Only companies ?; Do both compete?

Perspectivism teaches us that we must observe people, animals, things and situations from different perspectives, hopefully from all possible perspectives, in order to achieve a full XE vision "vision" of what is observed.

A Historical Look

It is evident that nations compete, it is only enough to go through history from the beginning of the invasions in order to subdue other neighboring peoples and increase (the competition for) power and wealth. In prehistory, stone emerged as a tool and a weapon.

Homo Erectus learned to use stones and bones to hunt, to defend themselves, and to compete with other tribes or communities.

In ancient times writing also arose, but slavery advanced, the Babylonian empires, the Persian, the monarchies and even the city-states (the beginnings of democracy with the Greek cops), the medical and Peloponnesian wars arose.

Etruscan rule and the Roman Empire with its persecutions, competition between the empires of the East and the West. The seizure of Constantinople by the Ottoman Turkish empire begins the Middle Ages.

In the Middle Ages, barbarians, Huns and the Tatar-Mongol kingdom emerged. The Mongols invented the stirrup, and with that fulcrum they conquered Asia and almost all of Europe, forcing the Romans to pay so as not to be invaded.

It is evident that the Mongols' competitive advantage XE "competitive advantage" was the support in the stirrups to be able to use both hands: shoot arrows at a gallop, use the shield and the sword at the same time while riding. Thanks to the invention of the stirrup, the Mongols achieved one of the most successful invasion competitions of all time.

The Hundred Years War (competition between France and England for the succession to the throne of Charles VI), which led to competing for alliances until the war ends with the recovery of Bordeaux the same year that Constantinople falls into the possession of the Turks, 1453.

With the fall of the Eastern Roman Empire the Modern Age was born, characterized by competition between the absolutist and expansionist monarchies of Spain, Portugal, England, Holland and France which compete for the discovery of new territories to plunder their wealth. The French Revolution, which was a bourgeois revolution, ended absolutism in France and became the beginning of the Contemporary Age. A competitive commercial development began in the 15th century that transformed the European economy because commercial transactions were monetized and social classes were distanced by economic activities.

It should be remembered that with the Lutheran, Anglican and Calvinist reforms, the so-called “Protestant ethic XE ethics” emerged, which identified very well with the merchants who would later form the capitalist class. But in the 19th century, Napoleon begins his invasions of Europe and Egypt, in determined competition with England.

Indeed, in 1806, Napoleon Bonaparte declared a continental blockade against England, prohibiting any European country from allowing the entry of English merchandise. Napoleon was seeking a twofold goal: that the European continental XE "market" be reserved only for French manufactures (monopoly XE "monopoly") and take revenge on Admiral Nelson for having sunk the fleet of French ships when Napoleon went to conquer Egypt. In addition, for the repetition of the failure against Nelson himself in the famous battle of Trafalgar, which was unforgettably disastrous for Napoleon.

The Congress of Vienna reorganized the political map of Europe and created the balance of power between the powers; but, in 1823, the president of the United States, James Monroe, established his famous "Monroe Doctrine" in which he presented to the Congress of the Union the following statement: "America for the Americans" warning the English that they dominated the seas, the Russians who were expanding in the north (Alaska) and who had offered support to the Spanish against the American independence movements, that any European interference in America would be considered a threat to the interests of the United States, who had already recognized the independence of Latin American countries.

The Industrial Revolution intensified with the new business freedoms of the bourgeoisie.

European competition with England was manifest. The elements to compete were the XE resources "natural resources" in coal and iron; bank financing; the dominance of the seas and, primarily, the expanded markets in the colonies.

Competition in the free market XE «market» increased creativity and, with it, inventions that led to machines, steel and heavy industry that would serve the competitiveness XE «competitiveness» of European nations for territorial distribution from Asia and Africa that would lead to the First World War, then to the Second, after the "Cold War" between the Soviet Union and the United States. Currently there is competition for access to oil and many other natural XE "resources" more subtly than in the 19th century.

The actuality

In accordance with the study conducted by the International Institute for Management Development XE "Institute for Management Development" -IMD XE "IMD" - through its existence, the concept of Competitiveness involves different dimensions that interact with each other.

