Strategies for Business Competitiveness: Clusters, Benchmarking, and Outsourcing

Posted on Mar 16, 2025 in Business Administration and Innovation Management

Strategies for Business Competitiveness

Cluster Development

A cluster’s objective is to maximize competitiveness and entrepreneurial success by leveraging value chain networks. Clusters foster innovation by generating forward and backward linkages, creating synergy that promotes the productive sector and investment in research and development. Clusters are generally composed of SMEs.

Benchmarking

Benchmarking is a tool to achieve competitive behavior by providing metrics for variables, indicators, and coefficients. Its importance lies not in the detailed mechanics of the comparison, but in the potential impact on behaviors. Benchmarking can be classified into:

  • Internal: Differences between various processes within an organization.
  • Competitive: Identifying and comparing products and services of competitors with one’s own.
  • Functional: Focusing on functions such as marketing, production, human resources, or finance.

Obstacles to benchmarking may include targets that are too high, impractical timelines, poor team composition, and resistance to change. Successful benchmarking requires action orientation, openness to new ideas, improved practices, discipline, and proper coordination of resources and efforts.

Outsourcing

Outsourcing involves using an outside agency to operate a function previously performed within a company. It aims to reduce direct costs through subcontracting or outsourcing services that do not affect the company’s core activities.

Benefits of Outsourcing:

  • Minimization of investment and financial risk reduction
  • Increased flexibility in the organization
  • More efficient operations
  • Better control and enhanced security
  • Increased competitiveness
  • Lower costs
  • Management of new technologies
  • Faster deployment of applications development
  • Improved processes

Risks of Outsourcing:

  • Inappropriate contracts
  • Difficult provider selection
  • Supplier failures
  • Excessive reliance on outside firms
  • Faulty contractual control systems
  • Risk of contractor non-compliance with human rights
  • Threat to confidentiality

Decision-Making Process

Decision-making is fundamental to a company, as it determines whether goals are met. Decisions can be categorized by:

  • Long-term strategic objectives: Defining the market position in the medium term.
  • Medium-term tactical objectives: Specific plans allocating resources.
  • Short-term operational objectives: Addressing immediate needs, such as replacing a worker on sick leave.

Decisions can also be:

  • Objective vs. Subjective
  • Analytical vs. Systemic
  • Static vs. Dynamic
  • Deterministic vs. Probabilistic

The approach used affects the decision and its consequences.

Types of Decisions:

  • Programmed: Routine or structured problems with precedents.
  • Unscheduled: Unstructured, new, ill-defined, and non-recurring situations.

The Decision-Making Process:

  1. Defining the Problem: Identifying an objective to be achieved, a path to achieve it, and impediments blocking the way.
  2. Analysis of Available Information: Investigating the situation, identifying variables, and rating them quantitatively or qualitatively.
  3. Development of Alternative Solutions
  4. Implementation of the Chosen Strategy

Brainstorming

Brainstorming, developed by Alex F. Osborn, encourages problem-solving by finding new and unusual solutions. The goal is to generate a multitude of ideas.

Rules of Brainstorming:

  • Do not criticize any idea.
  • The more extreme the ideas, the better.
  • Encourage a large quantity of ideas.
  • Encourage the progressive improvement of ideas.