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  Félix Peña

INTERNATIONAL TRADE RELATIONS NEWSLETTER
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009
QUALITY OF INFORMATION AND COMPETITIVE INTELLIGENCE:
Its importance for doing business in a strongly dynamic world with multiple options

by Félix Peña
February 2011

English translation: Isabel Romero Carranza


 

It is essential for a SME with a sustained presence in multiple markets, or that is exposed to international competition in its own market, to obtain and process quality information on those events that have a bearing on the future and that point to circumstances that, in due time, may open up or displace business opportunities.

There are two different kinds of events that need to be detected and diagnosed in relation with the strategy for the international insertion of a SME. In the first place, those that reflect the deep forces that are anticipating significant changes in global economic competition, or in that of the corresponding regional geographic spaces. In the second place, the unforeseen events that may imply a turning point in the external context that affects the competitive advantages of a business.

The accurate and timely processing of relevant information on the international scenario, markets and competitors, enables SMEs to efficiently manage their competitive intelligence. This can be understood as the result of a continuous process of gathering and analyzing quality information that may be obtained through public media -especially the Internet- and that is relevant for the strategic planning of a business, with the aim of preserving and developing its ability to compete in the markets where it is currently present or where it aspires to be.

Due to their size, SMEs may have several limitations in the approach of their competitive intelligence. A path is thus open for the development of intense collaboration agendas between government agencies, business chambers and academic institutions in Argentina and with similar existing cooperation efforts in many countries, including those of Mercosur.


The internationalization of small and medium enterprises (SMEs) that project their capacity to produce goods with some kind of differentiation, either by their insertion in transnational productive chains or by directly reaching the spaces of consumer supply (large stores and aisles of supply chains), is one of the phenomena that characterize current global economic competition. This even has an impact on the external trade policies of the involved countries and on the agendas of international trade negotiations.

This is a phenomenon that has been accentuated by the breakdown of every kind of distance -physical, economic, cultural- between countries and regions and that has accelerated the connection of markets and productive systems. It is also the result of the trade liberalizations that have taken place in the last decades both at the multilateral level through World Trade Organization (WTO) negotiations and at the inter-regional and bilateral levels with a growing number of preferential trade agreements. (See the information about the internationalization of SMEs, including bibliography, document sources and videos, in the three instructive manuals on international trade published by the Institute of International Trade of the Standard Bank Foundation in its Virtual Library, on http://biblioteca.fstandardbank.edu.ar/).

At the same time, this is a phenomenon that tends, if not to erode, at least to redefine the difference between what is domestic and what is international, both at the level of production and in the trans-border exchange of all types of goods and services. As a consequence, the crossbreeding that characterizes the current international system -with its intense mix of cultures, technologies and religions- has also become evident in the goods and services that cross over the borders, making it difficult many times to identify their origin and that of the enterprises that produce or provide them (on this regard refer to the conference given by Pascal Lamy, Director General of the WTO, of February 5, 2011, on http://www.wto.org/).

It is essential for a SME with a sustained presence in multiple markets, or that is exposed to international competition in its own market, to obtain quality information on those events that have a bearing on the future and that point to circumstances that, in due time, may open up or displace business opportunities. It is even more important to be able to process such information in the perspective of its own interests and strategies.

There are two types of events that need to be detected and diagnosed in relation with the strategy for international insertion of a company. In the first place, those that reflect the deep forces that are anticipating significant changes in global economic competition, or in that of the corresponding regional geographic spaces. In the second place, the unforeseen events that may signify a turning point in the external context that affects the competitive advantages of a SME.

It is not and has never been an easy task to detect and decipher the events that point to long term trends in the international scenario, particularly for SMEs. However this becomes essential for the outline, adaptation and implementation of the corresponding strategies for world insertion.

It is particularly so within the current international context, characterized by a strong dynamism resulting from the continuous shifts in the relative power of nations and in the competitive advantages of the players in the competition for world markets. It is also characterized by the appearance of potential opportunities resulting from the economic growth of several emerging markets and the strong trend that can be observed in them, towards a growth in their population having incomes and consumption patterns characteristic of the urban middle classes.

