Companies are key to a country’s competitiveness

ANTONI SUBIRÀ / MARÍA LUISA BLÁZQUEZ - Director of the ICC / Research Associate of the ICC 28 February, 2013

The importance of brands stems from their relationship with competitiveness. This statement leads us to one of the most important issues today, which is simply clarifying the nature of competitiveness: what does it consist of? What does it stem from? What strengthens it? And what harms it? What or who is responsible for it? etc.

Regarding the first question, what does competitiveness consist of? Today it seems that virtually everyone – both in the academic and the economic decision- making sector – agrees that economic competitiveness is practically synonymous with “productivity” and in advanced economies in which the limitation of resources or capital is not crucial, competitiveness depends essentially on the productivity of people working in that economy.

In this sense, productivity can be defined as the “market value of what we produce (product or service) per hour worked.” A good industrial designer is much more productive, the market pays more for his output per hour worked than say a potter, unless the ceramic artist in question is called Pablo Picasso. To be more precise, we should talk about the “value added to market prices per hour worked” rather than simply “market value etc”, but the basic idea is clear: the society that is able to get more value from the market per hour worked will create more wealth, will have a higher standard of living and will create progress and prosperity for its citizens.

Also, when we talk about the market, it should be understood that we are not referring to a local market but the global market. This is no more than the consequence of the permeability of local markets or of the modern inability to maintain a closed market for any economically significant period.

Once we have defined productivity, it is clear that competitiveness is a quality that the most productive have or that the least productive are lacking. In other words, competitiveness and productivity are parallel and move in a parallel world.

Why are some countries or societies more productive (competitive) than others? What causes lower or higher productivity? How can its deterioration be improved or prevented? clearly there are environmental conditions that strongly influence productivity, for example: a poor communications system may prevent correct access to part of the market and therefore affect productivity, but the contrary is not always true. Good communication systems do not per se generate productivity. There are numerous examples of countries with good communication networks but which are considerably unproductive. This is an example of a necessary condition but alone it is insufficient. This often happens with physical and even legal and political environmental conditions. Poor conditions can hinder improvements in productivity but good conditions are not the origin of good productivity.

The origin lies in the key players who are none other than those who actually produce the goods or services and put them on the market, i.e. entrepreneurs, companies etc. Productivity, in other words, competitiveness is generated, maintained, improved or lost in companies.

Ultimately the so-called competitiveness of a country is simply the amalgamation of the competitiveness of its companies, or in other words it is merely its productivity. But when we talk about a country these concepts become large overall average figures; an unproductive industry can drag down the entire data for a country. This is why when analysing the reality of the situation, it is more useful to disaggregate at a company level so as not to deal with an overall average figure but instead with the real players that “create” greater or lesser competitiveness through their decisions.

This type of vision also helps us to eschew standard clichés. for example: competitiveness only exists in “modern” sectors; “traditional” sectors are doomed. The example of the ceramic artist Pablo Picasso clarifies the issue somewhat. However, the textile and clothing industry, considered by some as traditional and therefore doomed in advanced countries, has examples of companies that compete brilliantly and successfully in global markets. competitiveness does not proceed from “what is done” but “how it is done”. Similar examples can be found in several sectors and only reaffirm that the categorisation of the traditional sector in a derogatory sense is wrong or, worse, is useless in terms of economic decisions.

Competitiveness does not proceed from ‘what is done’ but ‘how it is done’

Now that we have defined competitiveness, we can look at what stimulates it. The first answer to this question is obvious: competitiveness is stimulated by competition. It seems a truism but it is hard to believe just how often this is forgotten. Protectionism, authorisation of monopolies and tolerance of oligopolies are nothing but manifestations of forgetting that clear and obvious truth. I reiterate: competition in the global market stimulates competitiveness. Protectionism is a temptation related to populist political interest, on the one hand, and the appetite of short-term benefit on the other. Its consequences in the medium and long term are always disastrous. The protected component is comfortable in its closed market (safe haven!) but its competitive streak will fatally degenerate and when the time comes (inevitably it will) to open the market up, it suffers at the hands of the strongest forces in the global competition. You learn to compete by competing and only the best survive and thrive in the global marketplace.

