ECONOMIC AND STATISTICAL METHODS IN EVALUATION OF COMPETITIVE ADVANTAGES OF REGIONAL AGROSYSTEMS

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1 ECONOMIC AND STATISTICAL METHODS IN EVALUATION OF COMPETITIVE ADVANTAGES OF REGIONAL AGROSYSTEMS Galna Poshekhonov, Olga Belova Abstract The artcle consders the possblty of usng economc and statstcal methods to evaluate the level of competton and compettve advantages of producers of agrcultural products, the formaton of whch sgnfcantly depends on clmatc condtons, the duraton of the producton cycle, seasonalty of producton. Usng the ndex method allows, usng the ntegral ndex of compettveness, hghlght the benefts of each commodty producer on manufacture, sales of products based on ts concentraton n the regonal market. Integrated ndcator combnes a number of crtera whch ndcate producer benefts by the level of productvty and producton costs (ndex of producton effcency); on a prce level and busness costs (effcency ndex of sales); the level of concentraton of producton refers to the produce s share market. The proposed methodologcal approach to the analyss of the compettveness of the agrcultural producton n the regon and the obtaned results make t possble not only to dentfy reserves of compettveness, but also effectvely usng t n the preparaton of management decsons at the regonal level. The presented materal provdes an opportunty for further research n evaluatng the compettveness of rural agrcultural producton. Based on them t s possble to form specfc areas of montorng the effectveness of agrcultural producton and agr-food polcy. Key words: agrbusness, compettveness, evaluaton, the ntegral ndex, regonal compettve advantage. JEL Code: C 43, O 018. Introducton Agr-food system at the regonal level s a complex, developng system havng certan characterstcs and structure, whch ams to provde food and feed to ndustry. Market mechansm dctates the necessty to mprove the effcency of managng the whole agrondustral system. In connecton wth ths very relevant s the dentfcaton of the mechansm 1230

2 of competton, compettveness, assess the compettve advantages and ther use n agrbusness. Sgnfcant contrbuton to the theory of competton has made by the Amercan economst Mchael Porter. Generalzng the vews of dfferent economc schools, he proposed a model of the fve basc compettve forces that help to dentfy and explot compettve advantage. "Compettve advantages of the system - s any exclusve value, whch has a system and that gves t an advantage over ts compettors, the mplementaton of whch generates a certan level of compettveness of producton» - (Porter, 2005). Complementng the deas of Mchael Porter, a Russan professor R.Fathutdnov defnes compettveness as "... property objects characterzng the degree of satsfacton of specfc needs compared wth the best smlar objects represented n ths market at the level of the organzaton, regon, ndustry, any sphere of the macro n the country a whole. "(Fatkhutdnov, 2005). Several artcles M.Gelvanovsky emphaszes that "the carrers of these propertes can be dfferent actors of compettveness: products, companes and organzatons or groups whch form ndustry or conglomerate assocatons and fnally, ndvdual countres' (Gelvanovsky, 2005). Identfcaton and explotaton of compettve advantage s reflected n the theory of clusterzaton of M.Porter: "Clusters represent a new way of thnkng about natonal, state and local economes, and they requre new roles for companes, governments and other nsttutons to ncrease the compettveness» (Porter, 2000)/ The state's economy "clusters act as ponts of growth" of the domestc market, whch n turn ncrease the country's compettveness, as t keeps t a strong poston of ndvdual clusters, wthout them can take a medocre place n the world economy. In hs research I.Turok ndcates the need to fnd a compettve advantage busness, ctes, terrtores, "whch arse from the concentraton of economc actvty and qualty of nteracton between frms» (Turok, 2004). In hs research I.Turok ndcates the need to fnd a compettve advantage of busness, ctes, terrtores, "whch arse from the concentraton of economc actvty and qualty of nteracton between frms» (Turok, 2004). The role of analyss and evaluaton of compettveness and compettve advantages of busness enttes, ncludng varous knds of enterprses, dstrcts and regons ncreases as the dstrbuton and ncreasng competton between them. In ths case compettve analyss and compettve advantages n busness becomes systematc and comprehensve. To analyze the compettve advantage at the level of enterprses and assocatons have long and successfully appled SWOT-analyss dsclosed n the textbook "Strategc Management: Concepts and stuatons" (Thompson, 2001). It conssts n consderng the 1231

