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ISSN: 2249-7196

IJMRR/August 2016/ Volume 6/Issue 8/Article No-4/1012-1029

Biswaranjan Ghosh et. al., / International Journal of Management Research & Review

*Corresponding Author www.ijmrr.com 1012

LINKAGE AMONG COMPETITIVENESS, COMPETITIVE ADVANTAGE AND

COMPETITIVE PRIORITY OF APPAREL EXPORT FIRMS AT TIRUPUR

Biswaranjan Ghosh*1, Dr. K.Kumuthadevi

2, Dr. D. Jublee

3

1Research Scholar, Dept. of Management, Karpagam University, Coimbatore, India.

2Prof. & Head, Dept. of Commerce, Karpagam University, Coimbatore, India.

3Prof, Dept. of Management Studies, Karunya University, Coimbatore, India.

ABSTRACT:

To face the intense international competition and sustain the growth rate in business, a firm

has to develop competitive priorities and action plans so as to create for itself a competitive

advantage position. The competitive advantage is created by development and proper

exercise of a set of competitive priorities. The present study tries to identify the competitive

factors contributing to the growth of business in Tirupur knitwear manufacturing cluster.

Infrastructure, resource, supplier and related industries, demand condition, firm structure-

strategy and competitor, dynamic capabilities of firm and Government have emerged as the

determinants of competitive advantage. The competitive priorities are quality, cost, time,

flexibility and innovative product. Survey data from 223 manufacturer and exporter shows

that time and cost are more important, while innovative product is less important competitive

priorities. Performance of firms is good in terms of increase in profit and sales revenue. There

is significant coexistence between determinants of competitive advantage and competitive

priorities. There is no significant coexistence between competitive priority set by the firm and

competitive capacity developed.

Keywords: Competitiveness, competitive advantage, competitive priorities, firm capability

and performance, Tirupur.

INTRODUCTION

Globalization, liberalization, changing customer needs, rapid technological innovation

coupled with environmental issues have brought new challenges for the companies to remain

competitive in the market place. It is difficult for a manufacturer/exporter/firm to produce the

goods in insulation of global demand, changes and competition. The competitiveness at firm

level depends upon the capability of the firm to mobilize its resources to produce or supply

the products superior to those offered by competitors and remain in the global market

fulfilling the challenges posed. The competitiveness of Tirupur based apparel manufacturer

and exporter can be understood by knowing the present and past performance of the sector.

Studies revealed that the cluster has been facing many challenges in recent past. Year 2007-

08 and 2008-09, due to global recession, the knitwear cluster export was in declined trend.

Year 2011, the cluster faced a major jolt after Madras High Court order to stop the processing


Copyright © 2016 Published by IJMRR. All rights reserved 1013

plants, which were not maintaining zero liquid discharge. But, studies also revealedthat since

last five years, despite having turbulence in global market, Tirupur based knitwear

manufacturers and exporters have maintained a good track record of growth of 15% CAGR

(Textile Excellence, April-2016) as against the national average growth rate at less than 9

percent and consistently facing the global challenges to maintain the growth spirit and sustain

in the business. T E. Narasimhan (2014) opined, since 2005, category 338 (Men / Boys knit

shirts, cotton) and 339 (Women/ Girls knit blouse/shirts, cotton)garments‟ export growth

ratefrom Tirupur is lagging behind the competing countries such as: Vietnam, Bangladesh,

Srilanka and China. Apparel Resources (Feb. 2016), in the year 2015, India's overall apparel

exports to US markets grew by 7.78 percent, Sri Lanka‟s grew by 15.82 percent,

Bangladesh's grew by 11.7 percent and Vietnam‟s grew by 13.97 percent. From this it is

evident that the overall export growth rate of competing countries are higher than India and in

category 338 and 339, higher than Tirupur exporters‟ growth rate. This implies huge

international competition posed severe challenges to Indian as well as Tirupur apparel

manufacturer and exporter to sustain and increase the growth rate. To cope it is essential for

an exporter to formulate appropriate competitive strategy and emphasize proper

manufacturing strategies to execute the competitive strategy, so as to deliver the product and

its attributes superior to those offered by competitor.

To remain competitive, development of competitive priorities (CP) is the first step in

developing a firm‟s manufacturing strategies (Shaohan Cai et. al., 2014).With the established

competitive priorities solidly in place in relation to business environment, the firm then

develops a set of plans that is operationalized through programs, processes and assets to be

pursued in order to accomplish those plans. Together, the competitive priorities and action

plans constitute the firm's manufacturing strategy, which ultimately influences the firm's

operational capabilities and business outcomes. Competitive priorities are decided and

executed to create competitive advantage based on the requirements poised by the business

environment. Earlier studies suggest that business environmental factors such as resources,

market condition, infrastructure, firm management and structure, competitive hostility, local

Government etc. jointly create a competitive advantage condition. To develop a competitive

advantage condition, first the firm needs to know the determinants which create competitive

advantages condition, then formulate the appropriate strategies to execute the same at

operational and other levels as well.

