Unidad

Third Teaching
1 / Escenario
Unit /2Sixth Learning environment
Lectura Fundamental
Essential reading

International
Etapas de un plan
competitiveness
de comunicación
and
estratégica variables
productivity

Content

1 International competitiveness sources

2 International productivity variables

3 International competitiveness strategies

4 Conclusions

Keywords: competitiveness, international productivity, joint venture, strategic alliances, franchises.

1. International competitiveness sources
For starters, it is important to remember the concept of competitive advantage given by
Michael Porter. This concept has been applied by developed countries as a tool of international
competitiveness. In fact, rich countries have a very a clear point of view of what are the sources of
international competitiveness:

Science Technology

Innovation Quality

Environment Human
resources

Figure 1. Sources of international competitiveness

Source: designed by the author

All these sources or factors determine a company’s productivity and, therefore, a country’s
competitiveness in this global world. For example, a productive company can have the adequate
human resources, trained people capable of innovating and creating high quality products and
services. In addition, a productive company is one that cares for the environment and implements
science and technology in their processes.

2. International productivity variables

Before analyzing the international productivity’s factors is important to clarify the concept of
productivity. According to Martinez & Botero (2012) productivity is “the capacity of companies to
optimize the use of their productive resources, maximizing benefits and minimizing costs”.

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In this sense, productivity is related with some factors that make it possible to be productive.

Global variables Internal variables External variables

Investement Administrative Cohesion

Research Operations Solidity

Technology Sales Satbility

Development Financial Competence

Training Legal Leverage

Figure 2. Productivity variables

Source: designed by the author

So, if a company needs to improve its productivity, its manager must analyze each of these variables
in its context to determine which of them needs a new strategy. If the company has a strong
competitor, it must analyze its stability and its financial situation to invest in research, technology or
training and become more competitive.

3. International competitiveness strategies

International strategies for companies are very different and they depend, not only on the availability
of the resources, but also on government’s policies. Companies, today, are applying strategies that
include global models like franchises, joint ventures and strategic alliances.

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Each strategy has advantages and disadvantages that every company must analyze before deciding
which is the best option.

3.1. Franchises

You surely have heard about Mc Donald’s or Subway. They are the best example of the global strategy
called franchise. But how does the franchise model work? Before describing the model, it is important
to clear up the definition. According to the International Franchise Association (2018), a franchise
“is a business model in which a franchisor (owner of the franchise) grants the license to a third party
for the conducting of the business model and Brand (franchisee). The franchisor receives from
the franchisee a payment called Royalty”. This business model can be used for production and for
distribution. The real business is based on the transfer of know how.

Subway 7-eleven

KFC
Mc Donalds (Kentucky
Fried Chiclen)

Burger King Pizza Hut

Figure 3. Successful franchises worldwide and in Colombia

Source: designed by the author

In addition to these companies, you can find many others that are starting to apply this new business
model as a competitive strategy for internationalization. In Colombia, some companies are using this
strategy to enter international markets. The best-known colombian company using this strategy is
Juan Valdez.

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 Nativos
Sandwich Qbano
Totto

Jeno’s Pizza
Servientrega/Efecty

Figure 4. Colombian companies with Franchise model

Source: designed by the author

Table 1. Colombian franchises vs. Foreign franchises in Colombia

Colombian franchises international International franchises in Colombia

Nativos Mc Donald’s

Crepes and Waffles Kentucky Fried Chicken

Tostao Cosechas

Source: designed by the author

On the countries with the most franchises, Colombia is ranked fourth in Latin America, after Brazil,
Mexico and Argentina (Dinero, 2018). However, this business model has some advantages and
disadvantages that must be analyzed carefully.

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 Advantages Disadvantages

Obtaining access to You don’t own

experience, technology the board
and know how

Access to a proved Payment of entry fees

profitable business and royalties

The main decisions are

Training and taken by the franchise,
communication limiting their ability to
support and assistance innovate and act
independently

Access to Supervision by
economies of scale the franchisor

Figure 5. Advantages and disadvantages of franchises

Source: designed by the author

3.2. Joint venture

This strategy is a “new firm formed to achieve specific objectives of a partnership like temporary
arrangement between two or more firms”. (Collins Dictionary, 2018). The main characteristic of a
joint venture is that both companies share the costs and the benefits. However, the new company
has its own identity and the other two companies continue with their original businesses.