In 1965, two American academics, R. Farmer and B. Richman, made an attempt to quantify competitiveness XE "competitiveness" by building a matrix composed of four major areas: political-legal, educational, socio-cultural, and economic which were crossed with business functions such as marketing, XE "planning" planning, finance and production. The result was too complex and rigid to be functional; however, the concept led to a methodology that was applied by the IMD team.

In 1985, the President of the Council of Economic Advisers to the President of the United States, Laura D'Andrea Tyson, in Who's Bashing Whom ?, proposed a definition on competitiveness XE «competitiveness», a term that came into fashion in 1980 with monetarism growing, which reads as follows: (competitiveness is) "our ability to produce goods and services that pass the test of international competition while our citizens enjoy a standard of living that is both sustainable and better and better."

The Key Concepts of World Competitiveness

Do nations compete?

The presidents of modern governments travel abroad to present the tax and commercial benefits of their countries to foreign investors so that they can contribute to improving the lives of their nations by generating employment, foreign exchange and seeking technology transfer for their countries. In addition, governments extend invitations to potential investors to come to know the way of life of their nations and the attractions to invest.

For example, if a multinational corporation wants to directly serve the XE "market" of the Andean Community of Nations, in which country should it locate its facilities? The answer depends a lot on the efforts that each of the five members of the CAN XE «CAN» has taken to attract the new investor: competition between governments and between nations, because national unions come, in alliance with governments, to seduce to potential investors.

Not only states, nations, nation-states compete, but regions, too. For example, when the government of President Reagan offered tariff preferences to Caribbean countries, grouped regionally in Caricom, under the label of aid by the Caribbean Basin Initiative, known by its acronym in English CBI (Caribbean Basin Initiative) during In the 1980s, Colombia and Venezuela complained about not receiving the same aid despite being Caribbean countries. The same happened with the ATPA XE "ATPA" and, currently with its extension ATPDEA XE "ATPDEA", which grants preferences to Colombia, Peru, Ecuador and Bolivia, as Andean countries and leaves Venezuela out (Excluded because no production is reported there of narcotics or related substances).

Political and military competition has been paramount on the international agenda and consists in making clear who exercises power, defined as power control (Realpolitik).

To control the results, diplomatic exercise through other governments is required to prioritize the negotiating agenda.

Before September 11, 2001, the world agenda was hierarchized based on the issue of trade liberalization and democracy (WTO XE "WTO", IMF XE "IMF", World Bank XE "World Bank"). Terrorism was a subtopic, along with drug trafficking and arms sales, to deal with the least developed countries. As terrorism affected the United States, it then became a priority issue on the international agenda.

In environmental matters, the United States is the most polluting nation on the planet; therefore, as long as the Kyoto Convention is not signed, there will be no serious commitments to reduce gases. Likewise, as long as the United States does not sign the accession to the International Criminal Court, it will not have sufficient strength either because it will condition its aid to less developed countries based on their behavior before the Court.

All of the above means that the United States is the “owner of the ball”, that when it has to be absent, it takes it and the game is over. That is, without the commitment of the United States in any international treaty, agreement or convention, the effectiveness of the results is doubtful and weak.

Cultural competence is also manifest despite the subtle cover-up of ethnocentrism and xenophobia, only expressed by doctrinal or fundamentalist groups.

Nations compete for the best cuisine, the best wine, the best music, the best theater, the best cinematography, the best designs, the best standard of living (highest income) and the best quality of life (health, leisure, longevity).

The German philosopher Max Weber studied the relationship between culture and economic development in his book "The Protestant Ethic, Protestantism and the Spirit of Capitalism", at the beginning of the 20th century, in which he refers to XE values "values" and to education. In reality, nations do not compete with products alone, but with value systems and the education they offer their citizens.

The scientific and technological competence produced in research centers, funded by the national budget and belonging to the State and public universities, produce results that eventually become used by the private sector to compete with industries from other countries.