Aside from this, unforeseen events tend to become more frequent. These are what Nassim Taleb called the "black swan" (refer to his book "The Black Swan. The impact of the Highly Improbable", Random House, New York 2007). Of particular relevance are those events that indicate turning points in economic and political processes, be it within countries or in key regions. Even when such events reveal deep changes in the distribution of power, in or between nations or in the structure and behavior of the markets, they may contribute to a rapid obsolescence of any analysis and diagnosis, making the previously crafted strategies and courses of action more vulnerable.

The fact is that predicting the future, even the near future, has become extremely difficult. This can be exemplified by the recent events that took place in Egypt, with the process that led to Mubarak's resignation from office. This event had not been anticipated to happen at the time and in the manner that it did. For example, Paul Kennedy confirms that the issue of the crisis of Africa's Northern countries was nowhere to be found in the agenda of the World Economic Forum of Davos of last January (see his report on page 39 of Clarín newspaper, Buenos Aires February 6, 2011). As indicated by Timothy Garton Ash, it is much easier to explain something after it has occurred than to foresee it beforehand. This is what he calls "retrospective determinism". (See his opinion on page 29 of El País newspaper, Madrid February 12, 2011).

The quality of information is nowadays, more than ever, a relevant factor in the ability of a SME to compete in world markets. Its importance increases in view of the diversity of options that companies might have for their insertion in economic global competition, which is characterized by a strong dynamism and an intense proliferation of competitors.

The accurate and timely processing of relevant information on the international scenario, markets and competitors enables a company to efficiently manage its necessary competitive intelligence. The latter can be understood as the result of a continuous process of gathering and analyzing critical information that may be obtained from public media -especially from the Internet- and that is relevant for the strategic planning of a company, with the aim of preserving and developing its ability to compete in those markets where it is present or where it aspires to be (for a definition of competitive intelligence go to the web page of Industry Canada, cited in the Recommended Reading Section bellow). This certainly involves a clear idea of what goods and services a SME may project into a target market and of what is required for them to be valued by potential customers, many times coming form different cultures and with diverse consumption patterns. Above all, it implies the will to have a sustained presence in these markets.

This is not an easy task, in good measure because of the fact that there are many competitors that aspire to reach the same customers, even from very different countries. If those who offer goods and services have multiple options in terms of the consumers they can have access to, so do those who demand and consume these goods and services. The changes that are continuously happening in the global scenario are accentuating, precisely, the diversity of options and of protagonists.

Due to its size, an SME normally has many limitations when undertaking and managing its competitive intelligence. This is the reason why it is an activity that may require joint efforts with other enterprises, for example belonging to the same regional cluster or export consortia. It is a task where a SME may find or aspire to find the collaboration of agencies for the promotion of trade, business chambers or academic institutions, either at the national or local level.

In the case of Argentina, this will be of growing importance for the future development of foreign trade in the measure that more SMEs face the complex task of having a sustained presence in more distant and unfamiliar markets., especially with goods with diverse forms of differentiation, The countries of Asia, Africa and the Middle East are some examples on this regard.

The need for SMEs to efficiently manage their competitive intelligence paves the way for the development of an extensive future cooperation agenda between government agencies, business chambers and academic institutions, not only within Argentina but also at a regional level with Mercosur and at an inter-regional level with similar cooperation efforts existing in many countries.


