KONKURENCE A KONKURENCESCHOPNOST V ZEMĚDĚLSTVÍ ...

Competition and Competitiveness in Agrobusiness. Theoretical and practical aspects

konkurence a konkurenceschopnost v zemědělství. hlediska teoretická a praktická

Mieczysław Adamowicz

Adresa autora:

Mieczysław Adamowicz

Department of Agrarian Policy and Marketing, Warsaw Agricultural University

Abstract:

Competition and competitiveness are complex phenomena related to a market economic system which is not commonly understood nor clearly defined. The importance of these concepts are increasing with the progress of internalization and globalization processes in the world. The concept of economic competition was originally developed by economists but managers, business and marketing specialist added an important amendment to this classical economic concept. The aim of the paper is to reveal theoretical background of these concepts and to show some practical aspects related to agribusiness,. The competition and competitiveness are then discussed as an element of micro and macro economic theories with special attention to comparative advantages in trade theories. Next, industrial organization theories, marketing theories and strategic managerial theories have been examined. A part of the paper deals with the measuring of competitiveness as well as with the system of a competitiveness monitor. Competitiveness and its measuring becomes an important subject of research in agrifood sectors of developed and transition economics.

Anotace:

Konkurence a konkurenceschopnost jsou složité jevy tržního hospodářského systému, které nejsou běžně chápány ani jasně definovány. Význam těchto jevů roste s postupem světové internalizace a globalizace. Účelem tohoto vystoupení je odhalit teoretické základy těchto jevů a poukázat na některá praktická hlediska se zřetelem k agrobyznysu. Konkurence a konkurenceschopnost jsou pojednány jako prvky mikro- a makro- ekonomickývh teorií se zvlášním zřetelem ke komparativním výhodám v obchodních teoriích. Dále se zkoumají teorie organizace trhu, teorie marketingu a teorie strategického řízení. Konkurenceschopnost a její měření, kterými se toto vystoupení také zabývá, jsou důležité předměty výzkumu v sektorech zemědělství a potravinářství v zemích vyspělých i transitivních.

Key words:

competitiveness, competitive strategies, trade theories, competitive performance, competitive monitor.

Klíčová slova:

konkurenceschopnost, strategie konkurence, teorie obchodu, konkureční výkonnost, konkurenční monitor.

Competition as an element of microeconomic theory

Competition as a rivalry between persons or economic subjects originated on the market. Market may be defined as all relationships between market participants and mainly between sellers and buyers of a product which result in the distribution of goods for consumers.

If more than one seller and more than one buyer act on the market two general types of relations exist: exchange (negotiative) relations and competitive relations. Every seller and every buyer is under the influence of competition processes on the market. The basis of the competitive processes is a continous mechanism of confrontation of the different aims and interests of the seller (buyer) with aims and interests of the other sellers (buyers).

A confrontation of sellers representing a supply with the buyers representing demand evokes exchange relationships between them from which price as a third element of the market appears. Both, sellers and buyers want to exchange goods and to maximise the reward (profit or utility) they get from the transaction of specific products at given prices and with an available budget. The competitive relations take place mainly inside separate groups of sellers and buyers, but through the exchange (negotiative) relations they transfer also on the relations between seller and buyer.

The negotiative and competitive processes are not autonomous on the market. There are different casual relationships between them. Participation in the competitive processes is the only way to finalize the exchange processes. Only the last one permits to realize the market subject aims. Each market participant has his own aims and goals he strive for, which in most cases are contradictory to aims and goals of any other one on the market. Reward received by one market subject depends not only on himself but on all other participants on the competitive market. Competition constitutes an element of that group of market phenomenas which concern the way of dealing the subjects on the market.