The so-called new materials revolution has been sparked by NASA, to cite an example from which modern industrial competition benefits. It is enough to compare a car from the fifties or sixties made up of more than 90% of iron, steel, thick cans, chrome, wire and a bit of textile for its upholstery against a current car built with new materials.

New computer technologies come primarily from research funded by the United States, primarily.

In Part II, we will see how the new international economic order led to the stabilization of exchange rates and the opening of nations to external markets, to avoid depressive situations such as the experience lived with the "black October of 1929" known as "The great Depression". JM Keynes then demonstrated how the slowdown in the American economy had led to the worst global economic depression, largely because governments had pursued protectionist policies.

As we will see in Part II, the Monetary and Financial Conference held in the town of Bretton Woods XE «Bretton Woods», State of New Hampshire, United States, during the summer of 1944, led precisely to seek alternative solutions to avoid the return to protectionist careers that would lead to commercial bottlenecks and, eventually, to new economic and social depressions.

Therefore, it is clear that States, nations, regions, municipalities and localities compete to attract investment, primarily in economic terms. For example, if a mayor achieves that a company is installed in one municipality and not in another, which had invited him, there was competition in which the municipality selected by the investment company benefits from the cost of the one that was not chosen: one wins and the other loses.

Garelli

Professor Garelli XE «Garelli”, Director of the IMD XE «IMD» Global Competitiveness Project, refers to the concept of creating value XE «value» to clarify where this originates. Garelli says that in any industrialized society, value creation begins with individuals (artisans, farmers, lawyers, etc.) and in companies where goods and services are produced.

Therefore, the State itself does not participate in that process directly, although it may participate with capital in many of these companies.

However, the State is a key actor in determining the level and quality of life of a nation because it establishes the rules that define the framework for the creation of wealth. Consequently, Garelli believes, wealth creation can be defined as "the engine that helps improve living standards."

Porter

Professor Michael E. Porter XE "Porter" shows that although "a nation's XE competitiveness" competitiveness "depends on its industry's ability to innovate and catch up… a country succeeds in a given industry because of its domestic environment it is the most forward-looking, dynamic and challenging ”.

Then, Professor Porter proposes "The Diamond of National Advantage" through which a nation responds to the innovation capacity of its companies and they can improve by overcoming barriers to the threats of change and affirms that the reason is in four attributes that constitute "The diamond of national advantages" namely:

The conditions of production factors such as specialized labor and infrastructure.

The conditions of national demand.

Related and supporting industries that supply goods and services.

The strategies, structures and quality of competing firms at the local level: the country's business management capacity.

The Porter XE Diamond «Porter»:

The Porter Diamond XE "Porter" sets the determinants of national competitive advantage XE "competitive advantage".

Illustration 3. Porter's diamond.

According to Professor Porter XE «Porter», "each vertex of the diamond -and the diamond as a system- affects essential aspects to achieve success in international XE competitiveness" competitiveness ".

In fact, in the subject of Competition and Business Strategy of the Master's Degree in Economics at the Pontificia Universidad Javeriana we have shown that with open economies, Professor Porter XE «Porter's» Diamond model is not necessarily "determining" to be able to compete internationally; in fact, if the economic policy of the government of a country that has decided to open its economy formulates guidelines that allow the removal of barriers to trade, as has happened with the 150 member countries of the WTO XE "WTO", entrepreneurs can, then, set up exporting companies that use imported raw materials and supplies, assemble locally and sell abroad.

In the previous case, none of the vertexes of the Diamond are required: it does not need the conditions of the local factors because it imports the equipment, tools and supplies to add XE value "value" and then export; qualified personnel may also be foreign; You don't need related or supporting industries because everything matters, if you want or if it's convenient; nor does it need the conditions of local demand; and, finally, the XE «strategy» strategy has to be international and not local, the same as management, which can be carried out by foreign administrators.

A branch of a multinational corporation can set up facilities in a free zone of a country, with foreign personnel and capital goods and imported inputs to manufacture, under favorable tax conditions, and compete in other international markets.

