Comparative Advantages Related to a Municipality – the Experts View

Title

Comparative Advantages Related to a Municipality – the Experts View

Author

Yana Balashova-Kostadinova

Classification JEL

M31

Abstract

In recent years competitiveness has intensified immensely not only between businesses but also amongst territories. This is on large part due to globalization, development of communication technologies as well as the easy opportunities for traveling and exploring. Territories nowadays have to look for ways they can improve their competitiveness not only on the global markets or related to their attractiveness to external audiences but also related to local residents’ and business’s attitude towards the territory itself. One way to increase the competitiveness of a territory is to use its advantages in order to distinguish it from other territories with similar characteristics. In classical economics theory two types of advantages are described comparative advantages and absolute advantages. Absolute advantages can be used to build competitiveness but not all territories have absolute advantages and also absolute advantages are not always enough to ensure sustainability over time. Territories have to also look for and explore the options for developing their comparative advantages. Comparative advantages are derived from the opportunity for exchange which leads to increased productivity and consumption. In other words the value of the comparative advantage is assessed based on the advantages the competitor has. Applied towards territories comparative advantages could be found in specific features pertaining to the territory like certain climate conditions, a given set of natural resources, the available sightseeing sights, traditional culture, local customs and traditions, certain locally produced food and drinks and so on – all of which give the opportunity to build advantages over competitors. In the current paper the experts’ views on identifying the potential comparative advantages of Varna municipality will be put up for discussion.

Keywords

comparative advantage, competitiveness, territory.

Full Text: download pdf

Cite: download citation (for EndNote, Reference Manager, ProCite)

 

++++++++++++++++++++++++++++++++++++++++++++++

Title

Value Creation vs Value Appropriation: Network Externalities for Auto-Dipper

Author

Rajnandan Patnaik

Classification JEL

M13, M30

Abstract

A firm’s competitiveness is deeply engrained in its offering. It is important to understand the competition, the market requirement, production-operations and the value of its offering. Moreover, to ensure survival of the firm, it is essential to ascertain the plausible source of competitive advantage, the obvious being its value offering. Most firms face the necessity to not only creates value for its customer, but also to appropriate value for itself. This paper takes the case of Auto-Dipper and tests the issues of value-creation and its appropriation in the practical perspective of business strategy, through the concept of network externality. The Auto-Dipper is an optical-mechanical device that automatically puts the vehicle headlights to lower beam when it encounters an oncoming vehicle in the night. The glare of oncoming headlights puts the driver to light blinding which increases the chance of an accident. Further, as most of the Indian roads are two-way and the frequency of oncoming vehicle is very high, the driver is severely fatigued after a night drive, raising the accident chances. The product passes through stringent field trials and the price is affordable for the market. The ministry of surface transport of the Government has made the product mandatory for all four wheelers and other heavy vehicles. Further, the product is patented and has a seemingly ready market. However, the product is still not seen in vehicles and the analysis points to network externalities that inhibits in capturing value. The paper exemplifies through the research approach of analytic induction technique that value-creation in itself is not sufficient for the firm to achieve growth and profits, but the capability to appropriate value is as crucial as the value itself. With this, the argument between value-creation versus value-appropriation is explained in the perspective of business strategy with the help of the case on the firm, through the lens of network externality. The network externality is crucial in the movement from value-creation to value-appropriation, as is exemplified by the case of Auto-Dipper.

Keywords

Value Creation, Value Appropriation, Network Externality, Competitive Advantage, Business Strategy.

Full Text: download pdf

Cite: download citation (for EndNote, Reference Manager, ProCite)

 

Please cite this article as: mbd (2017) Comparative Advantages Related to a Municipality – the Experts View. International Conference on Marketing and Business Development. http://www.mbd.ase.ro/?p=318