CHAPTER 3 THEORETICAL AND CONCEPTUAL FRAMEWORK
3.5. T HE C ONCEPTUAL FRAMEWORK
In light of the literature reviewed above, the following conceptual framework (Figure 3.3) is created.
According to Smyth (2004:168) the role of a conceptual framework “is to provide a set of broadly stated ideas and theories that help a researcher to properly identify the problem in order to correctly position one’s arguments of research.” Consequently, a well-planned conceptual framework allows the researcher to find the link between the reviewed literature and the gap which will be closed by the current research presented as a visual representation of how the researcher will navigate in the research while pursuing the goal of solving the existing problem (Shields & Rangarajan, 2013). The construction of the framework may take various forms highlighting the main variables of interest to the researcher and how they are interlinked (Koopmans et al., 2011), through the use of circles combined with narrations to convey meaning and rationale of the framework (Hamilton & Selen 2004).
3.5.1 Models for competitiveness
The quest to achieve competitiveness in global markets where ‘cut throat’ competition exists remains one of the key challenges of business executives (Dusa, 2014). Several models of competitiveness have been suggested (Dusa, 2014). The model by Man et al. (2002) covers four constructs of company competitiveness namely, (external factors, internal factors, entrepreneur profile, and firm performance);
three competitiveness dimensions namely (potential, performance, process), and four competitiveness characteristics namely, (durability, controllability, relativity, and dynamism). However, the
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aforementioned has not been empirically tested. Sirikrai and Tang (2006) proposed a framework of competitiveness which combines external drivers, internal drivers (RBV-based), and financial and non- financial performance indicators. The external factors were divided into industry conditions and governmental roles, while the internal factors were mainly operational. The model of Toppinen et al.
(2007) considered resources and capabilities, marketing strategies and industry key factors. Chew et al.
(2008), built up a framework for the Chinese SMEs’ competitive strategies, which included strategic alliances, innovation and differentiation. Yan (2010) showed the significance of cost reduction, differentiation, innovation, strategic alliances and the environment. Awuah and Amal (2011) considered the drivers for company competitiveness in less developed countries such as innovation, learning, and internationalization. All suggested models combine different factors of company competitiveness without narrating the effect of globalization on them (Singh et al., 2008). As Singh et al. (2008) observed, a holistic approach has not been adopted to analyze the competitiveness of companies in the global context.
Therefore, by borrowing from Zou and Cavusgil’s (2002) global marketing strategy, explained above, this research is thus conceptualized as outlined below.
3.5.2. Competitiveness through conceptualizing Porter’s Model
Although there are many models for analyzing the industry competitive environment, Porter’s Fives Forces Model remains one of the most dominant and popular model used by academics and practitioners (Indiatsy et al., 2014). The model is an illustration of how the “Five” competitive forces can be used to explain the competitive position of a company in any industry (Eskandari et al., 2015). The Five Forces are grouped as the threat of new entrants, bargaining power of buyers, supplier power, threat of substitutes, and rivalry among the already established firms (Eskandari et al., 2015). Eskandari et al., (2015) note that the intensity of each of these forces determines the expected level of profitability of a company. As the intensity increases, profitability is reduced as the company attempts to defend its position and existence in the market (Hove & Masocha, 2014). The threat of new entrants for example, affect existing companies as any new entrant will strive to secure a sizable market share of the market thus affecting the profits of existing companies (Hove & Masocha, 2014). The challenge is for existing companies to erect barriers to entry (Hove & Masocha, 2014). According to Porter (1985) major barriers to entry may come in the form of economies of scale and differentiation. These factors prevent potential competitors by giving them a significant cost disadvantage and a high capital requirement in various ways (Indiatsy et al., 2014). The reviewed literature however shows that while the validity of Porter’s Model cannot be overemphasized, its renewal is also urgent (Mohapatra, 2012). There are three additional forces
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to consider as conceptualized below in line with available literature. Figure 3.2 below is a conceptualization of the above arguments.
Figure 3.2: The Contemporary Model for Competitive Analysis (CMCA)
PRIMARY FORCES
...
MODERATING FORCES
Source: Researcher’s own conceptualization
In the conceptualization above, the five forces are retained as the primary forces while the impact of technology, policy and organizational dynamic capabilities are considered the as regulating forces. The regulating forces do not play a minor role but in fact are the major forces since they influence the outcomes of the primary forces (Weller, 2014). Firstly, it has been noted that government policy is a major force which demands to be included in the model as Mohapatra (2012:274) states that “individual forces and their collective impact will change as the government policies and macroeconomic and environment conditions change.” Various streams of literature suggest the need to consider the role of the government in determining the competitiveness of a company (e.g. Anderson et al, 2014; Chirisa &
Dumba, 2012). The role of national policies in defining industry competitiveness must be incorporated as the sixth force within the model (Mohapatra, 2012). This is because not only do government policies
BARGAINING POWER OF SUPPLIERS
BARGAINING POWER OF BUYERS
THREAT OF NEW ENTRANTS THREAT OF SUSTITUTE
AND COMPLIMENTARY PRODUCTS ITENSITY OF COMPETITIVE
RIVALRY
TECHNOLOGICAL IMPACT ON
STRATEGY
IMPACT OF GOVERNMENT
POLICY
ORGANIZATIONAL DYNAMIC CAPABILITIES
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influence all the other factors, but it has now been seen to assume a central role in defining company strategy (Anderson et al., 2014). Achieving competiveness without the inclusion of Information Technology (IT) in the modern era of marketing is unthinkable (Lui, 2015). However, the model of Porter does not include IT as a separate competitive force. “Information technology was only considered as a means of supporting the five forces” (Andriotis, 2004:134). One reason cited by Porter for ignoring the inclusion of the IT forces could be the fact that the ‘old economy’ only used IT for implementing changes not as a tool for achieving competitiveness in the market place (Lui, 2015; Ali &Habib, 2012). However, times have since changed and the role of technology has equally evolved hence the need for treating it as a separate force. Today, new technology is one of the most important drivers for change (Ngai et al., 2013). Friedman (2005) states that globalization still has an increasing impact on business organization and practice. Effective utilization of dynamic capabilities in the current situation requires that it is not considered an optional extra but rather a key element of an organization’s dynamic capabilities arsenal necessary for success and competitiveness in the presence of the forces of globalization (Den Hertog et al., 2010). The highly dynamic global business environment no longer requires complacency, but concerted efforts on the part of management to reconfigure and align business strategy to the new realities of globalization (Fischer et al., 2010). This requires the effective use of a company’s dynamic capabilities in order to propel itself into the future (Kindström, 2010). The obtaining context requires a critique of the role of the regulating forces as conceptualized and assessing their effect on the creation of sustainable marketing strategies in the clothing and textiles sector (Moyo, 2014).