10. Economics of the enterprise

Zhdamirova A. O.

Sumy national agrarian university

SOURCES OF COMPETITIVE ADVANTAGES OF DOMESTIC ENTERPRISES

In conditions of unfinished reorganisation of a property and the absence of its effective protection the major aim of managerial branch of domestic enterprises (firms) lies in “money distribution” and often in private enrichment. A problem of business development goes to the back side instead of it, the ideology of reduction or even liquidation of the enterprises begins to dominate. It is the way to explain the fact of “hidden circulation” in Ukraine (5 billion dollars) and considerable flow out of the currency abroad, that still continues. 55 percent of money circulation takes place outside of the banking system of our country. At the same time according to the estimate before February, 2000 state debt of Ukraine was 51% of its GDP and 85 % of the volume of Ukrainian export of goods and services.

Ability of the economic environment of Ukraine is determined by the possibility of its enterprises and firms to hold and extend competitive advantages. That’s why the one of the most important tasks of the country in conditions of transition economy – forming of the environment that would favour the maintenance of competitiveness at the firm level. This task remains actual even in market economy. It explains greatly further growth in industrially developed countries in the last two decades of state participation in competitiveness of domestic enterprises growth.

Despite the growth of export of goods on 3.5% such anomalies of Ukrainian economic environment obviously brake the development of external trade as the major source of currency inflow and the basic indicator of Ukrainian economy entrance into the world economy. Unprecedented decrease of investment blocks fundamental tasks solving: expanding of productive base of export in the branches of high technologies, development of perspective of import substitutive productions, transport and informational infrastructure perfection.

The theory of the international competitiveness treats economic growth as a motion in the direction of competitive advantages sources complication and the positions of highly effective segments and sectors of the market strengthening.

Level of economic development of different countries is represented as the raw of competitiveness development stages that differs by the scale of use of its major determinants (competitive “rhomb”).

Characteristic feature of competitiveness development on the base of the productive factors is that the advantages in it are provided only by the condition of these factors. The support on it sharply narrowing the circle of branches able to stand the conditions of international competitiveness. Competitiveness development on the base of monetary levers stipulates readiness and ability of the national firms to rough investment. Priority resources of the competitiveness in these conditions are not one but three sides of “competitive rhomb” – productive factors, internal demand that grows, strategy and rivalry of the firms. The circle of the branches in which national firms show high competitiveness on this stage considerably expands.

The development of the stages of competitiveness on the base of innovations is reached with the help of cooperation of all the parts of “competitive rhomb” in the wide circle of branches. The development of the economy on this stage favours creation and the development of new specialised factors, rapid development of related and supporting branches, transition of the firms to the global strategies creation. The branches become less vulnerable concerning price shocks and changes of currency rates. The circle of segments in which national firms successfully compete at the world market constantly expands.

At the current stage of the system of transformation of Ukrainian economy the position of domestic technological basis is that it is hard or even impossible to produce competitive on the world market goods on its base. Whole substitution of its basis or its considerable part demands the great volume of investments. By experts estimation for economic problems solving Ukraine in the last decade will need about 40 billion US dollars investments. In conditions of impossibility of attracting it in such volumes means that in the nearest decade the enterprises will need to spend more than 60% of its capital – amortisation expends and profit on investment. Apart from that they will need to attract 25 % more of the capital in a way of bank credits, portfolio and foreign direct investments (FDI). The rest of the whole sum of needed investment must be given by state, regional and local budgets.

In such way the vital role in activisation of investment process belongs to enterprises, that’s why considerable growth of investment is possible only in terms of great financial enterprises conditions upgrade. Though about 40% of the enterprises are unprofitable and that’s why can’t finance investment from its profit. To change present negative situation into positive one will not be easy. Profitable enterprises invest their capital mostly in renovation and capital repairs which doesn’t favour the upgrade of technological production level.

In conditions of monetary levers turning into one of the sources of Ukraine`s competitive advantages it is important not only to extend their volumes but also change their branch structure. Last years almost 50 % of the investments came to metallurgy when the sharpest need in investment was in chemical, processing and food industry.

An important task to the government of Ukraine and domestic enterprises in transition period is more active attraction of innovative factors of development. Ukraine has a good enough scientific potential so far, but a raw of serious tasks must be solved starting with financing of researches and investigations, their rapid implementation into production and finishing with goods production. Science intensive branches always go forward and determine the competitiveness of the country in modern economy, their active force is the profitability of scientific technical production.

Competitiveness enforcement on the internal market and active use of the strategies of business development would favour expand of the demand on the investigation and the researches results. So far the quantity of innovatively active enterprises in domestic industry and the part of scientific intensive products in total amount of productive industry of goods is too small – about 2 %.

That’s why, in the process of the research was determined, that consistent state policy, directed on economic activity forming, growth of total demand, investment and the innovation activity of the enterprises, saving and increasing of scientific-technical potential including financial support of fundamental and applied science, education may favour the expand of competitive advantages sources. For creation and the development of normal market environment in the country it is necessary to provide property protection, economic legislation execution by the forces of judicial and law-enforcement agencies. It is highly important to fix and increase the activity effectiveness of those parts of governmental body which implement force to execution. The task of Ukraine’s executive bodies on the future decade should become the perfection of economic environment and monetary conditions of entrepreneurial climate upgrade, modernisation and rise of domestic economy, its more active entrance into the system of the world economic interrelations.