ANALYSIS AND EVALUATION OF

COMPETITIVE FACTORS AND COMPETENCIES OF A TRADING

ENTERPRISE

The strategic management of the trading company is heavily focused on those key areas in which progress can be made and exceeded by the achievements of competitors. Therefore, the analysis of competitive

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factors is the second in the order and equivalent in the importance task of analyzing the strategies of a trading enterprise. Managers who make strategic management decisions must be well aware of the points in which it is possible to destroy the positions of the competitors and find new buyers.

Any trading company should have, apart from the material base and financial resources, a coherent set of competences, through which, in fact, any strategy is implemented. Prerequisites for long-term success of the enterprise, according to A. Nalyvayko, are not only the proper development of tasks and the assessment of the external and internal environment, but also "the creation, expansion and effective use of so-called distinct competencies of the enterprise ..." [3, p. 11].

Distinctive or, as they are often called, the core competencies that A. Nalyvayko describes is a prerequisite for the implementation of virtually all competitive advantages of trading enterprises. The effectiveness of sales, logistics, operational sales management, marketing and advertising provides the appropriate competencies that the enterprise owns.

For example, in our opinion, the competitive advantages of many trading companies are as follows:

• strong and recognizable brand, which is associated with prestige, high level of service and quality of products;

• availability of a strategic brand development plan, which includes the standards of corporate salon and service, a set of brand differences, an appropriate advertising policy;

• versatility of brand standards;

• the existence of exclusive rights to the distribution of leading manufacturers;

• diversification of the range (the maximum share in turnover per one manufacturer does not exceed 15%);

• orientation to the consumer's expectations;

• availability of a comprehensive product, which includes a ready interior solution and a number of additional services;

• wide geography of presence;

• professional management;

• professional implementation of ERP-system at the enterprise.

As can be seen from the list above, the role of such non-material factors as the presence of a strong brand, personal reputation and talent of top managers, peculiarities of organizational relations, customer orientation, the existence of economic ties and exclusive rights, etc., has

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increased significantly. All these factors should be considered as intangible resources that can generate profits and determine the appropriate position on the market. Therefore, one of the most common views on this problem is based on the definition of organizational capabilities and competencies of the company as the most influential factors in its successful long-term development and competitiveness.

Scientific literature and management practices do not yet have a unified terminology in the field of competence. Most often, terms such as "core competencies", "basic competences", "intangible assets",

"intellectual resources", etc. have been used. Unfortunately, there is currently no clear definition of these concepts, which would be shared by the vast majority of reputable specialists. There is also no unity in the sense of the same terms, which only increases the uncertainty in the conceptual apparatus of the direction of the study of competences and creates certain problems for the spread of methods of competence management among professionals.

In the 90 years of the last century, the development of the theory of competitive advantages was associated with the expansion of the interpretation of resource support for the operation of the enterprise. In order to assess the strategic potential of the company, in addition to tangible and intangible resources, the following terms were proposed as

"core competencies" [8] and "dynamic capabilities of the company" [9].

Competence (from the Latin competentia – affiliation) is a term that literally refers to the sphere in which a person or organization has extensive experience and knowledge. This term is often applied to individuals, describing the ability of a person to perform certain functions; the presence of her important skills in the performance of work. Personal competencies of an employee are the subject of attention in the management of personnel, as well as in strategic management, when it comes to the implementation of strategic plans and responsibility for their implementation.

An employee who owns valuable (from the point of view of his employer) personal competences must, on the one hand, clearly perform the functions assigned to him in accordance with the requirements of the enterprise, and on the other hand, be able, on the basis of his experience, to find the right solutions in different atypical situations.

The term "competences" or "strategic competences" is often used also in relation to organizations [6]. Strategic competences are the ability to choose the best business strategy in the appropriate external environment. Such competencies at the strategic level represent an

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important intangible asset that cannot be seen in the usual balance sheet, but which ensures that the course of the organization conforms to the environmental conditions and available resources.

Competences of the enterprise must be distinguished from other, quite popular, concept – key competencies (Eng. – core competencies).

The most enthusiastic scientists in this area are G. Hamel and K.

Prahalald who define competence as a "set of interconnected skills and technologies," but in any case not as "individual skills or technology" [4, p. 177]. Such sets every business can have dozens and hundreds. With regard to core competencies, these are, according to Hamel and Prahalad, certain specific knowledge and skills that provide exceptional competitive advantages and support the success of the enterprise. This view is shared by F. Guyar and J. N. Kelly, who suggest defining core competencies as "interrelated sets of skills, abilities and technologies that form the uniqueness of the company in a particular industry or field, and can be applied in many types of businesses and industries." [2, p.

224].

Consequently, core competencies apply only to enterprises and cannot be attributed to individuals. It is highly unlikely that one person or a small team can have the core competence [4, p. 178]. As a rule, core competencies exist throughout the entire organization. For example, despite the fact that world-wide best-selling networks use cost leadership strategies, each of them succeeds in their geographic markets through the development of a unique set of resources and capabilities (for example, in logistics), original managerial decisions and organizational systems. Other trading companies can, of course, study this experience, but attempts to copy the strategy of the above-mentioned enterprises are almost guaranteed to be doomed to failure, since what is excellent cannot be bought or sold (except for the company as a whole).