Recommended Reading:


  • Archivos del Presente, "Revista Latinoamericana de Temas Internacionales", Año 14, N° 53/54, Buenos Aires 2010.
  • Baeza, Cecilia, "L'Amérique Latine. 50 cartes & fiches", Ellipses Édition Marketing S.A., Paris 2010.
  • Beck, Ulrich; Grande, Edgar, "La Europa Cosmopolita. Sociedad y Política en la Segunda Modernidad", Paidós, Barcelona 2006.
  • Brown, Kerry; Su Hsing, Loh, "Trying to Read the New "Assertive" China Right", Chatham House, Asia Programme Paper: ASP PP 2011/02, London, January2 2011, en: http://www.chathamhouse.org.uk/files/18402_0211brownhsing_pp.pdf.
  • Canuto, Otaviano, "Can Developing Countries Continue to Lead Global Growth?", Carnegie Endowment for International Peace, International Economic Bulletin, January 20, 2011, on: http://www.carnegieendowment.org/.
  • Global Competition Review, "The Handbook of Trade Enforcement - 2010", GCR, London 2010.
  • Halle, Mark; Wolf, Robert, "A new approach to transparency and accountability in the WTO" Issue Brief - 06, Entwined 2010/16/09, Stockholm 2010, on: http://www.iisd.org/.
  • Industry Canada, "SME - Direct. Competitive Intelligence", Industry Canada, Ottawa, on: http://www.ic.gc.ca/.
  • Kawai, Masahiro; Wignaraja, Ganeshan (editors), "Asia's Free Trade Agreements: How is Business Responding?", Asian Development Bank-Edward Elgar Publishing, Cheltenhyam UK-Northampton, MA, USA, 2011.
  • Khanna, Parag, "How to Run the World. Charting a Course to the Next Renaissance", Random House, New York 2011.
  • Liu, Lu; Li Shuang, "The Internet and SMEs. Internationalization-Cases Studies of Swedish Manufacturing SMEs", Master's Thesis, Master of Science Programme in Business and Economics Specialization: E-Commerce, Lulea University of Technology, Lulea 2004, on: http://epubl.ltu.se/.
  • OECD, "Looking Beyond Tariffs. The Role of Non-Tariff Barriers in World Trade", OECD Trade Policy Studies, Paris 2005.
  • Price, Gareth, "Asia and Europe: Engaging for a Post-Crisis World", Chatham House, Asia Programme Paper ASP PP 2011/11, London, January 2011, on: http://www.chathamhouse.org.uk/.
  • Rosen, Daniel H.; Wang, Zhi, "Deepening China-Taiwan Relations through the Economic Cooperation Framework Agreement", Peterson Institute for International Economics, Policy Brief, June 2010, on: http://www.piie.com/publications/pb/pb10-16.pdf.
  • Sandrey, R.; Jensen, H.G.; Fundira, T.; Denner, W.; Kruger, P.; Nyhodo, B.; Woolfrey S., "South Africa Way Ahead: Shall we Samba?", Trade Law Centre for Southern Africa (tralac) - National Agricultural Marketing Council, Stellenbosch-Pretoria 2010, on: http://www.givengain.com/.
  • Senado Federal, Brasil, "Venezuela e Mercosul. Ciclo de Debates", Comissâo de Relaçoes Exteriores e Defesa Nacional, Brasília 2010.
  • Serbin, Andrés, "Regionalismo y soberanía nacional en América Latina: los nuevos desafíos", in Revista Nueva Sociedad, Buenos Aires, Agosto 2010, http://www.nuso.org/userView/notas/serbin.pdf.
  • UNCTAD, "Globalization for Development: the International Perspective", UNCTAD-DITC/2007/1, Geneva 2008, on: http://www.unctad.org/.
  • UNCTAD, Non-Tariff Measures: Evidence from Selected Developing Countries and Future Research Agenda. Developing Countries in International Trade Studies", UNCTAD- DITC/TAB/2009/3, Geneva 2010, on: http://www.unctad.org/.
  • ZEI, "Regional Integration Observer", Center for European Integration Studies, Universitätbonn, Vol. 4, N° 3, December 2010, on: www.zei.de.


Félix Peña Director of the Institute of International Trade at the ICBC Foundation. Director of the Masters Degree in International Trade Relations at Tres de Febrero National University (UNTREF). Member of the Executive Committee of the Argentine Council for International Relations (CARI). Member of the Evian Group Brains Trust. More information.

http://www.felixpena.com.ar | info@felixpena.com.ar


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