Competition is a process which shapes a relationship inside groups of sellers and buyers and between members of these two groups. In highly supplied market competition it is originates mainly among sellers. Every seller likes to distinguish him positively among other competitors and solicits for acceptance of this distinction by buyers. Every seller could use a different instrument of competition. The use of different instruments permits for attaining a competitive position of sellers on the market and for overcoming the dominant position of buyers. Market subjects aim at attaining negotiation and competitive assendancy which permits them to meet their goals.

Classic economic theory explains competition mainly in the micro-economic price theory. This is based on several assumptions of an ideal market with the perfect competition and ideal prices which give adequate equal rewards to all participants. The ideal prices compensate for the cost of the seller and assure marginal utility of the goods for buyers. In practice an ideal market doesnt exist and competition leads to elimination of competitors to a monopoly. To avoid this a competition mechanism is protected or promoted by state legislation. In practice several intermediate market models exist between a market of perfect competition and a monopolistic market. The classic economic theory is supply oriented and aims mainly to solve the question of distribution of goods to consumers with the help of prices.

The general concept of a market could be operationalized by drawing boundaries with the use of marketed products, regions and time. To distinguish relevant or non-relevant products for specific markets, the theory uses the assumptions about perfect knowledge and the supposed ability of consumers to make rational choice between offered goods at given prices. Because different products, at different markets are offered the substitution amongst products plays also an important role. Relations between goods could be measured by substitution elasticities. The substitution elasticities are used to distinguish between different product qualities (vertical dimensions) and close by related products on regional markets (horizontal dimensions).

The classical or neo-classical economic theory has been developed to explain price. The strict assumption of this theory make it not fully suitable for describing, explaining and predicting consumer behaviour which is more and more important in the competition mechanism. The operationalization of market boundaries in a price theory with the help of elasticities is also not fully useful for competition analysis. The integration of states and economies, the internationalization and globalization of companies with foreign direct investment and strategic alliances makes them players on different markets and makes national borders a less important boundary for the markets. Development of transportation and communication help to make the border between regional markets vanish. These are only a few examples of factors influencing the development of the new practical activities and theoretical thinking on the area of competition and competitiveness.

Competitiveness and comparative advantage in trade theories

Competition among countries and regions could be discussed also as an element of trade theory and as a reason of gains from trade between nations. These theoretical concepts of competitiveness based on the well developed trade theories, and first of all on the concept of comparative advantage, which is established by comparing differences in costs and prices of products in the situation of autarchy and trade between countries.

The basis for different competitiveness of nations has evolved from classic economists concepts and first of all from Adam Smith and David Ricardos models in which differences in absolute costs and in labour productivity which reflect also differences in technology, led to differing autarchy prices across countries, hence the differing comparative advantages. Further development of the trade theory, mainly by Hecksher and Ohlin, uses the factor endowments explanation of those underlying differences. They are based on the preasumption that the same technology is available everywhere and differences lie in endowments of labour and capital. The concept was generalised to a model of world multiple factors of production. The New Trade theories, stressing mainly technology and human capital factors, added reasons why differences exist between countries, and so comparative advantage may arise.

Because a theoretical concept was not always proven by empirical studies, a lot of new concepts explaining the international trade emerged. That new concepts show that not only differences between countries, as stressed by classic trade theories, but also similarities may encourage a trade exchange. The increasing importance of intra-industry trade, especially among integrated groups of countries and industries, contradicts the role of comparative advantages as a key determinant of trade flows. Another features such as economies of scale, product differentiation, institutional structures, imperfect competition and firms co-operation are used in the new concepts explaining competitiveness and gains from trade among nations. Most of these factors depended closely on firm behaviour which more frequently can be multinational in scope attaining their goals not only by foreign trade but also by foreign direct investment. Even than these new concepts do not create a new general theory of trade and international competition they show that explanation of the new economic phenomenas could be found not only with the help of traditional micro and macro economic theories but also by the use of new disciplines related to business stressing behaviour of the firm in the competitive environment.