Now is a good time to mention aggregation, that is considering another level of aggregation over and above the individual company. We do not deny our claim that the company is the key player in competitiveness, but we achieve an interesting viewpoint by adding another level. This immediate level of aggregation is not the sector, the sector is important for statistical purposes only and perhaps also socio-political purposes, but it is not useful in the analysis of competitiveness. As we saw earlier the same sector encompasses many different companies in terms of competitiveness. The degree of aggregation to which we refer, is what nowadays – from the publications by M. Porter in the early 90s – is called clusters. A cluster is a grouping of objects that are more or less related. In europe, there have been several different translations of the word cluster (pôles de competitivité, sistemas productivos locales, etc.) which are political-administrative inventions of a rather tedious and unimaginative nature. Thus the Anglo-Saxon term is the one we will continue to use.

The first economist who systematically described these clusters is none other than Alfred Marshall (Marshall, A. (1961). Principles of economics. New York Macmillan) and nowadays, as mentioned earlier, the main author on the subject is M. Porter. A cluster is a geographic concentration of companies with similar or related activities. Their close interaction has production advantages. clusters are analogous, as one author has written (i.e. christian Blanc [ Blanc, c. (2004). Les Pôles de compétitivité, l’Industrie de Demain, ]) to an ecological system in which members compete and simultaneously generate synergies beneficial to all. clusters are important in this regard because their strength and dynamism affect the competitiveness of the companies involved and in turn the strength and dynamism in the market of the companies have an impact on the entire cluster in a “virtuous circle” that is perfectly described in the literature on the subject.

Unfortunately the term cluster has been successful in some political decision points that have misinterpreted its nature, understanding them to be areas of business cooperation and encouraging this based on offering subsidies for cooperative agreements. This is a dangerous approach and it is wrong because it tends to reduce competition between the key players in the cluster, which will gradually make them become less competitive. The creation of synergies (competing) should not be confused with administratively formalised and subsidised partnerships.

We have presented the issue of clusters for two reasons: the first because it is relevant in the analysis of the effects of brands in a positive way and the second, negative, to emphasise that any action aimed at reducing competition, even rivalry between companies is detrimental to their competitiveness.

Differentation is only effective if customers are aware of it

These phenomena are clearly seen in any cluster analysed. Take for example the clustering of wine production whose primary cause is undoubtedly due to nature (climate, geology and biology), but obviously is reinforced by the interaction of human, cultural and business elements. Interactions in a wine cluster are rich and varied: wineries, vine growers, oenology centres (training and research), specific machinery manufacturers, bottle, barrel and cork manufacturers, wine and gastronomy tourism, etc. The brands are these highly relevant clusters, from the variety denominations, to the denomination of origin including the brands of specific products and names of the wineries and even the families involved. There is no doubt that there is a wealth of competitive interactions and synergies and it is evident that brands play a priority role in a positive way, if the strategies that support them are correct, or negatively otherwise.

Similar phenomena occur in high range and highly competitive automotive manufacturing clusters: Maranello, Stugard and coventry have nothing to do with Mother nature but they have a lot to do with competitive and synergistic interactions. In this case, manufacturer brands and motor-racing teams play an important role. Within an approximate 40 km radius of coventry, the nerve centres of the vast majority of the highly competitive formula 1 teams can be found. There are specialists – individuals or subcontractors – in advanced materials, precision engineering, technical plastic injection, aerodynamic tests, electronics and data processing, etc., in a constant exchange of products and advanced services, in intense competition, constantly creating synergies and scientifically shaping and learning in the platform of the best specialists in the world.

Among the “natural” cluster paradigm (wine) and the “artificial” cluster of coventry there are a varied range of real clusters that exist in modern economies and competition and synergy are present in all. In most cases, brands are an essential feature in both processes. All of this increases the efficiency of presence in global markets, which are ultimately the playing field of important competition and therefore the origin of the forces driving companies to become more and more competitive.

The brand as a competitive ad­ vantage of companies (and there­ fore countries)

We mentioned before the close relationship between the concepts of competitiveness and productivity. The World economic forum understands and defines a nation’s competitiveness as “the set of institutions, policies, and factors that determine the level of productivity of a country. The level of productivity, in turn, sets the level of prosperity that can be earned by an economy. The productivity level also determines the rates of return obtained by investments in an economy, which in turn are the fundamental drivers of its growth rates.” (World economic forum (2012). The Global competitiveness Report 2012-13.Geneva. Palgrave Macmillan).