Unless having competitive advantages position, it is difficult for the Tirupur based apparel

manufacturer and exporter (AME) to achieve the growth rate of CAGR 15 percent as against

less than 9 percent national average growth rate. The present studyis planned with the

following objectivesand this will help the individual firm to focus on the specific competitive

determinants and corresponding strategies to create competitive advantages condition.

OBJECTIVES:

1. To find out the determinants of competitive advantage for Tirupur based Apparel

Manufacturer and exporter Organization (AMEO).

2. To find the relative importance of various competitive priorities among the Tirupur

AMEO.



3. To analyze the coexistence among elements of competitive priorities and determinant of

competitive advantages in AMEO‟s

4. To find the coexistence between competitive priority and capability of firm.

THEORY OVERVIEW

Competitiveness

Competitiveness has been described by many researchers as a multidimensional and relative

concept. The significance of different criteria of competitiveness changes with time and

context. According to Altomonteet.al (2011), competitiveness is related to the ability of firms

in a given country – not the country itself – to mobilize and efficiently employ (within and

also outside the country‟s borders) the productive resources required to offer those goods and

services against which other goods and services can be obtained (domestically or

internationally) at favorable rates of substitution (or terms of trade). Competitiveness, as

explained by Porter (1990), can be defined at three levels: firm, industry and nation.

Measures of the competitiveness at the firm level include firm's profitability, firm's exports,

and market share. Measures at the industry level include the firms' profitability, the industry's

trade balance, and the balance of outbound and inbound foreign direct investment (JMOP-

2003). At the national level, it is the ability of citizens to achieve a high and constantly rising

standard of living. M. Porter (2004), stresses on the inter-dependability of firm's and

country's competitiveness. He says, “Unless there is appropriate improvement at the

microeconomic level, macroeconomic, political, legal and social reforms will not bear full

fruit”.In other words, macroeconomic conditions influence microeconomic (business)

environment and vice versa. This opinion was stated earlier by him thus: "It is firms that

ultimately compete internationally, but it is the international competitiveness of a country that

shapes the international competitive advantage of firms [Porter (1990a)].

Conner (2003) addresses the central question: who decides if a company is competitive? He

lists a number of answers to this question. For example, governments might define a

company as competitive if it conforms to criteria contained within competition or anti-trust

law. Managers might define competitiveness in terms of market share and growth.

Shareholders may judge competitiveness in terms of profit and growth. It is clear that the

definition will vary with differing points of view and with nature of the viewer‟s interest in

the performance of a business (Conner, 2003, p. 196). Some authors view competitiveness

with the competency approach. They emphasize the role of factors internal to the firms such

as firm strategy, structures, competencies, capabilities to innovate, and other tangible and

intangible resources for their competitive success (Bartlett and Ghoshal, 1989; Hamel and

Prahalad, 1989, 1990). Ability to develop and deploy capabilities and talents far more

effectively than competitors can help in achieving world-class competitiveness (Smith, 1995).

“Competitiveness is a capability and its potential has to be realized in a firm‟s everyday

operations” (Dilek C. et. al., 2013)

Barney (2002) opines that competitiveness of a firm is its capacity to achieve its targets.

These targets are likely to be expressed in a variety of terms depending on the context.

Within a macroeconomic perspective, a competitive firm develops and sustains a level of

performance that contributes to the Gross Domestic Product (GDP), employment



opportunities, and the wealth of the people. From an entrepreneurial perspective, a

competitive firm needs to survive in the market and to achieve market share and profitability.

The success of a competitive firm can be measured by both objective and subjective criteria.

Objective criteria include return on investment, market share, profit and sales revenue, while

subjective criteria include enhanced reputation with customers, suppliers, and competitors,

and improve quality of delivered services (Barney 2002). Chikan et. al. (2008), view that

competitiveness is a capability of a firm to sustainably fulfill its double purpose: meeting

customer requirement and profit. This capability is realized through offering on the market

goods and services which customers value higher than those offered by others. C. Daniele et.

al., (2011), suggest that at firm level, competitiveness can be understood in two different

perspectives: one is drivers responsible to drive the competitiveness of a firm‟s performance

and the other is firm‟s competitive performance as outcome. The drivers are available or

accessible resources (labor, raw material, technology, finance, knowledge etc.), infrastructure

facilities, access to market, managerial dynamic capabilities, supplier and related industries,

presence of rivalry and Government. The outcome may be expressed in terms of firm‟s

superior performance such as increase in sales revenue, profit, market share etc.