A study prepared by Avantel, interprets the position of Professor Porter XE «Porter» which is similar to that of a sports coach who cannot compete, himself, but has to do it through his players (companies). The Government, through the formulation of adequate policies, facilitates and promotes the best business performance to increase its levels of competitiveness XE «competitiveness». In Colombia, for example, two entities attached to the Ministry of Commerce, Industry and Tourism, the one financial -Bancoldex- and the other marketing -Proexport Colombia-, execute a large part of the policy formulated by the Government to promote competitiveness and, with she, Colombian exports.

A Mexican study argues that "Competitiveness is generated individually (at the microeconomic, industrial or business level), and not on the basis of aggregates, or macroeconomic levels, as generally tends to be thought." In accordance with the above, the competitive unit is the company and not the State or the nation.

Professor Krugman XE "Krugman" also believes that "countries do not compete with each other in the way that corporations do:" Coca Cola and Pepsi are complete rivals… if Pepsi is successful, this tends to be at the expense of Coca Cola… If the European economy is doing well, it does not have to be at the expense of the United States. On the contrary, a successful European economy would probably help the United States economy by offering it bigger markets and selling higher quality goods at lower prices.. "

3. Systemic Competitiveness

In this section we present the competitiveness generated by the economic policy formulated by the government in office affects the development of the business sector against its rivals in foreign markets.

But, systemic competitiveness is not only the product of economic policy but also of the legal, political, cultural and social components of a nation. The Germans introduced us to the bridges between microeconomics and macroeconomics by incorporating institutions that are part of that link called mesoeconomics.

Likewise, they introduced us to the concept of metaeconomics to go beyond the national aggregate economy and incorporate all those treaties that pierce national sovereignty without affecting its territory.

There has been a consensus among European, Asian and American academics on the importance of creating an economic environment conducive to the creation of wealth in each country.

Historians wondered why the Chinese with all their technological advances and natural XE "resources" were not the ones who developed the Industrial Revolution centuries earlier, when they were far more advanced than England.

The answers began with Carlos Marx and Federico Engels who argued that the socioeconomic environment of a nation was crucial for its economic development.

The British bourgeoisie has been very dynamic since the 18th century, particularly, and eager to achieve economic success, adventurers and explorers of wealth. The Chinese had a closed society around the emperor and considered that they were the center of culture and, therefore, any people outside of the Chinese borders was barbaric.

The main motivation of Chinese culture was the search for perfection, it was neither the territorial expansion, nor the commerce nor the subjugation of other peoples. Well, England subdued the Chinese with the two Opium Wars (1839-1842 and 1856-1860), forcing them to consume the opium extracted from the poppy that the English cultivated in India, and that is how they seized Hong Island Kong (returned to China in 1997) and five mainland ports, followed by other powers such as France, the United States, Russia and Japan.

We mentioned another determining factor in the difference in the economic development of the peoples, when we referred to Max Weber and his analysis of the "Protestant Ethics", at the beginning of the 20th century, related to western economic development.

As the name implies, the government system must formulate and execute policies to provide the appropriate elements and environments to create XE value "value", including stable and adequate legislation and pertinent institutions.

For developing countries such as members of the Andean Community of Nations and, for Colombia in particular, the following order of systemic factors can be established to favor competitiveness XE "competitiveness" of business:

Political: political factors refer to the political will to offer security to citizens and businesses, on the one hand, and the will to seek sustainable and effective peace processes.

Infrastructure: the provision of modern physical infrastructure that facilitates the start-up of companies in terms of energy supply, communications, transportation, drinking water.

Legal: regulatory stability is essential to compete. The changes in the “rules of the game”, as has happened in Colombia with tax reforms every two years, not only affect the XE planning, financial "planning" of the companies, but also affect their profitability, in addition to alienating foreign investment due to mistrust in the country's regulations.

Macroeconomic: the flexibility of monetary and exchange rate policies to adapt the economy to the opportunities of external markets, both to import and to export; access to loans with interest rates that allow profitability for businesses and formulation of policies that guarantee more facilitation than hindering business entrepreneurship.

Political-institutional: they refer to XE planning "long-term planning" of the economy and not to short and medium-term development plans (Colombia).