Business economists focus on industries and adequate markets. In the field of international trade they recognize that not countries but individual firms compete with each other. An international trade is only one way of supplying foreign markets: food manufacturing firms increasingly rely on alliances with foreign partners or production in wholly new invested production facilities in foreign countries (Boon,1998). The business economists attempt to find general and practical rules on how firms may create and maintain competitive advantage. Behaviour of the firms operating on the different markets is the key element of industrial organisation theory.

Industrial organisation theory

The industrial organisation theory was developed because the neo-classical economic theory about prices on internal markets and international trade theory in relation to industrial markets was inconclusive for oligopolistic markets and markets with highly differentiated products. In practice, economic mechanism by elimination of inefficient subject lead to oligopolistic form of markets which could give a monopoly profits to some firms and losses to others because the whole economic capacity is not used and perfect competition is not practized. Because of market failures, the market does not lead to an efficient allocation of production factors. How a market fulfils its role depends on the market structure (form), market behaviour (level of competitiveness) and market performance. The basic industrial organisation theory recognizes that in given industry the market structure sets the boundaries for the market behaviour and performance is determined by it. This simple casual relation has developed into more complex relations between structures, behaviour and performance in recent years (de Vlieger 1998).

The industrial organisation theory gave a framework to understand competitiveness and strategy of a firm. It was developed mainly by Michael Porter who provided a number of useful frameworks and tools such as the five forces framework (1980); the value chain analysis (1985); and the Diamond Approach (1990), to understand and analyse the competitive position of firms of specific industries.

An industry is understood as a group of enterprises that produce similar products with the help of a similar technique and to compete for a specific need of consumers. The basic assumption of these ideas is that the environment of firms has a strong influence on the strategies potentially available for the firm and its performance. According to the five forces framework, the nature of competition in an industry is embodied in the five competitive forces: 1. The threat of new entrants; 2. The threat of substitute products; 3. The bargaining power of suppliers; 4. The bargaining power of buyers; 5. The rivalry among the existing competitors.

The ability of firms to earn above-normal profits is dependent on the attractiveness of an industry. Firms in highly competitive industries may only achieve average economic performance. Firms in less-competitive industries may obtain a competitive advantage and above-normal economic performance. Thus these firms must choose a favourable position in their competitive environment that can neutralize the five competitive factors. They can choose between two basic types of competition strategies: low cost (cost leader) or differentiation. Lower costs in relation to competitors are translated into superior returns. Differentiation is the ability to provide unique or superior value to the buyer which could pay for this a premium price and superior returns . Environmental threats and opportunities affect all firms in the industry but the abilities of firms to cope with them differ. This is the key to competitiveness between firms in the industry. Sustainable competitive advantage is the fundamental basis of an above average performance in the long run.

The competitive advantage of a firm would arise not only from the strengths and the right position on the market but also a firm can change these position by organising and performing discrete activities. A firm creates value by performing these activities and it is profitable if this value exceeds the cost of performing these activities. Thus, firms may gain competitive advantage if they are more efficient than their competitors (lower cost) or perform activities in a unique way (differentiation).

The two basic types of competitive advantage: low costs and differentiation could be combined with the scope of activities which led to three generic strategies for achieving above-normal performance in an industry: cost leadership, differentiation and focus. The focus strategy is limited to the segment which has two variants, cost focus and differentiation focus. The leadership cost and differentiation strategies seek competitive advantage in a broad range of industry segments.

To analyze the sources of competitive advantage Porter introduced the value chain concept, which desagregates a firm into its strategically relevant activities to understand the behaviour of costs and sources (existing and potential) of differentiation (Hack and others 1998). In the concept of the value chain analysis, Porter shifts from a market power perspective -i.e. competitive advantage stems from positioning and the ability to erect entry and mobility barriers - to an efficiency perspective - i.e. competitive advantage stems from superior co-ordination of activities, increasing value of products which can be sustained through barriers to imitation. He distinguish five kind of primary activities (inbound logistics, operations, outbound logistics, marketing and sales, services) and four kinds of support activities (firm infrastructure, human resource management, technology development, procurement) that each can create value. Every value activity employs purchased inputs, human resources and technology to perform its function. The value chain of firm is embodied in a larger stream of activities called by the author the value system.