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 Did you know that…?
Bonyurt was created by a joint venture between Alpina and Nestlé

Advantages Disadvantages

Both companies share

resources, technology and High investment
distribution channels

Both companies continue Discussion in

to be independent form the decision making
joint venture

Discrepancies in
Greater competitiveness partnership priority

Ease the entry to

new markets Valuation of the parties

Figure 6. Advantages and disadvantages of joint ventures

Source: designed by the author

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Colombian companies have created joint ventures as a competitive strategy. The Colombian com-
pany Postobón established a joint venture with the Chilean company CCU, that led to the creation of
the company Central Cervecera de Colombia. But this is not the only case, transportation companies
like Expreso Brasilia and Cruz del Sur from Peru, had a joint venture that allowed the creation of a
new company to transport people all over South America (Garzón, 2014).

Toyota (Japan) -
Distoyota (Colombia)

Prietocarrizosa (Colombia)
- Philippi(Chile)

Alsea (México) -
Nutresa (Colombia)

Corona - Eternit
(Colombia)

Alpina - Nestlé
(Colombia)

Figure 7. Colombian companies with of joint ventures

Source: designed by the author

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 3.3. Strategic alliances

A strategic alliance is the union of two companies to reach a common objective: Become more
competitive. However, a strategic alliance is not necessarily the strategy you need to create a
different company like in the joint venture. As the other strategies, it also has some advantages
and disadvantages.

Advantages
- Transfer of technology and know how
- Faster operations
- Synergies by combining the best of each company

Disadvantages
- Conflicts of control
- Different management styles
- Lack of sincerity and cooperation

Figure 8. Advantages and disadvantages of strategic alliances

Source: designed by the author

Colombian companies are also using strategic alliances to enter international markets or to become
more competitive in the national market. An example of this is the strategic alliance between Éxito
and Cafam. In this alliance, Cafam is the one responsible for selling medicines and Éxito is the one
responsible for selling groceries.

Another important strategic alliance took place between Colombia, Chile, Perú and Mexico known
as the Pacific Alliance. The objective for these countries is to have free access to goods, services, and
capital and human resources to become more competitive in the region (Dinero, 2012).

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 3.4. Exports

The most common strategy for international competitiveness is when a company decides to export.
An export is sending products or services from one country to another. Colombia has been a
great exporter of commodities like oil, emeralds, and coal. Nevertheless, the idea of becoming a
competitive country means changing the idea of exporting commodities and start exporting added-
value products like the ones that include high technology such as video games, preparations of fruits,
toasted coffee, leather manufacture and fashion design clothing.

Mineral fuels (oil) Coffee, tea, spices

Live trees, plants, Plastics, plastic articles

cut flower

Gems, precius metal Fruits, nuts

Figure 9. Principal colombian exports (2017)

Source: designed by the author

4. Conclusion
The big gap between the productivity in southern countries and northern countries lies, basically,
in the institutions and corruption, since southern countries suffer a lot of this problems. While rich
countries are focused on innovative products and services, poor countries are still thinking about
exporting or the internationalization of commodities. This way of thinking makes a big difference.

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References
Collins Dictionary. (2018). Joint Venture. Collins Dictionary. Retrieved from
https://www.collinsdictionary.com/dictionary/english/joint-venture

Dinero. (September 11 2012). Alianza estratégica. Comercio. Retrieved from

https://www.dinero.com/empresas/especiales/articulo/alianza-estrategica/163393

Dinero. (February 19 2018). Así va el mercado de las franquicias en Colombia este 2018.
Emprendimiento. Retrieved from https://www.dinero.com/edicion-impresa/negocios/articulo/
franquicias-mas-importantes-de-colombia-2018/255585
Garzón, R. L. (December 4 2014). "Matrimonios empresariales por conveniencia" van en aumento.
El Tiempo. Retrieved from http://www.eltiempo.com/archivo/documento/CMS-14933369

International Franchise Association. (2018). What is a Franchise. International Franchise Association.

Retrieved from https://www.franchise.org/what-is-a-franchise

Martinez, A. R., & Botero, J. C. (2012). Diseño de una estrategia de desarrollo responsable y sostenible
de productividad estructurada en los soportes categóricos y enfoques productivos. Bogotá: Universidad
del Rosario.

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 TECHNICAL INFORMATION

Module: Globalization and Competitiveness

Third Teaching Unit: Competitiveness between countries
Sixth Learning environment: International competitiveness
and productive variables

Author: Sandra Milena Chicas Sierra

Academic advisor: Claudia Rocío Puentes Mendoza

Graphic designer: Brandon Steven Ramírez Carrero
Assistant: Eveling Patricia Peñaranda Izquierdo

This material belongs to the Politécnico Grancolombiano.

Total or partial reproduction is prohibited.

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