Support for access and coverage for technological risk; the facilitation and protection of intellectual property XE «intellectual property» (in Colombia the registration of a trademark may take more than eight months (the gestation of a baby). The provision of an agile and effective institutional framework.

Social: the redistribution of income equitably leads to reducing the gap between educated and illiterate; between healthy and sick; between people motivated to progress and indifferent and lazy people who want to live on the XE subsidies "subsidies" of the State. Health, education, training and leisure are essential elements for a society to progress.

Trade unions: they refer to the facilitation of communication channels between the State and the different types of association that group the population of a country.

Knowledge is perhaps the most critical XE competitiveness factor. Access to knowledge is a responsibility.

Operational: they refer to the training of a bureaucracy that responds to the nation with effectiveness, efficiency and, therefore, effectiveness. The bureaucratic obstacles of developing countries seem to seek the separation of the nation-state binomial instead of consolidating it.

Technological: technological factors refer not only to infrastructure but to technology transfer, which only occurs effectively if, and only if, there is access, assimilation, adaptation and application. Hence, we refer to the four A's of technology transfer.

International: international factors refer to the foreign policy of a country with respect to the diplomatic management that is exercised and the achievement of trade agreements that produce opportunities for the advancement of business abroad. Opening and promotion of exports.

The concept of systemic competitiveness was disaggregated by the Germans who focused it on the formulation of a concerted economic policy with the productive sector and through the guilds and with the different classes of associations, mainly unions and academia. The Economic and Competitiveness Council of the Presidency of the Republic of Colombia For the period 1994 - 1998 proposed the application of a model that staggered microeconomics with macroeconomics and incorporated the meso and metaeconomics into a system.

Meso and Metaeconomics

Illustration 4. Scheme of Systemic Competitiveness.

Mesoeconomy XE "Mesoeconomy" proposes to study the interests and interaction of all these intermediate actors that should serve as a bridge between Microeconomics XE "Microeconomics" and Macroeconomics XE "Macroeconomics", although each of these actors defends their own interests. For example, it is normal to see two opposite positions between the representative of the exporters and the representative of the importers (merchants), against the exchange rate policy of a government.

For the unsuspecting observer, this confrontation between importers and exporters vis-à-vis the level of the exchange rate, for example, confuses him: exporters want currency devaluation and importers ask for revaluation.

Importers will try to convince policymakers to revalue the currency and lower inflation, which is pleasing to consumers.

After all, it is the responsibility of the economic authorities to ensure the well-being of the majority of the population (the nation) and they must be aware of the effects of the rise in prices on family income, on the increase in inequality and on the difficulty of improving budgeting, both public and private.

Exporters also have very good arguments to defend a policy opposed to revaluation and encourage consecutive devaluations of the national currency because, by improving their incomes, they will be able to compete abroad, generate more productive employment, generate foreign exchange for the State so that it has money with what to pay for imports, substitute expensive imports and thereby improve employment and consumption levels, attract foreign investment to produce a spiral of progress.

If unions were more proactive than reactive, they would defend foreign investment to create more and better jobs for their children. Other paradigmatic union leaders think they can defend their privileges indefinitely; but they receive surprises when they are forced to change, by the forces of the XE «market» market.

The example of the demonstrations in the city of Seattle, in November 1999, when it was planned to carry out the famous WTO “Millennium Round” XE “WTO”, the transport unions joined other unions and NGOs grouping an extraordinary “strategic alliance” that managed to prevent the globalizing negotiations of the Ministerial Meeting at the end of the century.

Ralph Nader, representing consumers; John Sweeney, leader of the AFL-CIO unions, representing the rest of the American "union unions" and the representative of Green Peace, who in turn represented more than 15,000 NGOs across the planet, managed to hinder the start of negotiations to liberalize agriculture., services and other negotiations related to free trade.

The above analysis can be classified into what is currently called the XE Metaeconomy "Metaeconomy".

