The Sunday Mail
MICHAEL Porter is an internationally renowned Harvard Business School professor. Many countries around the world have used his models.
It is not surprising that scholars in Business Studies, Accounting and Economics would know of Porters’ models.
In essence, Porter does not believe that countries or nations, as such, are competitive, but rather that conditions within a country may help firms to compete.
He believes that the productivity of both firms and individuals collectively — supported by an enabling national and regional environment — is key in growing wealth and competitiveness.
The lesson to be learnt is that Governments cannot compete, only firms can. Government can only influence the context in which an industry operates and can create opportunities and pressures for innovation.
Professor Porter identifies four principle determinants of national competitive advantage — factor conditions, firm strategy culture and rivalry, demand conditions, related and supporting industries.
Factor conditions
Factor conditions are a country’s endowment from inputs to production. These include human resources, physical resources, knowledge, capital and infrastructure. Zimbabwe as a nation has developed a strong human resources and knowledge base over the years and indeed it has vast physical resources in terms of land, minerals and climate.
Economists believe that the country’s only limitations are capital and infrastructure.
There is crucial need to continue to engage key stakeholders in order to ensure that the country attracts foreign direct investment, which is vital in supporting infrastructural development.
An abundance of factors alone is not enough, it is the efficiency with which they are deployed that matters.
Notwithstanding the vast natural resources that the country has and a fairly educated workforce, there currently exists serious economic challenges.
Our strong human resources base is one of our competitive advantages as a country, but one of the fundamental questions that have to be asked is: Is that strong human resources base efficiently deploying resources?
Agriculture and mining are clearly the country’s economic backbone and more work needs to be done to get the maximum possible value from industry.
Government has invested a lot of resources to equip farmers with inputs as a deliberate effort to create value.
Quite naturally, some farmers have been very successful, while others have squandered Government’s goodwill by selling those inputs for quick financial gain.
The land audit that is presently being undertaken by Government and the continuous evaluations of running mines and greenfield projects by the Ministry of Mines are quite commendable as they are meant to ensure that resources are efficiently deployed.
If land is not being fully utilised to meet national needs, it is justifiable for Government to repossess it. It is only the land that can provide sustenance to the nation.
Demand conditions
Local market conditions determine how firms perceive, interpret and respond to buyer needs. Currently, Zimbabwe is relying so much on imported goods, especially from South Africa.
Sophisticated and demanding buyers set the standards. Are our products fairly priced and of high standard to compete on the international standards? Indeed, Zimbabwe produces some of the finest products not only on the continent, but in the world.
All that is needed is to put more energy in resuscitating our industry by acquiring modern technology, which lowers the cost of production and also revising policies in order to suit the growth of industry.
In the local service industries, particularly the fast food business, prices are being adjusted regularly.
Chicken Inn, Chicken Slice and the new entrant KFC have created some exciting times in this sector.
Competition is surely good for Zimbabwe. But there is obviously need to explore how we can broadly stimulate competition in industry. Some companies simply have to be privatised in order to create healthy competition.
There is definitely need to explore the benefits of privatisation and also the effects of monopolies.
Related and supporting
industries
Competitive success in one industry is linked to success in related industries. Domestic suppliers are always preferable to foreign suppliers. The Buy Zimbabwe initiative is a good move for our nation and more work still needs to be done to ensure that our supermarkets are dominated by Zimbabwean products.
Firm strategy and rivalry
Management style and industrial structure can also determine our competitive advantage.
Zimbabwe is likely to display competitive advantage in industries that are culturally suited to our normal management practices and industrial structure.
For example, in Germany the managers tend to have a strong bias towards engineering and are best at products demanding careful development and complex manufacturing processes.
They are less successful in industries based on intangibles such as fashion and entertainment.
In Zimbabwe, we should work on improving our expertise in agriculture and agri-business, including mining.
And this should be our competitive advantage as a nation. We have to restore our bread basket status again.
More work and analysis should be continuously done in these sectors to ensure we get maximum value.
Taurai Changwa is an articled accountant and ACCA finalist. He is MD of SAFIC Consultancy. He writes in his personal capacity and can be contacted at [email protected], Facebook page SAFIC Consultancy and WhatsApp number 0772374784
