Every day, there are more and more new companies all over the world. Their success directly depends on the number of completed orders, sales, or purchases. Demand creates supply and a certain rivalry, which, in turn, expands the range of products and significantly improves its quality. To be always in demand in a certain area of business, one needs to monitor changes in the consumer market carefully. The purpose of the paper is to analyze the article, to determine the main arguments about competition in business and the factors influencing it, and to identify the advantages and disadvantages of the study.
Summary of the Core Issues
The presented article by Szász and Demeter (2014) entitled “How do companies lose orders? A multi-country study of internal inconsistency in operations strategies” is about competition in business. The article also describes operational strategies that can reduce the company’s competitiveness in the market. The authors conduct a study aimed at analyzing the factors of negative influence on operational strategies (Szász & Demeter, 2014). It is unique because it explores internal inconsistencies, which helps to consider the problem more broadly.
They describe and analyze all previously acquired knowledge in this topic and, on this basis, create a model for their research. The authors use two databases of the same structure, which contain information about more than 450 companies from 20 countries, which contributes to the universalization of this study (Szász & Demeter, 2014). The article may be useful for owners of small and medium-sized businesses, for those who are going to open their own business, as well as for students who study entrepreneurship and its structure.
Competition is not just a struggle for market leadership; it regulates pricing, as well as regulates consumer demand. It can be assumed that any rivalry in business has a positive effect on the production of goods, their quantity, and quality. It helps to oust “weak players” from the market and leave the strong ones (Szász & Demeter, 2014). As a result, the consumer receives exactly what he needs, not only goods but also services. However, often the word “competition” is mistakenly understood only as an analysis of the strengths and weaknesses of a particular competitor, forgetting to consider the strategy of their enterprise. This can cause a fall in the market, as well as cause a decrease in sales and profits.
To begin with, the motivation of the article is quite understandable; the reader can easily determine that the article is concerned with the negative impact of internal processes in the company’s strategy. The authors find and provide previously written works on this topic, they also correctly note that the sensitivity of competitive factors to the loss of order had not been previously studied (Szász & Demeter, 2014). In the analysis, they use a lot of diagrams and tables, which facilitate their understanding. However, not enough theoretical material is cited. Terms such as the “urgent action zone” that they use in the article can be understood by a student who studies macro and microeconomics (Szász & Demeter, 2014, p.102). Still, others will have to use an additional source to search for information.
Two separate studies are conducted to analyze the internal incoherence in the strategy of operations and its impact on the loss of order. Four hundred and fifty different companies in scale and variety of the goods provided are chosen for it. As a result, such an extensive sample allows authors to make the research results more generalized with the ability to apply them to other companies and enterprises.
The first study demonstrates that inconsistencies in competitive capabilities and competitive priorities lead to conflicting operational strategies. Next, the influence on the effectiveness of a controversial strategy on business performance is investigated. The results show that production costs can often lead to internal inconsistencies in the company (Szász & Demeter, 2014). After analyzing two groups of enterprises, the authors claim that the results are similar to each other, both in the factors influencing the strategy and within the zone of “urgent actions” (Szász & Demeter, 2014, p.102).
Szász and Demeter (2014) present all research results in tabular form. However, in the course of the study, two factors are obtained that significantly differ between statistical samples. Szász and Demeter (2014) claim that “in the case of environmental protection, the probability of leading to internal incoherence is higher, whereas, in the case of order size flexibility, it is lower”(p.113). These statements of the authors can be called objective since they were obtained during the study.
Regarding the topic of the article, the authors firstly show competitive factors affecting the business which can provoke the loss of orders. Besides, regardless of internal quantity factors of influence, in the case of even a single of their presence will harm the competitiveness of the enterprise. The authors identify the cost of the product and the after-sales service of the buyer as one of the most important reasons for the loss of orders; one can agree with this statement (Szász & Demeter, 2014). The reliability and relevance of this study can be confirmed by the databases that were collected for 2004 – 2009-10.
During the discussion, the authors indicate that cost is a crucial factor in negatively influencing demand among buyers. They point out that little attention has been paid to the issue of value over the past decades, although this is not an unjustified fact. The results of the flexibility of the order are contradictory; however, Szász and Demeter explain this by the beginning of the economic crisis a year before the collection of data for the study.
To summarize, the authors argue that competition is a form of competition or struggle between entrepreneurs, people in business, companies, or organizations. They correctly noted that its leading indicators on which the rivalry process is based are price and quality. Business rivalry allows people to regulate the market in a particular segment. It will enable any company to become a leader. The article highlights the main aspects of the influence of individual competition factors in the operational strategy of a business. Besides, it studies each factor separately and describes it. The research method is statistical, that is, it provides reliable information
The authors put forward theoretical hypotheses about the differences in this influence, that is, they describe the most significant factors, and indicate that the drop in sales does not depend on their number. The article is relevant, as it is the first to describe internal errors, and not analyze competitors. In the course of the study, companies that are different in the structure are used, therefore, having obtained the results, it can be concluded that the theoretical part of the article is universal and suitable for various enterprises. The author calls the main problem in reducing sales the cost, which is why managers should pay more attention to the price of the product.
Szász, L. & Demeter, K. (2014). How do companies lose orders? A multi-country study of internal inconsistency in operations strategies. Operations Management Research, 7, 99-116.