Summarizing the above, it is understood that, in a dynamic business environment, firm's

competitiveness is possible only when managerial capability of a firm is able to utilize the

resources and assets effectively as compared to other firms engaged in similar kind of

business for better performance in relation to customer satisfaction. Also at firm level

competitiveness can be expressed by profitability, market share and sales revenue etc.

Competitive Advantage

The concept of competitive advantage is often mentioned and discussed within strategic

management field, but lack of consensus is there about these definitions. Competitive

advantage may be defined as the extent to which a firm is able to create and maintain a

defensible position over its competitors [M. Tracey et. al,. ( 1999)]. Alternatively, it may be

considered to refer to the capabilities which allow a firm to shape its competitive advantage

so defined and differentiate itself from its competitors (S. Li et.al., 2006). In the same vein,

H. Ma (1999) defines competitive advantage as the asymmetry or differential in any attribute

or factor that allows a firm to serve its customers more effectively than others and hence to

create better customer value and achieve superior performance.. Porter (1991) defines

competitive advantages as the capability of a company or industry to make the products that

provide more value to the customer than competing products, such as by offering lower

prices or providing quality services or other benefits that justify higher prices. The strongest

competitive advantage is a strategy that cannot be imitated by other companies. Anna Mar

(2013) states that competitive advantage is often confused with pricing, cost, return on

investment, margins, innovation, sustainability, brand and reputation. In other words,

businesses tend to call anything they consider good to be a competitive advantage.

Porter (1998) states that industrial clusters act as a source of competitive advantage by

facilitating the organizations in making more conscious decisions regarding the selection of

their location, fostering productive social relationships in those locations and working with

other constituents nurturing the cluster. Researchers claim that the companies, which are



within the cluster, are more progressive as they have better competitive advantages

conditions. According to Passemard and Kleiner (2000) the competitive advantage is gained

by five sources of innovation which includes: the new technologies, modification of the

demand or a new demand, the occurrence of a new segment, the changes in the costs or the

availability of means of production and changes in regulation.

Summarizing the above, competitive advantage of a firm can be understood as a state that

fixes a firm in a favorable position to add more value to its customer than of competitors.

Competitive priorities

The literature on operations strategy has extensively focused on the competitive priorities that

act as strategic capabilities which can help organizations create and develop competitive

advantage. Competitive priorities are the capabilities that the operations function of a firm

can develop in order to give a company a competitive advantage in its market place. In 1984,

Hayes and Wheelwright introduced the term „competitive priorities‟, which they defined as

strategic preferences or the dimensions along which a company chooses to compete in the

targeted market. Leong et al. (1990) term competitive priorities as a consistent set of goals for

manufacturing to gain competitive advantage. According to Skinner (1969, 1974) and Hayes

and Wheelwright (1984), competitive priorities denote a strategy which emphasize on

developing certain manufacturing capabilities that may enhance a plant‟s or a firm-level

position in the marketplace. Over the years numerous articles have been published using a

multiplicity of competitive priorities. The widely accepted competitive priorities are cost,

delivery, quality and flexibility (Kathuria, 2000). Leong et al. (1990) introduced a fifth

competitive priority called innovativeness. There is a broad agreement that competitive

priorities can be generally expressed in terms of low cost, flexibility, quality, and delivery

speed and reliability (e.g. Hayes, & Wheelwright, 1984; Leong, Snyder & Ward, 1990;)

Nada R. et al. (2012) opines that, once a business strategy has been developed, an operation

strategy must be formulated. This will provide a plan for the design and management of the

operations functions in ways that support the business strategy. The operation strategy relates

the business strategy to the operation function. It focuses on specific capabilities of the

operation that give the company a competitive edge. These capabilities are called competitive

priorities. By excelling in one of these capabilities, company can become a winner in the

market place. In determining competitive priorities, firms needs to work out on business

strategies in relation to several factors, such as the business environment (Mady, 2008),

customer needs (Connell, 2010) and competitor actions, as well as internal resources. By

balancing these elements with respect to market condition, firms can develop competitive

priorities or acquire the same to gain competitive advantage. It‟s also important for a firm to

understand the source of competitive advantage and establish a set of competitive priorities,

while formulating competitive strategy for their manufacturing, so that resources and

managerial capabilities can be oriented to develop desired competitive capabilities for

competitive advantage. Vickery et al. (1993) and Boyer et. al., (2002); define competitive

priorities in a manufacturing setting as, “a strategic emphasis on developing certain

manufacturing capabilities that may enhance a plant's position in the marketplace” and key to

the achievement of competitive advantage.



From the above, it is understood that to have the competitive advantage, a firm needs to

develop a set of competitive priorities in relation to the factors of competitive advantage and

business strategy and acquire the capabilities at operational level to fulfill the same.

