Competitiveness is defined as the ability to generate greater consumer satisfaction than others in a specific market, once settled on a price or the ability to offer a lower price. There is an urgency to compete with others selling similar goods or services. There is a certain satisfaction once a few factors are in place.
Frequently the expression loss of competitiveness is used to describe a situation of rising of production costs, since higher costs will adversely affect the price or profit margin without providing improvements to product quality.
Factors affecting competitiveness.
Quality
Product quality is the ability to produce satisfaction (whether economic goods or goods and services) to meet the expectations and needs of users. On the other hand, it can also means performing correctly during each step of the production process to satisfy internal customers of the organization and prevent defective outcomes. Its importance is based on the fact that customer satisfaction increases their loyalty to the product (at least in commercial organizations).
Productivity
This is the ability to produce a greater quantity of product of a certain quality (whether goods or services) with less resources. Productivity depends heavily on the technology (physical capital) used, and the quality of training of workers (human capital). This way, in industrialized countries, employees on average can produce many more goods thanks to the existence of machinery that mechanizes or automates parts of the process.
As for services, especially those requiring direct personal attention, productivity is often much more difficult to improve through physical or human capital. However, historically the production of manufactured goods has undergone major productivity increases thanks to the introduction of updated equipment and new technologies.
Greater productivity results in greater production capacity at equal cost, or in a lower cost to an equal product produced. A lower cost allows lower prices (important for commercial organizations) or lower budgets (important for government organizations or social services).
Quality of service
The service quality is related to the ability to satisfy customers, users or citizens, in an honest, fair, solid, transparent, kind, punctual way, etc., achieving high levels of satisfaction in their relationship with the organization or institution providing the service.
Image
Image is the ability of the organization to promote – in the minds of many people – the idea that their product or service is the best alternative for obtaining goods or services, and that these products or services shall satisfy the buyers’ needs and expectations. Image also means positioning the brand in the minds and tastes of the consumer.