The Porter approach looks not only for firms but also for groups of industries, regions and nations. He attempts to explain why nations succeed in particular industries. For this purpose he created a Diamond framework, which includes: a) Factor conditions; b) Demand conditions; c) Related and supporting industries; d) Firm strategy, structure and rivalry; e) Chances and; f) Government.

The above mentioned factors interact with each other to create conditions where innovations and competitiveness occur. The ultimate determinant of competitive advantage is the firms ability to create and upgrade ”advanced factory through innovation”. However, the necessary resources for a competitive advantage are mainly seen as located in the environment or in industry clusters. This stage of Porters analysis was made in two steps. In the first, clusters of successful industries were mapped in the important trading nations. In the second step he examined the history of competition in particular industries to clarify the dynamic process by which a competition advantage was created. Under the term of ”environment” he understood not only geographic location but also other important factors, such as the way in which managers and workers are trained, the nature of the companys important customers, the nature of related and supporting industries and the role of national and regional governments.

Industrial organisation contributed to the understanding of competitiveness and an empirical orientation, which could help to account for the position of a firm and its performance. These ideas have been very influential on a practical strategy of firms and their competitiveness thinking. Nevertheless, these approaches do also have some limitations.

Marketing theories

Themarketing theory is interested in markets and competitiveness from the point of consumers. According to this approach the market includes all potential buyers that share a certain need and want and can fulfil this need by means of an exchange (Kotler 1984). The marketing theory is interested in markets to define the group of consumers the firm and its marketing instruments have to be oriented to. In this concept the demand is more important element of the market than the supply and firms compete for consumers and adequate market shares in a specific part of the market. A market oriented approach can create a sustainable competitive advantage. Marketing is not interested in getting the right price but wants to know who the buyers of the product are and what their needs and wants are.

In the marketing concept, competitiveness is depended not only on production but also on the market orientation of firms and industries. A market orientation strategy includes: 1) the systematic collecting of information on customers and competitors, both present and potential; 2) the systematic analysis of information to attain better market knowledge, and 3) the systematic use of this knowledge to guide strategy (Hack et al. 1998). The implementation of market orientation could create a comparative advantage because it potentially enables a firm to produce for some market segments more efficiently than other competitors. The comparative advantage in one or more segments is achieved through product differentiation, product innovations, quality, service or suitable product range. The question remains, however, how long the comparative advantage of the firm could be sustained.

In the marketing approach the choice of relevant products is not made with the help of elasticities but is based on the needs of consumers and possibilities to fulfil these needs. The concept of the market also includes a part of potential demands. A market based on the consumer - buying models could be divided into several parts and segments, such as potential market, real market, qualified real market, markets for separate specific products directed to specific consumers in specific regions etc.

The recent individualization of consumer demands makes it much more difficult to distinguish the market for a certain product. Almost every consumer has become a separate market with its own buying criteria and wishes that may differ with the moment of the day and the place of location. These trends lead to a lower predictive value of market research and an enormous enlargement of the assortment of products. This creates serious problems, because the wishes of buyers are leading production and the assortment in a shop can not be expanded indefinitely. A larger assortment implies that the consumer needs more time for searching and walking through the shop. The market prediction and segmentation in target groups becomes less and less relevant. The reason is that variability and not stability is now the rule. Consumers dictate not only what they like to buy, but also what kind of information they need. This influences the production process and distribution channels.

The reverse in thinking by starting with consumers wishes has increased the need of co-ordination of production in the different stages of the total production process. This has resulted in a renewed attention for reasons to integrate vertically and for all kinds of vertical contracted arrangements between firms. The result of this is the disappearance of the market and competition between the different stages of product flow (food chain) or at least the diminished influence of such markets and competition.

