Productivity refers to the ability that a company has to produce items cheaper than its competitors, but it doesn’t necessarily mean more customers will buy their products.
Competitiveness, meanwhile, is the ability that a company has to get a higher profile than its competitors and therefore, make itself popular with potential customers. This capability is achieved by an original product, the quality/price relationship, customer care, or marketing techniques. Competitiveness responds to a relative ranking of companies: i.e., a company is always competitive in relation to others.
In investigations accomplished, it has been established that the competitiveness of PyMES companies lies in their ability to create value in the short term. This creation of value must be expanded in the mean term, which would allow the permanence of the company in the long term, i.e., if the company create values in the short and mean term, then long term is a result: therefore the concern for the long term would be lower.
How do we measure competitiveness?
From this conceptualization it appears that competitiveness has as determinants factors: productivity, P; (measured by the performances in the sector, generally this is quantified by setting the number of products produced divided between the resources: raw materials, supplies, labour, and equipment used) and profitability, P, of the sector.
The way to measure its results is to compare the productivity of the company with the industrial sector in which the production is located. This is generally a performance measurement (units produced of goods and/or services or inputs used by period). They will be highly productive if performances are equal to or exceed the sector or industry branch average in which the company operates.
We can say that competitiveness depends on the ability of employers to manage and engage in all required areas of the business in fields such as: business, financial, marketing, production, and technology. In symbolic terms this is expressed in the following equation:
CM = f (Ge; Co; Gf; P, T) + E
Where:
CM = Competitiveness of PyMES
Ge = Management
Co = Marketing Management
Gf = Financial Management
P = Production
T = Technology
E = Environment or exogenous factors related to the economy goal.