The World economic forum publishes the annual Global competitiveness Report. This analyses the competitiveness of more than 130 countries. It is drawn up using data published by renowned institutions such as business surveys and opinion leaders in the respective countries included in the report. This makes it one of the most comprehensive and important reports in relation to the analysis of competitiveness as it provides a consistent and systematic view of the situation and prospects of the assessed countries.

The Global competitiveness Index selects over 100 factors influencing the competitiveness of countries and groups them into 12 pillars. none of them alone can ensure competitiveness but together provide a complete, integrated view of the critical issues that, according to the World economic forum, favour it. These pillars are: institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, good market efficiency and labour market efficiency, financial market development, technological readiness, market size, business sophistication and innovation.

The World economic forum takes into account that not all factors affect different countries equally. Their impact varies depending, among other things, on a country’s degree of development. for example, aspects that can contribute to the improvement of a less developed country, such as the development of basic infrastructure or containing the impact of certain diseases, are not sufficient to promote development in highly developed countries. Given these differences, the World economic forum ranks countries into three development groups based on GDP per capita adjusted according to the purchasing power and each of the groups is assigned a different role to the pillars mentioned above:

  • The countries included in Group 1, the least developed ones, mainly compete based on a primary unskilled workforce and natural resources. for this group of countries the most important pillars include a stable macroeconomic framework, well-functioning public and private institutions and adequate infrastructure and healthcare. Some of the countries in this group are Angola, chad, ethiopia, egypt, India, Morocco, nicaragua, nepal, Paraguay and Vietnam.
  • The countries in Group 2 compete by developing more efficient production processes and increasing product quality. The most important pillars consist of higher education and training, efficiency in goods, labour and financial markets, technological readiness and market size. This group includes countries such as Argentina, Brazil, costa Rica, Lithuania, Latvia, Malaysia, Poland, Romania and South Africa.
  • Finally, the World economic forum believes that countries belonging to Group 3, the most developed ones, should also compete through innovation by producing new and different goods using more sophisticated business strategies and processes. These pillars are more important for countries in this group than for the other countries. This group includes countries such as Sweden, Switzerland, Denmark, Germany, france, Singapore, the United Kingdom, the United States and Spain.

Spain, therefore, owes much of its competitive level to business sophistication, i.e., businesses, and their level of innovation.

One of the aspects that is measured in terms of business sophistication is the nature of competitive advantage. More specifically, this means that companies are capable of developing differentiation strategies which enable them to compete in international markets. And here the brand obviously has a direct influence. Most likely these companies compete with innovative high quality products and services and sophisticated processes, but it is the development of a strong brand that is often able to distinguish such differentiation, maintain it and, above all, make it profitable. In short, differentiation is only effective if customers are aware of it (Grant, R. (2006). Dirección estratégica. Thomson, civitas).

Gráfico Análisis de la Competitividad

Influence of brands on the competitiveness of countries

In the latest edition of the report, Spain came 36 in the world ranking. Although Spain is in a strong position with regard to some of the pillars, such as infrastructure,

In which it ranks 10 in the worldwide market and size for which it comes in at number 14 worldwide, or technological readiness, for which it ranks 26, it also has major competitive disadvantages, for example in the efficiency of the labour market, a pillar for which it occupied position 108 and macroeconomic environment, coming in at number 104.

In terms of business sophistication, the evaluation and position of Spain is positive. In terms of aspects such as the nature of competitive advantage, which assesses whether or not companies in Spain are capable of competing by differentiating themselves from competitors, Spain ranks 33 in the world and in this, large Spanish companies with globally recognised brands clearly play a major role. The same occurs in terms of variables such as the use of sophisticated marketing tools, in which it ranks at position 36. Therefore, the differentiation and recognition of these major Spanish brands is a direct boost for competitiveness in Spain. And this is clearly the way forward: improving the competitiveness of Spanish companies on a global level through differentiation and brand recognition as partners for innovation and the sophistication of their processes and products and not via the low cost route, something that makes no sense since Spain cannot compete on cost with other Asian, Latin American or eastern european countries.