CONCEPTUALIZATION OF PRESENT STUDY

Creating competitive advantages requires determination of the factors that may put the firm

in a better position. M. Porter (1990) devised a diamond model of competitiveness, where he

opined, four interlinked broad attributes of the proximate environment of a firm have the

greatest influence on its ability to innovate and upgrade. These attributes are (1) factor

condition, (2) demand condition, (3) related and supporting industries,(4) firm strategy,

structure, and rivalry. In the same vein, role of Government was also an indirect determinant

or attribute. Tim Padmore and Hervey Gibson (1998) improved the Porter‟s diamond model

as GEM (Groundings-Enterprises-Markets)model. They created a new model which can

describe and assess the competitiveness of firms situated in a cluster. The GEM model

established the six categories of determinants affecting the competitiveness of industrial

cluster , which include: “resources”, “infrastructures”, “suppliers and related industries”,

“enterprise structure, strategy and rivalry”, “local market”, and “external market”. The GEM

Model variables are quite appropriate for the present study, since Tirupur is termed as

knitwear industrial cluster where group of similar and related firms are working together in a

defined geographic area and share common market, technologies, worker skill needs etc.

Owing to business environment dynamism, several researches suggest dynamic capabilities

of firm are also an important factor for determining competitive advantage. David J. Teeceet.

al. (1997) defines dynamic capabilities, as the firm's ability to integrate, build, and

reconfigure internal and external competences to address rapidly changing environments.

Dynamic capabilities thus reflect an organization's ability to achieve new and innovative

forms of competitive advantage given path dependencies and market positions (Leonard-

Barton, 1992). More recently, Wang and Ahmed (2007) have defined dynamic capabilities as

„a firm's behavioral orientation constantly to integrate, reconfigure, renew and recreate its

resources and capabilities and, most importantly, upgrade and reconstruct its core capabilities

in response to the changing environment to attain and sustain competitive advantage.

The present study has taken determinants‟ such as: resources, infrastructure, supplier and

related industries, demand condition, firm structure-strategy and rivalry, dynamic capabilities

of firm and Government for competitive advantage. The resources are considered as natural

resources such as raw material and other resources such as man power, technology, finance

etc. The infrastructure consists of information technology, logistic facilities, existence of

industry association, etc. Demand condition here refers to external international demand.

Related supporting industries refer to the industries, such as upstream, downstream and

ancillary industries, which are closely related and can greatly affect the competitive

advantage. Firm strategy, structure, competitors refers to the foundation, organization and

management patterns, as well as competitors or rivalry in the domestic market situation in a

region. Dynamic capabilities refer to the ability of firm‟s management to seize and

accomplish the business opportunities quickly by providing desired products and services.



The competitive priorities are taken as quality, cost, time, flexibility and innovative product.

Quality: This represents firm‟s emphasis to manage the processes of manufacturing for

desired quality in the final product, so as to remain competitive in the market place.

Cost: This represent firm‟s emphasis to reduce all sorts of cost including final product cost to

remain competitive in the market

Time: This represents firm‟s emphasis to cope up with desired lead time through timely

manufacturing and delivering the product to customer to remain competitive.

Flexibility: This represents firm‟s emphasis to react with changing customer requirement

with the changes in production, changes in product mix, modifications in design, fluctuations

in quantity, and changes in sequence for being competitive.

Innovativeness/ new product design: This represents firm‟s emphasis to introduce new

designs, products and product features as per market to remain competitive in market place.

RESEARCH HYPOTHESIS

H1: Determinants of competitive advantage affect its emphasis on competitive priority

“quality”.

H2: Determinants of competitive advantage affect its emphasis on competitive priority “cost‟

H3: Determinants of competitive advantage affect its emphasis on competitive priority “time”


“flexibility”.


“innovative product design”.

H6: Competitive priority affects the development of desired capability

RESEARCH METHODOLOGY

The study is designed to explain the relative importance of different competitive priorities,

their coexistence with determinants of competitive advantage and firm capability in Tirupur

based (AMEO). Manufacturer-exporters located in Tirupur region and registered with

Tirupur Exporters' Association are considered as population of the study. Out of total 941

registered exporters, 223 exporters are chosen as sample following simple random sampling

method. Primary data was collected through personal interview after administering a well-

structured interview schedule to the firm‟s top management officials such as proprietor or

head of the organization. The secondary data was collected from past research papers, leading

journals, books, conference proceedings etc. Questionnaires were designed to know the

demographic profiles of firms, to rank the competitive priority and determinants of

competitive advantage of individual firms. For ranking the most preferred one is denoted

with numerical number -1 and the least preferred one is denoted with higher numbers

depending upon the total number of factors or elements. Five point Likert scale (1-very low

capacity, 2 – low capacity, 3- average capacity, 4- high capacity, 5-very high capacity) was

used to collect the data of individuals firm‟s capacity to attain desired competitive priorities.