From the above we can deduce that there are many actors that can affect the free development of the markets. Even an individual can hinder the development of a XE «market». For example, there have been two attempts to introduce new golfing implements to the market. The first attempt was a ball whose modifications made it faster; and the other attempt was the introduction of a special cue to help get the ball out of the shoals on the courts or fields. In both cases, the products were rejected by the American association that regulates golfing implements. The reason for the rejection was due to the fact that one person demanded the use of the ball and another, apart,sued the use of the new golf club before the aforementioned association arguing that these new implements distorted the raison d'être of the golf game and with this, managed to avoid the acceptance of these new implements and their introduction to the market.

Both products had already been patented and put into production, generating huge losses for innovative entrepreneurs.

Unlike the previous example, an innovation in skis to slide on snow was accepted by the authorities of that sport, allowing the innovative entrepreneur to enjoy a phenomenal growth XE "market" by going from less than a million skiers in the 70s over nine million skiers in 2002.

Paul A. Samuelson (1974, 43) said that firms did not know when consumers changed their preferences and that, therefore, they could exceed production in one field and fall short in another. These ignorances of consumer trends have produced countless failures. But, marketing has evolved to help survive in the markets

4. The survival of the company and competition

Microeconomic texts show us that competition tends to reduce companies' profits to even zero. The reason microeconomics gives us is that when a business is very profitable, the desire to make money is so attractive that other entrepreneurs will want to compete in that XE "market" to enjoy their profits.

Then, with the entry of more producers, the supply increases, which pushes prices down; In addition, there is another unpleasant effect because the increase in production also pressures the prices of raw materials and inputs, but upwards, further deteriorating the contribution margins of entrepreneurs and, consequently, reducing profits to zero..

The academy peeks. In reality, university professors observe markets modestly, even if they finance research with included fieldwork. Some authors have ventured to propose definitions of what competitiveness is or should be XE «competitiveness»; Others seem to argue that anything that has more than one definition is undefinable by definition. Some third parties believe that the academy has not agreed on a definition of competitiveness.

In the theoretical framework of Chapter 1, the definition with which we are going to build competitiveness XE "competitiveness" business was proposed:

The act of competing means, chastisingly, contending two or more people with each other, aspiring one and the other with determination to the same thing. Our legislation admits natural persons and legal persons or companies. Thus, two or more legal entities compete for the same XE «market». However, rivalry for a larger slice of that market makes sense if it is profitable in order to create XE "value" and generate wealth. Otherwise, you would compete at a loss which would lead to bankruptcy.

If the profitability of a company in an open economy is lower than that of its rivals, even if it has the means to pay its workers, suppliers and shareholders, sooner or later it will be weakened until it reaches zero and turns negative. In this case, the microeconomic theory of the “null profit theorem”, stated above, would be applied.

What measure of profitability are we referring to?

Although many business analysts are of the opinion that business performance should not be measured solely by the earnings from the exercise, classical economic theory has argued that profit maximization remains the primary XE "vision" of investors and investors. entrepreneurs seeking socioeconomic success. Do you think, reader friend, that San Francisco de Asís could have been a successful investor or entrepreneur?

The investor with entrepreneurial qualities does not invest randomly as if he were playing in a casino. Whoever wins in a casino is not smart but good and lucky. On the other hand, those who win in investments previously analyzed and compared with other possible alternatives are judicious and rational people, who quite possibly have studied Competition and Business Strategy or the like.

The trade liberalization that the Uruguay Round produced from 1986 exacerbated competition among the fittest and raised awareness of the need for profitability in business. For this reason, when we propose the definition of XE competitiveness «competitiveness», it is also necessary to distinguish what profitability we are referring to.

Traditionally, investors and company managers approach profitability analysis through the use of the four simplest measures, which allow for quick and effective comparisons with other businesses or decision-making alternatives. These four profitability measures are widely known by their acronyms in English: ROS XE «ROS”; ROA XE «ROA”; ROE XE «ROE”; and ROI XE «ROI».

Returns refer to the percentage return on the application of funds: return on sales, on assets, on wealth, on investment.

ROS XE «ROS» (Return On Sales) or Return On Sales; that is, the profit after expenses and taxes.