To "service" the core competencies of the enterprise at all levels of management there must be formed specific management competencies.

They provide the required level of quality, dynamics and creativity of managerial decisions related to the implementation of strategic and operational indicators. Some authors also separate the category of psychological competencies, which "characterize the ability of staff and, above all, its managers to quickly perceive changes in the rules of conduct in the business environment, their functioning, as well as in the macro environment" [3, p. 65-66].

The above mentioned types of competencies are far from being a

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complete list. In our view, the formation of a methodology for the management of competencies and their evaluation is in the early stages of evolution and requires the following systematization and refinement.

At the same time, it is already clear today that competencies need to be considered on various pillars of the organizational hierarchy – starting from the enterprise as a whole and completing individual employees. In this regard, it is considered relevant to generalize existing views on the problems of understanding and identification of competencies of a modern trade enterprise and to present their own vision of this concept.

Successful activity of any enterprise is largely due to the "strength"

of all levels of management, each of which, depending on their competencies, strengthens or weakens the competitiveness and efficiency of the enterprise. Therefore, it is extremely important to properly identify and assess, on the one hand, the existing competencies, and, on the other hand, those that are necessary in terms of implementing a long-term business strategy. Competences should be tailored to the specificity of the business, the strategic goal, the requirements for managerial efficiency, and other parameters that are determined by the senior management of the company and which are in the field of strategic management responsibility. Consequently, management of the development of a trading company on the basis of its competencies can be considered a separate independent direction of analysis and decision-making.

Competence of the enterprise in terms of management of them can be considered in static and dynamic situations. The first of them involves the identification of specific skills, knowledge and experience in a specific area of the enterprise. The second position (dynamic) involves assessing the benefits of using existing competencies to address market, financial or operational issues.

The proposed approach allows us to systematize the conceptual and methodological apparatus of the analysis of competencies. The basis of this approach is the five-level structure of competencies, which has been suggested in the work of V. Verba and O. Grebeshkova [1]. This structure includes the following levels of competencies (Figure 3.3):

1) separate individuals (professional competences);

2) roles performed by team members in groups in the process of economic activity (role competences);

3) implementation of certain functions in the process of production and sales of products (functional competencies);

4) enterprises as a participant in market relations (strategic

177 competencies);

5) the uniqueness and distinctive character of the enterprise (core competencies).

In the basis of Figure 3.3 of "competency pyramid" there are personal competencies – professional and role-playing, in the middle – competences of subunits (functional competencies), and on top – corporate competencies (strategic and core competencies).

Figure 3.3 Hierarchy of competences of the enterprise [1, p. 25-26]

The level of personal competences includes the professional competence of a person, which refers to basic knowledge, skills and abilities of the individual, as well as role competences as personal characteristics that determine the social activity of the individual in the process of organizing and implementing the collective activities of people in groups while performing certain production tasks. It is the personal competence that forms the basis of the company's competencies as a complex open socio-institutional and technical and technological system [1, p. 26].

Functional competences have different nature and extend to the activities of divisions and subsystems of the enterprise. With the help of functional competences, the strategic intentions and plans of the enterprise are implemented – marketing, commercial, financial, research and development plans, in the field of personnel, etc. These competences "serve" the core business, providing systemic progress in all key areas of enterprise development.

Functional competencies are the basis for constructing strategic

178 competences within the enterprise.

Distinctive features of strategic competencies are, firstly, orientation on the adaptation of the strategy and tactics of the enterprise to the requirements of the environment, and secondly, the optimal selection of original (difficultly reproducible) levers of ensuring high competitiveness in a context of constant change.

The adaptive nature of strategic competences is complemented by core competencies of the company, which are aimed at creating and actively promoting qualitatively new solutions, services and products. In other words, core competencies allow the company to get the "right to championship" in a competitive struggle due to the unique characteristics of its business system, its strategies and technologies.

To capture and develop key competencies, the trading company must first analyze the existing and new competencies that need to be acquired as well as the existing and emerging markets for which it seeks to enter in the future (Figure 3.4).

Figure 3.4 Matrix of acquiring core competencies [4, p. 199]

The lower left sector of the matrix depicted in Figure 3.4, represents the existing portfolio of enterprise competencies. By exploring what competencies support the maintenance of markets (consumer groups), it is possible to determine which of the existing competencies can be used to strengthen positions on certain markets ("fill in the gaps"). For example, in the networks of trading companies, the leaders‟

competences of serving the customers can be extended to other stores.

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The upper left matrix sector offers an idea of what new competencies will need to be created to stay in the first place for its customer buyers in 10 years. For example, the development of modern information technologies requires thinking about meeting the growing information and communication needs of visitors to trading companies in the most convenient and modern way.

The right bottom matrix sector is intended to analyze the possibilities of using existing competences in new markets or new types of services.

