THE LIMITS OF AN INTERPRETATION WITH THE TRADITIONAL TOOLS OF THE COMPETITIVE ADVANTAGE ANALYSIS

To explain the competitiveness of the two firms, a traditional approach is the one based on the analysis of the costs advantages of the firm. From the analysis of the two case studies, this aspect does not emerge; even though, it seems important to point out how the competitive strategy of the two firms cannot be explained in such a perspective. The national context does not provide the Italian steelwork fabricators with any relevant advantage in relationships with the international competitors. In particular, the cost advantages specific to the national context could be the following ones: cost advantage related to the factor of the production (raw materials, labour, energy); cost advantage due to public intervention (for instance, subsidies for firms that export). None of these cost advantages were present in the two firms we considered. In the European Union, price discrimination policies in the steel market are severely forbidden and it is usual for the steel fabricators to get steel at the best price not considering only the domestic market but also any available opportunity in the international market. The Grand Canal Maritime bridge case confirms that dramatically: in Le Havre, the steel was bought from the biggest French state owned steel producer, Usinor Sacilor. As far as labour (see table 1) and energy, the Italian economic context does not provide any cost advantage in relationships with the other large EU countries. Finally, the heads of the two firms declared they did not receive any government direct subsidy. In conclusion, to explain the competitiveness of the two firms is not possible through the traditional approach based on the difference of the production inputs costs. Furthermore, in absence of a strong national cost advantage, a mere low cost based competitive strategy cannot be implemented for the very nature of the product that is traded in this market: it is very difficult to combine the production of prototypes and the technical efficiency based on the traditional economies of scale. Adopting Porter (1985) framework, these two companies adopted a focus strategy based on differentiation. In fact they work essentially in the structural steelwork related to infrastructure and in a few other steel fabrication submarkets.   1990 1991 1992 UK 144,4 157,2 167,5 Germany 210,6 245,8 279,6 France 121,5 127,5 132,9 Italy 133,6 145,1 154,5 (1985=100; Eur 1990=133,0) Source: Eurostat Table 1. Wages and salaries in Industry in some EU countries In particular CMF, after having operated in the residential and non residential building markets during the 1980s, has turned significantly towards the infrastructure submarket from the beginning of the 1990s. In an analogous way, Cimolai's production is historically represented by steel structures for bridges and viaducts and by military non residential buildings. Moreover, the focus strategy selected is based on differentiation, actually the only one that could successfully be chosen. Both companies perceived that in the infrastructure submarkets the clients needed not only the product itself, but related services too as well. In this submarket, to sell a steelwork product is not sufficient since it is necessary to sell its design, its construction and its assembly too. In this combination of the steelwork product and of all the necessary related services, CMF and Cimolai differentiated their activity significantly from their competitors. This type of classification is not fully satisfying though. It points out that competitive advantage does not come from a cost source and that differentiation is the key for a small/medium size company to compete in such a market. The problem is that it does not point out the how the production activity and the service activity are connected in order to produce new value. Only if it is possible to clarify how these two types of activities - production and service - are combined it will be possible to highlight the features of such a strategy into a more general perspective.