On the other hand, the image of Spain that these major brands forge abroad is very positive, and this contributes to the attraction of foreign investment, with the obvious benefits this has for the country of destination of such investments. for example, the chinese bank IcBc, the world’s bank largest in terms of market value, opened its first office in Spain in January 2011. There is no doubt that the existence of global prestigious banks, such as Santander and BBVA, is a reference point for IcBc when investing in Spain. In this context what we explained earlier in reference to clusters is applicable, that is so say. the existence of some strong competitors in a given sector, with recognised brands has probably generated in its surroundings a set of suppliers, companies and institutions to assist development, growth and improvement of the industry. This can be useful for both domestic competitors and foreign companies that decide to invest in Spain.

Strong global brands are essential for the competitiveness of a country

This industry development that favours the existence of large competitors with global brands also has a clear effect on attracting talent, as these companies and those around them provide the most qualified professionals with opportunities for learning, training and international experience. The presence in the country of qualified employees and low rates of brain drain are some other variables that, according to the World economic forum, directly affect the competitiveness of countries, and the big brands are helping greatly to create these conditions.

While having strong global brands is always important for an economy, and, as we have discussed, it has a clear effect on the competitiveness of a country, in situations such as the current economic crisis strong brands become essential. At a time when domestic demand is suffering a major contraction, as is the case of the Spanish economy at present, the big brands can diversify their risk and income, with less reliance on the domestic market and obtaining sources of global income. The drag effect that this generates on other companies and foreign investors is particularly useful in adverse economic climates.

Types of brands and their influence

We have established that competitiveness is measured by productivity, that is the market value obtained by the product or service divided by the number of hours of labour expended in its production. In this equation the brand influences the value that the market is willing to pay. consequently the brand influences competitiveness, increasing it either more or less according to its “value”, and we have seen how prestigious institutions such as the World economic forum explicitly refer to these effects when measuring competitiveness.

Let’s take a look at the different types of this influence, which naturally lead us to a possible classification of brands. This would only be of academic interest were if it not because a proper understanding of how a brand acts in the market leads to a specific strategy by the entity – generally a company – which usually controls the particular brand.

The economic value of a product (or service) [ When we speak about the “product” in this article we refer to “product-service” that is on the market and for which a price is paid. It is sometimes a purely material object without any associated service and in other cases it is a pure service without any material object but in the majority of cases it is formed by a material object plus some type of service ] in the market stems from the satisfaction that the product satisfies the needs, desires, wants, etc. of individuals who constitute the market and it is the manufacturer’s problem to adequately communicate the extent to which and the ways in which the product will meet those needs. That’s where the brand plays a role. In this sense, the brand is a symbol that communicates and transmits a set of qualities and characteristics. It is a symbol that communicates content as long as the user-consumer is aware of it and identifies it in a certain way.

This vision of the brand as a symbol that communicates certain content allows for a classification of brands depending on what economically valuable components of the product are provided by the brand.

Brands that portray usefulness.These brands emphasise the satisfaction of objective and specific needs in which the quality/price ratio plays an important role. When we talk about quality here we mean the degree of satisfaction of the buyer’s expectations. It is clear that the so-called quality/price ratio allows plenty of room for manoeuvre providing that the numerator is emphasised more than the fraction: The quality (denominator): the price. It is for this reason that this group contains brands that meet the highest expectations of a relatively small universe of demanding customers willing to pay a higher price as well as brands that offer more limited goods and services aimed at a wide audience with lower prices.

The company which controls the brand can choose from an endless range of alternatives and, it should make decisions that are astute and consistent with its broader strategic decisions. coherence in the various decisions related to these issues is important if we are to maximise the brand’s contribution to the value created in the market. for example brands can try to capture volume by lowering the price and offsetting the loss of margin by lowering the quality. However, this may have dire consequences as it will more than likely result in the loss of old customers that is not compensated by the acquisition of new clients. The opposite trend, i.e. trying to improve quality in order to increase the price can be difficult owing to the “memory” effect that the market has from the previous positioning.

One of the biggest Spanish brands that consumers associate with a good price/ quality ratio is Inditex, and in particular its flagship brand Zara. Since it opened its first store in 1975, Zara has become a benchmark brand in the textile sector, and now has a presence in 84 countries and a network of 1654 stores. Zara is identified with fashion, with clothes that are always at the forefront of fashion trends and also accessible, good value fashion.