Firms' past three years relative performance data qualitatively measured in terms of increase

in sales revenue and increase in profit. For performance a five point Likert Scale was used (1-

worst, 2-worse, 3- no change, 4-better, 5-best).Friedman test of significance applied to find

the coexistence between competitive priorities and determinants of competitive advantage.

Spearman correlation test was applied to determine the coexistence between competitive

priorities and individual firm‟s capacity to attain the desired competitive priorities.

RESULTS AND DISCUSSIONS

Ranking of Competitive Priorities (CP)

To determine the level of emphasis placed on the CP, the mean rank of each computed and

ranked accordingly (Table 1 and 2).

Table 1: Ranking of Competitive priorities

CompetitivePriorities Mean Rank Ranks

Improvement in product quality ( quality) 2.87 3

Reduction in production cost (cost) 2.05 2

Cope with reduction in lead time ( time) 1.66 1

Flexibility in production system and producing variety ( flexibility) 3.56 4

Innovative Product design ( innovative design) 4.89 5

Table 2: Significance Test

Test Statisticsa

N Chi-Square df Asymp. Sig.

223 890.712 5 .000

a. Friedman Test (Sig. <5%) Significant difference

Friedman test value (<0.05) shows rank differences are statistically significant. Cope up with

reduction in lead time or in other word “time” is the most preferred competitive priority

followed by cost as second , quality as third, flexibility as fourth and innovative product

design as the last preferred competitive priorities to create competitive advantage and for

better performance.

This shows apparel products manufactured in Tirupur are time sensitive and timely

completion of manufacturing tasks including shipment is the key for competitiveness and

success. Earlier studies [Y. Li., et. al., ( 2014)] point out that apparel products have high

marginal value with time and lose their value at the rate in excess of 1% per week. They also

point out that value of apparel products vary with season and the values decrease after the end

of season. Nordas et. al., (2006) point out that time is the critical criteria in case of labour

intensive products such as clothing and electronics. The results of present study, which

explains “time” as one of the very important CP choices corroborates with the studies

mentioned above indicating fact that time factor is very important to attain competitive

advantage position.

The least preferred competitive priority, “innovative design” indicates that, firms are less

bothered for innovative product as a means of competitiveness, which eventually reveal that

product designs for export orders are specified by overseas buyers and timely fulfilment of



the same is the major criteria to attain competitive advantage. Cost being second preferred

priority indicates, that Tirupur based AMEOs are shifting their traditional competitive stand

from cost to time to win customer order and gain competitive edge over their competitors.

Ranking of Determinants of Competitive Advantage (DCA)

To find the coexistence between elements of competitive priority and determinants of

competitive advantage, mean rank analysis and their coexistence statistical significance test

carried out. Friedman test is applied to test the significance (Tables- 3,7& 8). The past three

years' performance of a firm in relation to other firms engaged in similar business and their

nature is depicted in Table 4 and Table 5

Table 3: Ranking of Determinants of Competitive Advantage

The results of Table 3, (Friedman test value<0.05) shows rank difference is statistically

significant and it indicates demand-condition is the most influential competitive factor of

competitive advantage followed by dynamic capabilities of firm as second, the supplier and

related industries as third, resources as fourth, Government as fifth, firm structure strategy &

rivalry as sixth and infrastructure as the last influential determinants of competitive

advantage.

In general, the factors in a competitive advantage frame wok does not work in isolation with

each other, rather they are interdependently work to create a competitive advantages

condition. The result of Table (3) indicates relative importance of factors as perceived by

individual firm for competitive advantageous condition.

Table 4: Performances of firms in last three years i.e. 2011-12, 2012-13, and 2013-14

Worst

(1)

Worse

(2)

No change

(3)

Better

(4)

Best

(5)

Mean Std.

Dev.

Sales revenue rise 0.4 % 1.3 % 39.9 % 49.8 % 8.5 % 3.6457 .67455

Increase in Profit 00 % 6.7 % 52.9 % 37.7 % 2.7 % 3.3632 .64925

Determinant of Competitive Advantage or

Competitiveness Factors

Mean

Rank

RANK

Resources 3.85 4

Infrastructure 5.80 7

Supplier and related industries 3.63 3

Demand condition 1.62 1

Firm structure, strategy and rivalry 5.02 6

Dynamic capabilities of firm 3.50 2

Government 4.58 5

Test Statistics

N 223

Kendall's Wa .381

Chi-Square 510.019

df 6

Asymp. Sig. .000



The table (4) indicates mean value of performance in terms of rise in sales revenue and

increase in profit are 3.65 and 3.37 respectively. This implies performances of firms are good

in last 3- years. As per Textile Excellence Magazine (April-2016) in the last five years,

exports from Tirupur have grown at CAGR of around 15 percent, even as the overall garment

exports from the country have increased at a CAGR of less than 9 percent. From the above

information, it may be concluded that Tirupur‟s high growth rate as compared to the national

may be attributed to favorable demand condition and ability of firms to cope up with

changing attributes of customer satisfaction.

