Building Power Through COMPETITIVENES

In today’s era of free competition, there are no other more important words than competitiveness. Competitiveness means having strength, whether coming from within or from the surroundings. Competitiveness will create advantages, achievements and prosperity. On the other hand, a lack of competitiveness will result in losses and poverty. But before we go into the How To phase, we should first understand the following principles:

1. Competitiveness is reflected in prosperityand prosperity cannot come from low salaries, or simply from inheritance (whether in the form of natural resources or something acquired from the previous generation). So it must born in mind that prosperity is created, not inherited.
2. Prosperity is conceived by the state, but cannot be realized or distributed by the state or government alone (be it central or regional government). The government’s task is to create conditions in such forms as infrastructure, capital, incentives and productive manpower, and to establish work ethics (social capital) that will allow businesses to have a competitive edge.
3. In other words, the government creates prosperity through the business sector (companies). It is important to develop principles of governance that are in favor of the business sector. What is a pro-business government? A pro-business government is a government that is efficient, decisive and accurate in allocating resources, a government that is making efforts to make businesses operate efficiently, easily, safely and with high standards.
4. Competitiveness can be achieved through two things: internal and external strengths. The state or government will not be able to do much to strengthen a company internally, but it can influence a company’s competitiveness by creating a supportive environment.
   

From the above four principles, it is clear that both the regional and central governments play a crucial role, one that is prone to misinterpretations that could be counter-productive. If the government wishes to get involved directly through its arms, it may not achieve the intended results.
The government’s task is to regulate and its DNA is bureaucratic in nature. The role of businesses is to seek profit through competition and they have the DNA of business and entrepreneurship.

Business Strategy
How do businesses develop competitiveness? There are two things that need to be done. First, businesses must choose the right location and second, face competition with good strategies.

Choosing the Right Location
Businesses don’t just choose locations. Smart businessmen know where to find locations for their businesses. A location is a point from where a businessman moves, get things he needs and move them for shipping.
What does a business need? Businesses need raw materials, a trained work force with good work ethics, land, supporting equipment and so on. So complementarity is absolutely crucial. It is impossible for a company to produce everything on its own.
It needs supporting industries, be they small/medium enterprises or big companies. If the distance is too far for materials to be shipped, the cost will be too high.
Proximity is essential. The cluster concept emphasizes proximity and complementarity. Where a business and its supporting industries are in close proximity, businessmen get information, acquire new knowledge and access to technology and public goods.
But businesses also need support from a friendly government and public and to be free from illegal levies or other pressures. Businesses also need access to the global scene through modern information technology and access to ports that allow ships to come and go regularly at low cost. By adopting the right location strategy, businesses will be able to compete better.

Business Strategies
Finally, businesses need strategies to nurture competitiveness. These strategies involve management, methods of acquiring raw materials, investment strategy, marketing methods and so on. Through sustainable programs, a business nurtures its competitive edge better than its competitors. To be competitive, a business needs to ensure that it operates efficiently with a flexible cost structure, offers distinctive products and is capable of producing new things. In this
case, again businesses need support from research agencies provided by the state.
As a conclusion, it is clear that the business sector and the government (national as well as regional) need to support each other and work together to formulate the direction of the nation’s industry.

Rhenald Kasali
Director of the Masters of Management Program, Faculty
of Economics, University of Indonesia