A lot of firms differentiate their production, they no longer produce only one product. The competition becomes more complicated. Firms often play on different chess boards in order to survive competition. Further more, firms in the some industry do not always compete, because they have separated regional markets or produces highly differentiated products offered on different segments of the market. This means that not only the market, but also the concept of the branch or an industry is under transition. The competition is transfered between different products and brands manufactured in different industries.

The newer marketing approaches are concentrated on the explanation of consumer behaviour. New authors distinguish external environmental factors (culture, social strata, social group, family, personal and other influences), individual determinants (information processing, learning and memory, personality and self concept, attitudes, motivation and involvement) and the decision process itself (problem recognition, information search and evaluation, purchasing and post purchasing processes). Ideas of bounded rationality and costs of information are used in searching and processing of market information and market decisions.

Based on differences in consumer behaviour and influencing factors different markets segments can be distinguished. Additionally to traditional criteria, new aspects related to values, lifestyles and buying moments are being used.

Another development in marketing is the determination of competitive market structures with the help of market segments that are homogeneous in terms of probabilities of choosing the different brands in the product class. This theory is based on brands to which other products belonged to the same group are not alternatives for the buyer. This idea is not based on bounded rationality but on preference for a provoced set of products that are considered close substitutes with others or not. Provoced sets of products could be classified according to a product hierarchy: need family, product family, product class, product line, product type, brand and product (de Vlieger 1988). The product hierarchy can be used to asses the relation between different products.

The growing importance of the moment of consumption has led to other new marketing approaches including that about the value of product for consumer. This, so called prospect theory and others could be incorporated in the new definition of market and competitiveness.

Strategic management theories

There are a number of approaches and schools in the frame of strategic management theories which are related to markets competitiveness. Mintzberg (After de Vlieger, 1998) divides them into three groups: the prescriptive school (design, planning and positioning school), the descriptive schools (entrepreneurial, cognitive, learning, political, cultural and environmental school) and the configuration school. The first is concentrating on how strategies should be formulated, the second focuses on specific aspects of the process of strategy formation, and the third one combines the two above mentioned in a single perspective, that of configuration. The different schools concentrate on entrepreneurial behaviour of firms.

Predominant numbers of these schools are resource based and supply oriented, aimed at receiving the competitive advantage or competitive position on the market. In this aspect they differ from the view of marketing approaches. The competitive advantage or competitive position of a firm is defined as a bundle of unique resource compabilities and their relationships, which are hard to attain or to imitate their combinations. The task of the general management is to adjust and renew these resources, capabilities and relationships as time, competition, and change erode their value (Rumelt 1984).

The resources cover physical, financial and human capital as well as organisational capital. The latter includes: knowledge, information, intangible assets (brand names, market position) decision making process and coordination system.

The central point of resource based theory is that firms ultimate objectives to obtain above-normal returns. These can be achieved in the long run if tangible and intangible resources of a firm are combined in a strategic manner such that the manufactured products are distinctive in the eyes of buyers or if a firm selling an identical products has a lower cost position. Resources which permit to attain the sustainable above-normal profits must be valuable, rare, not perfectly imitable and not easily substituted (Barney 1991).

Most of competitiveness concepts deal with the struggle for the current market share in an existing market. The rapid technological progress may result in markets and the rules of competition will change and new, not presently know, opportunities may appear. To be competitive in the future a firm has to obtain a share of those future opportunities. Consequently is not only important to have a satisfactory market share at present, but also adequate opportunity share in the future. Therefore, it is not enough to utilize an existing core competencies and capabilities but it is also necessary to create a new core competencies, which will permit to be competitive in the future (Hamal and Prahalad 1994).

