3 THEORETICAL FRAMEWORK
3.4 External factors
3.4.4 Competition
South African SMMEs are facing increased competition from the country’s large businesses, particularly in Ekurhuleni Municipality (Badenhorst-Weiss and Cilliers, 2019; Magalhaes and Hartanto, 2020). SMMEs need to “continually transform, evolve, or reinvent their own way” (Lebusa, 2013) . This is so that they can be sustainable and long-lasting business in order to counteract this competition. Consequently, the development and survival of SMMEs, particularly those in Ekurhuleni, depends on
their enhanced productivity and their ability to compete with rivals (Badenhorst-Weiss and Cilliers, 2019; Tselepis et al. 2016).
Competitiveness is defined by comparing the degree related to economic or monetary competition across various businesses in a same sector and their environmental contexts and allows one to gain a significant amount of market advantage (Sachitra, 2016). In business and public discourse, the phrases “competitiveness”, “competition”
and “competitive advantage” are frequently used synonymously.
These ideas’ definitions can change depending on the issue at hand. While the concepts of competitiveness and competitive advantage are evident at the national, industrial, and business levels, competition is the primary metric for economic activity (Cong and Thu, 2020; Sachitra, 2016). Additionally, according to several researchers (Cong and Thu, 2020; Delp and Mayo, 2017; Utami and Lantu, 2014), while competition is fostered by rivalry, the competitive advantage is only attained when a company leverages competition to capitalise on opportunities. Therefore, a company's competitiveness begins with enhancing its competitive edge (Sachitra, 2016). This includes a method of developing, sustaining and delivering exceptional value to clients in a way that makes it difficult for rivals to imitate (Badenhorst-Weiss and Cilliers, 2019;
Sachitra, 2016).
3.4.4.1 Competition
The notion of “competition” (which comes from “contest” or “pursue together”) refers to the competitive state brought on by multiple stakeholders working toward a common commercial goal (Zelga, 2017). As a result, competition is typically viewed as a situation where rival parties attempt to compete over a single resource. Competition inherently entails a state of rivalry when there exists only one prospective victor. The emergence of competitive rivalry can be attributed to the presence of two or more competitors who are actively contending for a prize that is unattainable for all participants. Utami and Lantu (2014) suggest that there exist four crucial criteria in the realm of corporate competition. The rival enterprises and/or potential newcomers are the rival competitors.
• Profits, market share, resources and customer happiness are the objects of competition and the reason why competition exists.
• Competitive capability shows a company’s tenacity in a competitive environment.
• The competitive outcomes demonstrate the justifiable advantages of competing products among rivals.
3.4.4.2 Competitiveness
Competitiveness originates from the concept of competition (Cong and Thu, 2020).
However, because competition is a complex and extensively researched topic, there are numerous distinct definitions of the term in the literature. There isn't a single, all- encompassing definition of competitiveness, despite the fact that it has become more and more significant among scholars and organisations (Ibarra et al. 2018). The notion of "competitiveness" is still poorly understood despite extensive discussion and investigation (Setyawan et al., 2015), and its definition is not generally agreed upon.
Accordingly, the corporate, manufacturing, and national perspectives can be used to clarify competitiveness (Utami and Lantu, 2014). Since productivity is dependent on a firm's capacity to maintain a competitive edge, improvement in productivity and firm- level competitiveness are related (Sachitra, 2016). However, according to (Navickas et al. 2015), one must take an organization's goal into account while determining competitiveness. Definitions of "competitiveness" also need to highlight a clear relationship between domestic and international economic activity, as economic globalisation increases the strains of competition on all enterprises (Akaba et al. 2014;
Habánik, 2018). From the perspective of the enterprise, competition is characterised by the ability of the company to expand its revenue, outperform its competitors locally and globally, and endure and prosper (Cong and Thu, 2020; Sipa et al. 2015; Utami and Lantu, 2014).
"Competitiveness" at the industrial level refers to comparing companies that are involved in the same or similar industries. It highlights the extent to which individuals, groups, economies, or geographical areas can sustain their competitiveness in order to provide financial benefits (Sachitra, 2016). Industrial competitiveness, according to Sibel (2015), is the process of gaining and preserving an ongoing competitive edge
over competitors. According to Anton et al. (2015), competitiveness is defined by Porter (1980) as the use of a strategy that creates value and is reproducible, giving an industry an edge over others.
According to Ibarra et al. (2018), the globally accepted definition of competitiveness emphasises the importance of the "system of structures, policies, and events that define the level of productivity of a country." This suggests that the social, cultural, and economic elements impacting the population are expanding and getting stronger (Ibarra et al. 2018). According to some writers, there is a strong correlation between corporate and global competitiveness. But the concept of firm-level competitiveness is defined in terms of business productivity, growth, and profitability, which makes it quite plain and straightforward (Sipa et al., 2015).
3.4.4.3 Competitive advantage
Experts and practitioners in strategic management frequently employ the term
“competitive advantage” to define and compare an organisation’s performance to that of competitors, as well as to explain what amounts to variances in performance (Sachitra, 2016; Sigalas, 2015). Due to the fact that competitive advantage is the result of a few firm operations, it may be difficult to comprehend from the firm's perspective (Porter, 1980).
Competitive advantage, as defined by Chahal and Bakshi (2015) and Badenhorst-Weiss and Cilliers (2019), is an edge in the marketplace that helps a firm to outperform its competitors. With a competitive edge, a corporation can service more clients than its competitors. When a company can develop and maintain competitive features to outperform its competitors, its competitive advantage becomes evident;
this additionally relies on assessing relevant performance characteristics, including profits, financial results and possibilities for costs (Sigalas, 2015; Uzoamaka and Owuamanam, 2023). Additionally, a competitive edge often stems from a scarce or valuable resource; a company will only have a competitive advantage if it has built a distinct and sustainable resource (Badenhorst-Weiss and Cilliers, 2019; Sachitra, 2016).