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FORECASTING THE LEVEL OF INTERNATIONAL COMPETITIVENESS OF DOMEST
Vinod Anand | 14 Dec 2011

Although the process was narrowed-down considerably by the process that was discussed above, international cost and process comparisons of the wide range of products found in each of the micro-clusters were still problematic.

ALTHOUGH THE process was narrowed-down considerably by the process that was discussed above, international cost and process comparisons of the wide range of products found in each of the micro-clusters were still problematic. Consequently, a limited number of products were selected in each of the micro- clusters to enable direct comparison between domestic and global competitors.

The products that were selected in each of the micro-clusters had to meet three basic criteria. Firstly, it must be produced domestically, to enable comparison. Secondly, it must adequately represent the cost structures, processes and problems or challenges experienced by the selected micro-clusters. Thirdly, comparable products must be produced globally and international benchmarking partners for the products must be accessible.

In most of the cluster studies discussions with the manufacturers in the selected micro-clusters it was sufficient to identify the most appropriate products. These product descriptions must be very specific to ensure like-with-like comparisons. For example, the aluminum hollowware micro-cluster an all aluminum, 20 cm (in diameter), 3mm thick, pot with a lid and a Bakelite knob and -handles was identified as one of the most appropriate products.

In some of the studies that were consulted (Little, 1996), confidentiality problems (due to the sensitivity of company specific information) and difficulties to identify locally produced products that are directly comparable to products produced in other countries, excluded a product-specific focus. In these studies, international comparison was confined to production processes, such as raw material handling, research and development expenditures, and quality control methods. General comparisons regarding issues such as government support, market trends, availability of resources and other issues that are typically part of the competitive environment, could still be included were there was no specific product focus. The above-mentioned approach was considered the most appropriate for the Japanese Grant Fund Electronics cluster study.

IDENTIFICATION OF ‘BEST -IN-PRACTICE” COUNTRIES FOR COMPARISON

Porter’s ten nation study (Porter, 1990) focused on the determinants within nations that enabled them to be competitive in certain industries. Likewise, to understand the type of competitive platform (or diamond) that is most conducive to the development of certain industries, identification of the determinants that contributed to the “best-in-practice” position of certain countries in specific industries is required.

Therefore, leading international producers of the products that were previously targeted, were identified as case studies to detect the components of their national diamond that contributed to the ability of those manufacturers in that nation, to develop a globally competitive industry. Hopefully the lessons learned from these countries will give South African industrialists and policy makers some indication as to how the domestic “diamond” needs to be developed, to facilitate a process of continuous innovation and upgrading in specific industry segments.

The leading competitors in the specific micro-cluster, the so-called “best-in practice TM , were identified with the assistance of the domestic manufacturers of the selected products. Their selection was often based on their perceived domination of global markets in those specific products. However, the ability to access detailed company and product specific information from the companies in the targeted countries also had to be considered when selecting a country for comparison.

In addition to the identification of ‘best-in-practice’ companies i.e. those that are currently dominating markets, emerging best competitors was also identified for comparison. There are typically companies that are not as yet market leaders, but that has shown significant improvements in their competitive positions in recent times. The emerging best competitors are often located in newly industrialized countries. Obviously, the development path that was followed in these companies and countries are of particular relevance to South Africa.