3 object of economc management from four prncpal postons: strengths and weaknesses of ts actvtes, opportuntes and threats of the future development. Such structural analyss, as long-term practce shows, allows dentfyng reserves denote potental threats, calculate the optmal trajectory for the future and, ultmately, sgnfcantly mprove the compettveness and effcency. However, at the macro level to analyze and prognostcate the development of ndustres and sectors of natonal economes SWOT-analyss has rather lmted use. The method of "Boston Consultng Group," takes nto account the product lfe cycle. Ther qualtatve methods are based on the rato of "prce-qualty", they allow to Identfy compettve advantages. System of compettve factors s open, and the set of factors of compettveness s almost nfnte. Therefore, no matter how extensve ther lst, t wll stll be based on an ncomplete lst of crtera compettveness. "At the forefront of an exhaustve lst of factors of compettveness, the researchers come to a standstll, because such lst s mpossble n prncple» (Huggns, 2003). Through a comparatve analyss of methods for the evaluaton of compettveness and compettve advantage, we beleve that cost parameters s more demonstratve. To do ths, "t s mportant to justfy ther assessment benchmarks (Budd 2004)." There are many approaches to the assessment of regonal compettve advantages, whch are amed at the calculaton of the composte ndex. However, the latter do not always allow you to fully assess the stuaton, as they gve an overvew of the object beng studed. Integral ndcator of compettveness underlnes rregularty of economc condtons as separate objects beng studed, as well as certan areas. For more accurate analyss necessary to consder components calculated ndex. Moreover, varous ndexes compettve advantages of regons can be desgned for dfferent purposes notes R.Huggns. For example, to determne the nvestment attractveness or approprateness of the establshment and development of a busness, organze assessment, specalzaton, etc. In accordance wth the need to dentfy who s a consumer of nformaton n n makng whar decsons they may be useful and those nvolved n ther calculaton (Huggns, 2010.) Effectveness of agrbusness depends on clmatc factors that affect the cost of producton. Regonal Management Polcy should be drected on dentfyng and usng terrtoral advantages of the regon. V. Becvarova underlnes the need to fnd comparatve advantage not only "on the horzontal level, but also n the ntegraton wth processng enterprses, e vertcal level, throughout the supply chan of added value formaton 1232

4 »(Becvarova, 2008). Montorng of search queres of compettve advantages and effectveness of agrbusness should be the bass of government regulaton n settng clearer prortes and achevng compettveness at the mcro and macro levels. "The choce of ndcators for measurng the compettveness of rural s based on the concept of sustanable development of rural areas (Mkuš, 2010)." Despte many publcatons on the problem of analyss methods developed of compettve advantages are not fully. Ths apples, above all, regonal sectoral aspects of the assessment of formng compettve advantages of enterprses agrondustral complex. Tools and ndcators to effectvely evaluate the compettve advantages of the ndustry, of the company are not enough developed and on ths bass to develop effectve strateges to mprove the compettve status. 1. Methodology Research For the organzaton of montorng the evaluaton of compettveness and to dentfy of compettve advantages of agrcultural producton, we developed a methodologcal approach based on usng economc and statstcal analyss methods. Usng the ndex method of statstcal analyss as an evaluaton crteron we used the ntegral ndcator. Proposed coeffcent of compettveness by types of products of a busness entty s compared wth the average of ts value n the regon. The hgher the rato, the hgher level of compettveness, and accordngly, the level of compettve advantages of ts manufacturer on a specfc product type. As a crteron, the methodology of analyss of compettveness of agrcultural producton areas can be based on three components: effcency of producton, mplementaton effcency and concentraton of producton. Effcency of product producton (K j p) s characterzed by the level of productvty (yeld) and producton costs and s determned by the formula: I P Ñ j, (1) I P C s j j ð j Ê p : j ps s where I j p - ndex lvestock productvty (yeld) -th type of output of the j-enterprse; I j ps - the ndex of unt cost of -th type of output of the j-enterprse; P j(s) - the productvty of anmals (or crop yelds) -th type of output of the j- enterprses (regonal average); 1233