Demand condition is an external factor and its volatility depends upon several socio

economic changes in the market. Cope up with volatile demand condition and considering the

same as a competitive advantage is a challenging issue for Tirupur based AMEO. M. Porter

(1990) pointed out that having sophistication in demand at local market will motivate the

firms to acquire the capabilities, which ultimately put them in a competitive advantage

condition. Since Tirupur is in active export market in past three decades, where competition

is multifaceted, the possibilities of predicting demand condition and acquiring the capabilities

to meet the same is quite obvious. Moreover all over the world, cotton based garments are in

high demand and Tirupur is known to produce mainly cotton based garments. In apparel

market more demand fluctuation is noticed in high fashion and high priced garment and less

fluctuation in low to mid-priced fashion garments. Since Tirupur is known for low to mid-

priced fashion garments, coping up with less demand fluctuation is quite obvious.

The positioning of dynamic capabilities of firm at second rank indicates that, Tirupur based

AMEOs are not only having conducive demand condition but also possess required dynamic

capabilities to cope up with the changing demand condition by reorganizing and remobilizing

their resources and capabilities and meeting the international market requirements. M.

Porter's diamond model for competitive advantages points that all the determinants in

competitive advantage framework are working together to create a competitive advantage

condition rather working in isolation. From this it is understood that coping up with demand

condition is backed by the factor dynamic capabilities of firm.

Table 5: Nature of company

Frequency Percent

Micro enterprise 16 7.2

Small enterprise 123 55.2

Medium enterprise 75 33.6

Large enterprise 9 4.0

Total 223 100.0

The frequency distribution table (5) indicates, majorities (55%) of firms at Tirupur are small

enterprises and these firms are normally under direct observation of proprietor to manage the

state of affairs. As explained earlier, dynamic capability is the ability of firm‟s quick response

to changes in the business environment and acting accordingly to seize the opportunities.

Dynamic capability at the firm level demands leaders with thorough market information,

quick & firm decision making ability and power to execute the same. It also demands flexible



manufacturing system where resources can be reconfigured, realigned as per demand

condition. Since proprietor‟s involvement in business is keen among the Tirupur based

AMEO‟s, it is obvious, they and their firm possess the characteristics demanded by dynamic

capabilities.

Production of garment involves several multiple dissimilar processes and multi-varieties of

raw materials such as: fabric, button, zipper, hanger, toggles, elastic, laces, ties, etc. Since,

getting all these multi processes and materials in one firm is quite challenging, depending

upon various specialized contractors, job workers and suppliers is quite obvious to fulfill the

requirement. Firms at present study believe importance of supplier and related industries as a

competitive factor after demand condition and dynamic capabilities. Tirupur knitwear

manufacturing cluster has units all along the value chain of knitwear starting from spinning,

knitting, wet processing, printing, garment manufacturing, embroidery, compacting,

calendaring and exports. In addition there are ancillary units supplying buttons, laces,

embroidery, cones and yarn processing etc. Presence of these high degree of subcontracting

facility and raw material units within a close community culture coupled with continuous

growth and innovations in value chain activities other than CMT (cutting-making and

trimming) has provided the required support system for growth of the knitting industry in

Tirupur.

Moreover, when demand condition is highly volatile and dynamic and garment production

processes and material requirements for each styles are heterogeneous and availability of

subcontracting opportunities are in place; relying on favorable supplier and related industries

are obvious to have competitive advantage. The performance of AMEOs indicates that

supplier and related industries support is quite conducive to have competitive advantage.

Resources are ranked as the fourth preferred determinant for competitive advantage.

Normally resources as raw materials are considered to be an important factor, since it

constitutes 55 to 65 % of total production cost. But here as per competitive priority ranking

(Table -1), time is the most preferred competitive priority for competitive advantage, which

indicates timely getting of right resources is more important than cost and quality of

resources. Having good performance of firm indicates that Tirupur based AMEOs are backed

with nearby spinning mills to supply the right yarn as major resource and the cluster is

equipped with necessary facilities to have desired labour locally and nationally.

The factors of competitive advantage framework such as demand condition, dynamic

capabilities, supplier condition and resources etc. are interlinked with each other and works in

integrated fashion for competitive advantage. Dynamic capability sense the market demand

condition and accordingly mobilize and reconfigure the own resources and external resources

through suppliers following regulative laws and principles laid by the Government.

Resources usefulness can be ensured only after assessing the demand condition and supplier

source. Since performances of AMEOs are good, the preferred choice to place resources at

fourth position after demand condition, dynamic capability and supplier condition is quite

desirable.



Competitive Priority and Determinants of Competitive Advantage Coexistence

Table 6: Competitive Priority and Determinants of Competitive Advantage Coexistence

Mean Rank Rank

Competitive Priority Groups Competitive Priority Groups

Quality Cost Time Flexibility Innovati

ve.