ROA XE «ROA» (Return On Assets) or Return on Assets. It refers to dividing the profit over the total assets of the business.

ROE XE «ROE» (Return on Equity) Return on Equity which results from dividing the profits by the real equity of the business.

ROI XE «ROI» (Return on Investment) or Return on Investment. XE «Investment» Also used to analyze the profitability of a product XE «product» or a project.

Bibliography

Ferrari, César A. Economic Policy and Markets: Ch. 2, Theories on the Market. Pontificia Universidad Javeriana, 2001. Grosse, Robert and Kujawa, Duane, International Business, Theory and managerial applicaions, Third Edition, Irwin, 1995. Garelli XE «Garelli», Stephane, Director of the World Competitiveness Project. World Competitiveness Yearbook XE "World Competitiveness Yearbook", IMD XE "IMD", 2003.Hirshleifefer, Jack and Hirshleifer, David. Microeconomics XE «Microeconomics», price theory and its applications. Pearson Education. Sixth Edition, 2000.Krugman XE «Krugman”, Paul R. Pop Internationalism. Editorial Norma, 1999 Plane, Mariano, Study on Competitiveness of the Brazilian Industry, number 2, in Productivity XE "Productivity", Competitiveness and Internationalization of the Economy, DANE, Santafé de Bogotá, September 1995.Competitiveness in the Mexican Company; Mexican Institute of Finance Executives. Mexico, 1995 Porter XE «Porter», Michael E. Competitive Advantage: Creating and Sustaining Superior Performance. New York: The Free Press, 1985. Porter XE "Porter", Michael E. The Competitive Advantage of Nations. Javier Vergara Editor SA Buenos Aires, 1991.

Ferrari, César A. Economic Policy and Markets: Ch. 2, Theories on the Market. Pontificia Universidad Javeriana, Faculty of Economic and Administrative Sciences, Postgraduate in Economics, July 2000.

Ibid., Cap. 2

See, Laplane, Mariano, Study on Competitiveness of the Brazilian Industry, numeral 2, in Productivity XE «Productivity», Competitiveness and Internationalization of the Economy, DANE, Santafé de Bogotá, September 1995. Pp. 361-364.

Porter XE «Porter», Michael E. Competitive Advantage: Creating and Sustaining Superior Performance. New York: The Free Press, 1985.

Porter XE "Porter", Michael E. The Competitive Advantage of Nations. Javier Vergara Editor SA Buenos Aires, 1991, p 33.

Grosse, Robert and Kujawa, Duane, International Business, Theory and managerial applications, Third Edition, Irwin, 1995. Q 70.

For more information on the subject, see What is globalization XE "globalization"? Fallacies of Globalism, Responses to Globalization, by the German sociologist, Ulrich Beck, Paidós, Barcelona, 1998.

Garelli XE "Garelli", Stephane, Director of the World Competitiveness Project. World Competitiveness Yearbook XE "World Competitiveness Yearbook", IMD XE "IMD", 2003, p.4.

See Krugman XE "Krugman", Paul R. Pop Internationalism. Editorial Norma, 1999, p.23.

www01.imd.ch Institute for Management Development XE "Institute for Management Development", Lausanne, Switzerland.

Ibid., The World Competitiveness Yearbook XE "World Competitiveness Yearbook", 2003.

Porter XE "Porter", Michael E. The Competitive Advantages of Nations in the Chilean Production Promotion Corporation, FONTEC Program, 1991, p.1.

Ibid., P.8.

Ibid., P.8

Competitiveness in the Mexican Company; Mexican Institute of Finance Executives. Mexico, 1995

Proexport-Colombia is a Trust Fund managed by Fiducoldex that belongs to Bancoldex; but, the policy is formulated by the Ministry.

Avantel. Op. Cit… P 4.

Krugman XE "Krugman", Paul R… Pop internationalism. Norma Editorial Group. March 1999, p.p27-28.

Hirshleifefer, Jack and Hirshleifer, David. Microeconomics XE «Microeconomics», price theory and its applications. Pearson Education. Sixth Edition, 2000, p.205.

Ibid.