5 average). C j(s) - unt producton cost of -th type of output of the j-enterprse (the regonal Effcency of products (K j s) characterzes cost recovery on terrtores: I Ts Ñs êj, (2) I Ts Cs ês j tsr j Ê j s : j ês c where I j tsr - prce ndex of sales of -th speces n the j-products sector; I j ks - ndex of commercal unt cost of -type products n the j-th enterprse. Ts j(s) - sellng prce of -th type of output of the j-enterprses (regonal average); Cs kj(ks) - the commercal cost of producton unts of -type products n the j-enterprse (the regonal average). total output: The level of concentraton of producton (K jv) shows the share of the enterprse n V V j К j v, (3) In expanded form ndex formula characterzng the compettve advantages of a busness entty can be represented as follows: j j j j Ð j C j Ts j Cs k j V j K K p Ê s K v : :, (4) P s C s Ts s Cs ks V Usng the algorthm of cluster analyss (method of economc groups)realzed by n the software package STATISTIKA, reveal a group of companes on compettveness level and use of compettve advantages of producton or certan enttes (regons) areas. Unlke combnatonal groups cluster analyss leads to a groupng wth all the groupng characterstcs smultaneously, whch allows to perform multple groups that wll analyze the compettve advantages of agrcultural producton, usng clmatc factors accommodaton, the level of concentraton and specalzaton of producton, fnancal condton and solvency organzatons, etc. 2. Research results Comparng agrcultural enterprse wth the same type of ndustry sector or scale of actvtes enables us to determne ts place among the compettors, e ascrbe some mportance among other busnesses. In table 1 presents the results of a survey of agrcultural enterprses n terms of compettveness of mlk producton. The calculatons of all the studed companes 1234

6 performance level assgned to three groups. Receved groups (clusters) of agrcultural organzatons are characterzed by homogenety and smlar dsabltes, have common problems that affect the fnancal result. Table 1. Analyss of the economc ndcators of organzatons, dependng on the level of compettveness expressed by an ntegral ndex K j (n% to the average level) Indcators More Less than 0,8 to 1,0 than1,0 0,8 Quantty of the organzatons n the group At one organzaton: area of farmland populaton of cows marketable products productvty producton cost sellng prce proftablty (loss) of producton 41,9 14,5-19,8 Group's share of total producton 48,5 17,1 34,4 The frst group of farms (wth Kj PKU 1.0 above), the most successful set of ndcators for agrcultural enterprses of the regon. They contan 37% of dary cattle area, and produce 48.5% of the mlk. Organzatons of ths group are dstngushed by hgh ndcators of fnancal stablty and solvency, whch promotes nnovatve development of agrcultural producton. The second group of farms (wth Kj folder on 0.8 to 1.0) from a poston of compettveness can be consdered as a boundary between the frst and thrd groups. The Group's share n the producton of mlk s 17-20%. Wth ts low cost per unt of producton qualty of products gves farmng of the frst group, whch affects the decrease n sales prces and the level of marketablty. The thrd group s the bggest. Wth a huge producton capacty (61.1% of land, 45.2% of fxed assets, 49.3% of workers) produces a 1/3 of the total producton. Increased cost and low qualty of products leads to the loss of most ndustry busness enttes. Compettveness of ndex value less than unty nherent n most of the studed objects and ndcate unused reserves to enhance of compettveness and mssed opportuntes to 1235

7 ncrease producton. Noteworthy s the apparent downward trend n the concentraton of producton, dependng on the level of compettveness of reducng mlk producton by groups of households. The volume of trade on average for the organzaton of the frst group s more than n three tmes the average. Clear trend can be seen dependng on the concentraton of the compettve advantages of producton. As a result of studes there were dentfy varous trends and correlatons that can be, n our opnon, be regarded as the presence or absence of certan compettve advantages. The nfluence of natural factors on the effcency of allocaton. Wth the help of the ntegral ndex, we also nvestgated the nfluence of clmatc factors on the effcency of agrcultural producton. Most favorable for agrculture allocated forest-meadow and steppe zones. Ths s confrmed by the producton and economc performance of agrcultural enterprses (Table 2). The table data demonstrate certan compettve advantages of the gran ndustry steppe zone, where as an average over three years, and for ndvdual data yelds compared to other clmatc zones was hghest. In the producton of dary and fattenng cattle for meat stand mountan-forest and forest-steppe zones. Best results are shown and producton cost. Table 2. Factor producton and commercal success of the man types of producton n the context of clmatc zones Indcators Mnng and Forestry Forest Forest-meadow forest steppe Gran 0,62 0,28 0,91 1,09 Mlk 1,08 0,43 0,79 1,13 Cattle for meat 1,09 0,57 0,74 1,13 Values of the ntegral ndcator of the man products pont out the benefts of agrcultural producers steppe zone. Identfy the benefts of specalzaton Dependng on the combnaton of prncpal (man) and other agro-commodty sectors of the study regon, now we have varous types of ndustral specalzaton of agrcultural enterprses. The hghest number of households s manly specalzed n the producton of mlk and meat (31.1%), meat and gran (13.5%), mlk and gran (12.1%), gran (8.6%) 1236