Design

Quality Cost Time Flexibili

ty

Innova

tive

Design

Resources 4.26 3.49 4.04 3.90 3.00 4 3 4 4 3

Infrastructure 6.12 5.70 5.85 5.40 5.33 7 7 7 6 6

Supplier and

related

Industries

3.88 3.46 3.72 3.50 4.00 3 2 3 3 4

Demand

Condition

1.35 1.77 1.57 1.50 2.00 1 1 1 1 2

Firm

structure,

strategy and

Rivalry

4.74 5.01 5.14 4.30 5.00 5 6 6 5 5

Dynamic

capabilities of

firm

2.65 3.87 3.51 3.10 1.67 2 4 2 2 1

Government 5.00 4.70 4.18 6.30 7.00 6 5 5 7 7

Table 7: Friedman Test of significance

Competitive Priority Groups

Quality Cost Time Flexibility Innovative

Design

N 18 84 107 11 3

Kendall's W .534 .355 .393 .524 .794

Chi-Square 54.505 176.799 249.689 31.414 14.286

df 6 6 6 6 6

Asymp. Sig. .000 .000 .000 .000 .027

Significant Significant Significant Significant Significant

The table (7) shows the Friedman‟s significance values are less than 0.05 for all the elements

of competitive priorities such as quality, time, cost, flexibility and innovative design. This

implies there is a significant coexistence in between determinants of competitive advantage

and the competitive priority group, indicating fact that determinants of competitive advantage

affect its emphasis on competitive priorities such as quality, cost, time, flexibility and

innovative design.

Table (6) indicates that “demand condition” and “dynamic capabilities” have highest level of

coexistence with competitive priorities group. Demand condition‟s coexistence is highest

with quality, cost, time and flexibility, whereas dynamic capability‟s coexistence is highest

with new innovative product design. This implies demand condition has highest level of

emphasis and influence to have desired competitive priorities of quality, cost, time and

flexibility at operational level, whereas dynamic capability emphasis is on innovative product

design. On the other hand, “infrastructure” and “role of Government” have lowest level of

coexistence with competitive priorities (CP) group. Infrastructure‟s coexistence is lowest



with quality, cost and time, whereas Government‟s coexistence is lowest with flexibility and

new innovative product design.

This clearly indicates that if a company possess required dynamic capabilities it can plan to

have innovative products as competitive priorities and develop the capability accordingly for

competitive advantage, whereas to meet the demand condition, a company can have the

priorities of quality, cost, time and flexibility. While comparing the results of ranking of

competitive priority depicted in (Table-1), it is understood that demand conditions have got

highest coexistence and influence on “time” to be chosen as the important competitive

priority for competitive advantage. Emphasis and influence on cost, quality and flexibility

comes next in sequence. Looking in to the firm's performance (Table-4), it is understood

that, demand condition is key competitive advantage factor and time is the key competitive

priority for competitiveness of Tirupur based AMEO.

While comparing individual competitive priority and level of its coexistence with

determinants of competitive advantage, the following observations are made and a summary

of the same is depicted in Table 8.

Table 8: Summary of coexistence between competitive priorities and factors

Determinants of Competitive Advantage’s coexistence with Competitive Priorities:

(1- Highest coexistence, 7- Lowest coexistence)

Competitive Priority - Quality

Determinants

of

Competitive

Advantage

1 2 3 4 5 6 7

Determinants

of

Competitive

Advantage

Demand

Condition

Dynamic

Capabilities

Supplier

& related

industries

Resources Firm

structure,

management

& rivalry

Government Infrastructure

Competitive Priority- Cost

Demand

Condition

Supplier &

related

Industries

Resources Dynamic

Capabilities

Government Firm

structure,

management

& rivalry

Infrastructure

Competitive Priority - Time

Demand

Condition

Dynamic

Capabilities

Supplier

& related

Industries

Resources Government Firm

structure,

management

& rivalry

Infrastructure

Competitive Priority - Flexibility

Demand

Condition

Dynamic

capabilities

Supplier

& related

Industries

Resources Firm

structure,

management

& rivalry

Infrastructure Government

Competitive Priority – Innovative Design

Dynamic

Capabilities

Demand

Condition

Resources Supplier

& related

Industries

Firm

structure,

management

& rivalry

Infrastructure Government



Competitive Priority and Capability Coexistence:

The competitive priorities mean rank, the capability mean score and their coexistence

calculated through Spearman Correlation Analysis. The details are depicted in below table

(9).