But at the same time one needs to be careful, because, switching to a new direction, one can lose focus on one‟s main advantages. For example, the recent decision by the largest Wal-Mart marketing company to expand its offer to a wider range of people, especially those with higher incomes, was sharply criticized by analysts who rightly pointed to the risk of losing focus on traditional low-income buyers.

And, finally, the right upper sector allows to analyze what competences may be needed by the company in the future on new markets? For example, which competences are needed for leadership in e-commerce?

So, using the matrix of acquiring competences, a trading company can analyze and plan its activities to develop new and effective use of existing competencies in the old and new markets.

In order to analyze existing competences in trading enterprises, a decision matrix based on the analysis of core competencies can also be used successfully [7]. This matrix helps to identify and analyze the various services and processes of trading enterprises in terms of their relevance to core competencies and missions (Figure 3.5).

Compliance with key competencies and mission relevance are rated on the "low", "medium", "high" scale. Accordingly, there are nine possible combinations of these two indicators, each of which has its own recommendation – from the elimination of the relevant service to its full support.

The decision-making matrix based on the analysis of key competences is a useful strategic management tool that can be used successfully for the following purposes:

1) to bind core competencies to the mission of the enterprise and make decisions on the development / termination of the development of those or other services;

2) for the strategic assessment of any units of the trading network in terms of the relevance of their activities, the mission of the enterprise and the depth of their competencies;

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Figure 3.5 Matrix of decision-making based on the analysis of core competencies

3) as a tool for identifying core competencies and measuring their impact on performance outcomes.

Decision-making matrix based on the analysis of core competencies allows to correctly and efficiently direct the resources of the enterprise, to evaluate the most priority areas and to focus the attention of trade management on the development of core competencies that can provide long-term and stable success in a competitive market.

Similar tasks can also be solved by another strategic analysis tool – the matrix of outsourcing (Figure 3.6), developed by a consultant of the Russian consulting company BKG D. Khlebnikov in 1999 [5].

Outsourcing is the transfer of a part of the work, a separate function or certain actions in a row to a third party organization or a person professionally specialized in the field. In the process of strategic management of commercial business, the decision to transfer certain functions «to the side» is taken quite often. Therefore, the task of strategic analysis is to determine the list of works or functions that are not strategically important for the enterprise and which can be transferred to outsourcing.

It should be noted that in practice there are two approaches to outsourcing.

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Figure 3.6 Matrix of outsourcing by D. Khlebnikov [5]

The first approach is that the trading company transfers its functions to legally separate units – firms that have to earn money on their own.

The second approach is to eliminate certain works or functions, after which the company begins to purchase services from outside organizations.

For example, the trade network transferred the right to sell the product in its network to another company. The latter should carry out categorical management, determine the range of goods on the network, be responsible for pricing and merchandising. It is forecasted that in the nearest future, many trading companies will transfer and transfer the calculation of certain categories of goods for outsourcing, leaving only control as their function.

There are many examples when merchant outsourcing logistics, merchandising, security, information services, marketing and advertising. In particular, in recent years enterprises have increasingly been using logistics centers and other enterprises. There are several advantages for a trading company in the transfer of logistics to outsourcing.

First, the logistics center takes care of responsible storage of goods.

The retailer does not need to spend time and money on renting, purchasing or constructing warehouses, finding or training personnel, purchasing infrastructure and equipment for the warehouse complex.

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Second, if a trading company provides logistics for outsourcing, it does not pay for the excess of warehouse space that may temporarily not be used, for stoppage of technique and equipment, does not pay extra money to temporarily untapped personnel, but only eliminates the need for agreement and coordination of actions of different services.

At the same time, in the specific circumstances, the benefits of the transfer of logistics function to outsourcing do not always manifest.

Therefore, so far, many retail chains create their own distribution centers and carry on logistics independently. Consequently, the adoption of a strategic management decision on the transfer of certain work and functions for outsourcing requires careful preliminary analysis.

Using the matrix of outsourcing (Figure 3.6), one can significantly improve the quality of strategic decision making. This matrix can be applied to any work, functions, processes or competencies that can be spread over 8 cells (the central cell of the matrix has a special purpose – if during the analysis you hit this cell, this means that you need to reconsider the input data and make a choice in favor of another cell.).

This diversity is carried out by means of: 1) 1) the scale of compliance with the strategic goals; 2) the scale of accordance of the object of research with the average market quality indicators. For practical application of the matrix it is necessary to determine:

 how difficult will be the consequences for an enterprise of the exclusion of the object of analysis from the business system (scale

"Compliance with strategic goals");

 the extent to which the research object is a monopolist in relation to the result that the enterprise receives from it, within the usual markets for it (scale "Compared with the market").

Analyzing the various functions performed by a trading company, using the matrix of outsourcing, one needs to understand that each cell of the matrix has its own meaning:

• "Create alliances, joint venture" – subject to the high degree of compliance of a certain function with strategic goals but low own

• "Create alliances, joint venture" – subject to the high degree of compliance of a certain function with strategic goals but low own