Measuring Competitive performance

Practical aspects of the competitiveness are mostly related to on how to measure the competitiveness, and how the competitiveness research results are used in the policy and practical activity of firms. There are several approaches to measure the competitiveness. Buckley et al. (1988) have made a useful distinction between different measures of competitiveness such as:

· competitive performance,

· competitive potential,

· competitive process.

Measures for competitive performance show how well a country, region, sector or company is doing compared to its competing rivals. Such measures are commonly used as profitability, growth, market share and balance of trade. Measures of competitive potential look first of all on availability of resources or inputs, which result in above-normal performance such as access to abundant and cheep row materials, superior technology, unique know how etc., leading to higher production efficiency and cost competitiveness. Measures of competitive process stress the quality aspects and seek to measure how a competitive potential is converted into competitive performance.

For an international comparison the question is how to measure competitive advantage. Empirical studies show that while there is considerable ability to analyze absolute differences in costs of production the efforts to analyze the competitive advantage of countries due to any reason are neither successful nor quantitatively prove the theoretical ideas.

Balassa (1977) developed a tool of measuring comparative advantage export, which is called Revealed Comparative Advantage (RCA). This author says that comparative advantage would be revealed in high shares of export markets, and oppositely, a comparative disadvantage in low share of export markets. The RCAof any country for any product is the percentage shares of the international market for that product, divided by its share of the international market for all products. The RCA index exceeding 100 for a particular industry in a particular country would mean that the country has a comparative advantage while the index below 100 indicates a comparative disadvantage. Using such indexes we can identify sectors for which any country has a comparative advantage. This measures assess, the success or failure in performing profitable export and maintaining adequate market shares on foreign markets. The measure can be calculated for a whole industry and more preferably for specific product segments. According to the statistic collection system on trade this measures could be used for regions inside the country for which statistic are done. The RCA index differs from market share indicator in that the latter looks at the absolute performance of the industry, region or company vis a vis its competitors, while the RCA index looks at performance of an industry compared to other industries in the same country. This method can not be appropriate to compare competitive performances between countries. Different subsidies and policy measures can modify results as well.

A supplementary measure which covers not only export but also import is a Net Export Index. In this case the RCA measure could be used only for separate commodities and not for the sector or total trade. The import is, however, much influenced by restricted import policies applied in most developed countries.

Another approach is to measure economic performance by comparing industries across countries. For this purpose the value added measure is used as a measure of competitiveness. Static economic performance is calculated by dividing the value added per inhabitant of a country by the average value added per inhabitant in a group of countries such as OECD or EU. Dynamic economic performance is also calculated as the percentage change of this indicator over different points of time (Pits and Langevik, 1998). The weakness of this method is that the data of value added in different countries are not available at the same level of aggregation and frequently are not coherent. Sometimes also the data compiled on the firm level include activities of different sectors or branches. Also quality differentiation creates some problems of comparability.

The RCA method has little value to measure competitiveness on the firms level. For this purpose a number of techniques for analyzing of competitiveness have been developed. One of them is the Growth Share Matrix used by the Boston Consulting Groups (BCG) for evaluation of large firms.

This technique is based on 2 x 2 matrix, high and low market growth rate and high and low market shares. To distinguish between high and low market growth, 10% per annum is considered as the mid point (Pits and Langevik 1998). Relative market share refers to the share of its market held by the company compared with that of its largest competitor. The mid point of the market share is 1,0 which implies that the company share is equal to its largest competitor. A figure lower than 1,0 implies the weak, and a higher than 1,0 - a strong competitive positions.

The competitive position of two or more companies can be assessed by classifying their products on the matrix. Firms with a large share of their sales and with a high growth categorie are more competitive than those with small market shares or with a large share in low growth markets.

The share matrix method is widely used for strategic planning by large companies, however, it has some limitations and weakness. It includes only two criteria - market growth and market share while other characteristics of a company performance in a highly differentiated environment may be also of great importance.