Table 9: Mean Rank of Competitive Priority and Mean Score of Capability

Competitive Priorities Capability

Mean Rank Ranks Mean score (5 point) Rank

Improvement in Product Quality ( quality)

2.87 3 3.3004 2

Reduction in Production cost (cost) 2.05 2 3.1166 3

Cope with reduction in lead time (time) 1.66 1 3.5830 1

Flexibility in Production system and producing

variety ( flexibility)

3.56 4 2.7578 4

New Innovative Product design ( innovative

design)

4.89 5 2.2466 5

Spearman Correlation coefficient = 0.77; which is greater than 0.05 ( Not significant relation)

Spearman correlation coefficient value >0.05 indicates, there is no significant coexistence

between “competitive priorities” and “capability” developed by firm. Accordingly the

Hypothesis (H 6) not supported. This may be due to the fact that, competitive priorities (CP);

cost, quality, time, flexibility often described as attributes of customer satisfaction. These are

“the dimensions that a firm‟s production system must possess to support the demands of the

market or customer that the firm wishes to compete in (Krajewski and Ritzman, 1993, p. 47).

Numerous literatures depict that customer satisfaction attribute sare subjective in nature and

these are not exclusively restricted with product quality, cost, time, variety etc. rather

interdependent in nature. Developing capability as per competitive priority and its sequence

need to have close understanding of dynamic interdependent behavior and trade-off among

elements of CP. In other words, while deciding quality as top most competitive priority, the

cost, time etc. automatically come next and will follow the order as per preferences. But

development of capabilities may or may not follow the same order as of desired competitive

priorities. Capability development requires a set of interactive resources, knowledge, skills

and information etc. In a manufacturing system, it is difficult to isolate the parameters such as

cost, time and flexibility etc., while developing capability for better quality, since all these are

interdependent with each other and ultimately get influenced with each other and finally may

or may not necessarily follow the pattern and order of desired competitive priorities.

Competitive priorities, corresponding capability development and its coexistence need further

investigation after understanding dynamic interdependent behavior of each. This is out of

purview of present study.

MAJOR FINDINGS AND SUGGESTIONS

From the literature it is understood that, at firm level competitiveness can be expressed in

terms of profitability, market share and sales revenue etc. The competitiveness is possible

only when a firm can deliver better value to its customer as against the competitor.

Competitive advantage is a favorable state of a firm, where better customer value is ensured



as compared to other firm. Competitive priorities are the capability to be developed at

operational level of a firm for competitive advantage condition.

To attain competitiveness at the market place, a firm needs to know the interdependent

factors of competitive advantage and importantly the most influential factors. The

coexistence between competitive priorities and competitive factor reveal that selection of

competitive priorities is not in isolation with factors of competitive advantage. The demand-

condition‟s highest coexistence with CP such as: time, cost, quality and flexibility suggest

firms are deciding respective competitive priorities based on the emphasis poised by demand

condition, so as to develop capabilities at operational level. The dynamic capability, which is

the second highest influential factor of competitiveness, coexists with CP such as: time,

flexibility and quality. This indicates, it is the capability of individual firm, which copes with

demand condition by emphasizing the quality, time and flexibility capabilities to be

developed at operational level. Assessment of demand condition and dynamic capabilities is

highly subjective, hence it may be considered, to access relevant business intelligence and

forecasting services for getting advance information about demand condition such as:

international trade, macroeconomic and social changes etc. Services like ISO 9001 and QMS

may be hired to review and asses the various operational capabilities of firm. The above

mentioned tools and services will help the firm to formulate competitive strategies in

accuracy and set the competitive priorities accordingly. Since dynamic capabilities are the

second important determinant of competitive advantage, AMEO‟s can plan to have proper

assessment of processes capabilities and book value added innovative, high fashion and

customized products for better return and develop the capability accordingly.

Firms are more concerned towards reduction of process time as compared to reduction of cost

implies reduced time will help them to create competitive advantage. But, S. Kaththasami

(2015) opined that garments manufactured in Tirupur are costlier by 25 % as compared to

competing countries such as Bangladesh and Vietnam. This implies cost cutting measures

such as lean manufacturing and six sigma systems should be in place in line with responsive

supply chain management system for reducing processes time. It is also advisable, cost verses

time trade-off to be made in response to specific order and buyer. Government being one of

the determinants of competitive advantage and its influence is lowest on competitive

priorities such as: flexibility and innovative product design. This implies that, the firm on its

own or through their association should put effort to take various financial, technological and

R&D supports from the Government to invest in production of high value innovative

products. This will help the small firm to produce value added products and customized

varieties for better return and gain competitive advantage in long run.

CONCLUSION

In this study, discussion was made on theory of competitiveness, competitive advantage and

competitive priority and found competitive priority coexists with competitive advantage

factors, where demand condition is the most preferred choice as determinant of competitive

advantage. It emphasized on “time” as the most preferred competitive priority at operational

level to create competitive advantage. The finding of the study suggests linking of



competitive advantage determinants and competitive priorities may play a vital role to

formulate the business strategy for competitiveness in a dynamic business environment.

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