8 (Poshekhonova, 2011). Operaton performances of all agrcultural holdngs n the context of specalzaton show the unevenness of ther development. In terms of proftablty, productvty, farm stand suburban specalzaton development of vegetable and potato growng. The lowest level of ntensty dfferent farms wth gran orented (grans, gran meat, grans and dary). The best poston, agrcultural producers are located to the markets, specalzng n the producton of mlk, vegetables and potatoes. The most proftable are agrcultural enterprses (30.1%) mlk - (28.0%) and vegetable and dary (23.5%). Lower the effcency of gran farms (2.8% margn), where the gran structure takes nto marketable products over 70%. Ths s explaned by the fact that wthout a developed dary farmng gran obtaned from the mass of proft s not enough to cover all costs for the fund, transport, payment of wages to workers employed manly only n the summer. Obvous unproftable farms beef specalzaton. For these groups of households observed dynamcs reducton. Correctons of specalzaton n farms (especally anmal husbandry) requre correspondng changes n the structure of productve assets, personnel, etc. Ths specalzaton s assocated wth sgnfcant addtonal captal costs and a prolonged perod durng whch the possble reorentaton of producton. So here s partcularly mportant to dentfy areas of specalzaton n the producton regon, whch ncreasngly wll be responsble n the long term requrements of food securty areas. Our results suggest that the rght combnaton of prmary and secondary branches at agrcultural producers s essental for realzng the potental of agrculture n the regon and brngs certan advantages. Concluson. Compettve advantages - t s only the potental for producton of compettve products, related prmarly to the effcent use of resource potental (clmatc, technologcal, techncal, human, organzatonal and other factors of producton). The presence of certan compettve advantages n ndvdual agrcultural producers, some areas can be set by comparng such basc output ndcators, as the productvty of lvestock and poultry (or crop producton), producton cost and return on total costs. Ths approach allows not only fully assessng the level of compettveness of the enterprse, but at the same tme and gettng quanttatve value of compettveness. In assessng 1237

9 the compettve advantages lsted ndcators can be used both ndvdually and n the form of ntegrated ndcators. The above methodologcal approach n the study of the compettveness of the agrcultural producton n the regon and the results obtaned ndcate certan reserves n search of compettve advantages that can be used n the preparaton of management decsons at the regonal level. They also ndcate the possblty of formaton of separate areas of montorng, mplementaton of whch can mprove the management of agrcultural producton. References Porter, M.E. (2005). Compettve Strategy: Technque Analyzng Industres and Compettors. (Translated from Englsh), (p. 454). Moscow, Russa: Harvard Busness Revew. Fatkhutdnov, RA (2005) Strategc Compettveness (p. 505). Moscow: The Economy. Gelvanovsky M. (2005) What s compettveness? Questons the Economy n Transton, Volume: 7, Pages: Porter, M.E. (2000). Locaton, competton, and economc development: Local clusters n a global economy. Economc development quarterly, Volume: 14 (1), feb 2000, Pages: do: / Turok, I. (2004). Ctes, regons and compettveness. Regonal Studes, Volume 38 (9), December 2004, Pages , do: / Thompson, A. (2001). Strategc Management: Concepts and stuatons / AA Thompson ml.), AJ Strckland. (p. 412) Moscow, INFRA-M. Huggns, R. (2003). Creatng a uk compettveness ndex: Regonal and local benchmarkng. Regonal Studes, Volume 37(1), February 2003, Pages do: / Budd, L, A. Hrms, A.K. (2004). Conceptual framework for regonal compettveness. Regonal Studes, Volume 38(9), Pages do: / Huggns, R.. (2010). Regonal compettve ntellgence: Benchmarkng and polcy-makng. Regonal Studes44, Issue 5, June 2010, Pages , do: / Becvarova, V. (2008). Issues of compettveness of the present agrculture. Agrcultural economcs zemedelska economcs, Volume: 54( 9), Pages , Retreved from

10 Mkuš, O., Franć, R., Grgć, I. (2010). The evaluaton of rural compettveness n creatng a polcy of rural development n croata. Journal of Food, Agrculture and Envronment, Volume 10 (2), June, 2010, Pages Retreved from Poshekhonova, G. (2011). About the methodcal approach to evaluaton of specalzaton and concentraton of agrcultural producton at regonal level. Аграрный вестник Урала, Volume 8 (87), Pages Retreved from Сontact Galna Poshekhonova Russa Ural Federal Unversty , Ekaternburg,. Mra, 19 Mal: galna-posh@rambler.ru Olga Belova Russa Ural Federal Unversty , Ekaternburg,. Mra, 19 Mal: gmal.com 1239