Gellynk and Viaene (1993) have adapted Share Matrix Technique for analyzing the competitiveness of a portfolio of products of an industry sector on foreign markets. They distinguish a demand and supply side of the matrix and assess attractiveness of a separate market or markets for the demand side and the market position of the country on the supply side. The competitiveness is the result of the interaction of the two matrices representing attractiveness (demand) and position (supply).

The above discussed measures of competitiveness were mostly oriented on trade. However, at present the foreign investment is, an efficient substitution of trade. Foreign direct investment could be treated as a foreign production (production outside the home country by subsidiaries or multinational companies). As foreign investment becomes a more important way of international economic relations an adequate measures of competitiveness must be elaborated. This task is undertaken mostly by industrial organizations and strategic management theories. Porter (1980), Trail, Gomes de Silva (1994) adopted or proposed new approaches of measuring the competitiveness of foreign direct investment. One of the most important shortcomings in this area is the lack of relevant data and informations.

Competitiveness Monitor

One of the new approaches in measuring international competitiveness is the Competitiveness Monitor which constitutes the framework for repetitive measurement of a competitive position of agricultural industries in an international context. The works aiming at establishing an instrument to monitor the international competitive position of the agribusiness on a regular basis was undertaken in the Netherlands (Hack el al. 1998).

The framework for Competitiveness Monitor applied in Dutch agribusiness sectors aimed at gaining inside into the competitive position of an industry in order to start a discussion with policy makers in private enterprises on improving competitive positions of these industries. This means that this framework was practically oriented on improvement in the private agrifood sector as well as in the public sector to facilitate private initiatives to strengthen the industry. Such established aims did not disturb the common agricultural policy of the European Union. In detail the instrument Competitive Monitor should:

· give an exhaustive and up data picture of the competitive position of an industry;

· give enough detailed information to get practical points of improvements to enhance the competitive position for both firm and public policy maker;

· be applicable to all agricultural industries and give as far as possible comparable results

· give results that are comparable over time;

· give result that are verifiable (Hack et al. 1998).

This framework extracted the key elements of the different theories that determine or influence the competitive power of firms and industry. In this way they distinguish four determinative key-factors with underlying variables to describe competitive power . These factors are as follows:

1. Market adaptability which includes variables expressing the interaction between supply chain and the market.

2. Supply chain effectiveness includes variables which focus mainly on exchange and coordination between institutions in the chain.

3. Cost and efficiency focuses on the economic performance of the supply chain.

4. Strategic potential concentrates on the problems that gives indication of future prospects for stability development.

Concluding remarks

1. There are growing concerns about questions related to competitiveness in a firm, branch, industry, regional, country and international scales. Additionally, to neo-classical economic theory several new theoretical approaches and concepts are being developed. Each new concept is enriching the knowledge and brings some new tools for measuring and practical applications. No universal theory explains competitiveness or unified measures and tools to elaborate on practical application.

2. New important concepts of competitiveness were developed in the frame of on industrial organization theory (Porters concepts of the five forces, the value chain and Diamond approach), marketing theories (demand oriented strategies, consumer behaviour, competitive market structures, prospect theory, etc), strategic management theories (resource based and supply oriented prescriptive, descriptive and configuration schools, market share and opportunity share concepts) and others.

3. Practical aspects of the competitiveness are related mostly to measuring competitiveness. Some practical reorientations appear from all theoretical approaches, however the competitiveness research is too much extend hampered by the lack of information and relevant statistical data. Practical measuring approaches were developed to measure competitive performance, competitive potential and competitive process by the use of export and Revealed Comparative Advantage indexes, Market Share Indicators, Net Export Index, The Value Added, Growth Share Matrix, Foreign Investment and others. An advanced instrument to measure international competitiveness of agricultural industries in a regular basis is Competitiveness Monitor. Further research on competitiveness in agrofood sectors are necessary while internationalisation, globalisation and economic integration are dominant processes on the world influencing performance of industries and firms and advantages of any nations.

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