To achieve this positioning the company has made tremendous innovative efforts, and not a technological innovation, or product, but an innovation in processes and in the same business model of the textile sector. Thus, through a seamlessly integrated operations system with communication systems and daily orders from stores in line with what they are selling, fast production to order and minimum stock levels, good store locations and little investment in marketing and advertising, large investment in logistics and an excellent connection between design, business and sales teams, it has achieved a rapid response capacity and costs enabling it to offer customers a unique value proposal: changing fashion at a good price. In this way, Zara has revolutionised the business model of the textile sector. While most competitors “sell what they make,” Zara “produces what it sells”, therefore better adapting to consumer preferences, which ultimately is essential to achieving and maintaining a competitive advantage.

The existence of strong brands generates a drag effect to other companies

The existence of strong brands like Zara at a global level does not only positively affect the results of the company, but also generates a “drag” effect that provides benefits to other companies. While it is true that some textile companies have lost sales and revenues due to the rise of Zara, the fact remains that the competition, and in this case, the competition in the form of a model company at a strategic level, forces other companies to improve, innovate, whether in products, systems, operations or any other business field, and this is ultimately beneficial to the entire sector. The growth of the entire network of suppliers and subcontractors that operate around these big companies often “forces” them to follow their international expansion strategy, with the resulting benefits.

Trusted brands. The above considerations lead us to another type of brands that we call “trusted brands”. They have been created as a symbol, over time to consistently maintain a specific positioning that satisfies a particular market segment. These are brands whose threat is the evolution of competitive or substitutable products because this may lead to the need for change, when continuity and consistency are the key factors in building trust.

The appearance of rapidly evolving technologies has produced a subtype of “trusted brand”, those that generate followers who “trust” that the brand they love will always provide them with products that will always incorporate the latest developments in technology. Such brands can generate, if properly managed, great and long-lasting loyalty.

This group of brands may include companies in sectors as diverse as energy, engineering and distribution. for example, companies like Repsol, Renfe or El Corte Inglés have brands that reassure their customers, whether it is in terms of the technical conditions, service or otherwise, that their buyers demand.

Trusted brands in complex technical sectors can create a significant barrier to entry for new competitors that precisely

derives from the lack of confidence in the ability of the new brands, in practice, to live up to the expectations of the trusted brand.

Building trust is especially important in more traditional sectors especially related to the household products: mainly food and household appliances. It is not necessary to emphasise the significance of losing earned trust: it is earned slowly with a lot of effort and it is quickly lost by regrettable failures.

In any of the above subtypes, trust associated with a brand can increase the market value of the products bearing that brand and therefore increase the competitiveness of the company handling the particular brand. needless to say, even in these cases, brand policy must be part of a coherent strategy for the company or entity involved. This could be the case of companies such as cola cao, Gallina Blanca or Pascual, all brands that have worked to portray an image of trust, continuity and concern for healthy and quality eating.

Prestigious brands. These constitute an important segment both in terms of the economic volume generated and their influence on the image of business entities over the individual company (cluster effect and country brands) to which we will refer later.

These brands can be grouped into at least three subgroups according to the type of information that the symbol-brand contains. The first would be the brands that portray a particular aesthetic positioning. This covers fashion and design issues. considerations such as usefulness and trust are also applicable but the key determinant is the aesthetics and, as such, the brand image is influenced by opinion- and trend-makers. This includes companies like Pedro del Hierro, Adolfo Dominguez and Armand Basi. Sometimes it happens that the person creating opinions and trends is the channel and it is the brand of channel itself which is decisive. Another similar group consists of brands that symbolise sensory qualities: smell and taste. We refer of course to the brands related to food and drinks, such as Borges, 5 Jacks or Freixenet. In this case, opinion makers are also very important especially when it comes to penetrating new markets where consumers do not have the cultural background of the company that created the product. This is the case with regards to wine brands when they try to penetrate markets far from the “old wine culture”.

Trust associated with a brand increases the companys’ competitiveness

Another quite evident phenomenon in these brands is the natural tendency for clustering by geographical area whose designation (designation of origin) is also converted into a brand that can generate, if well managed, important synergies for its individual brands; if not well managed this could be a burden. Hence, the tendency to institutionalise somehow the management of these collective brands so as not to let them evolve randomly or to the whims of counterproductive specific interests. We have gone into some depth on the subject of wine because it clearly illustrates the problems and opportunities of such brands, but the above also applies, with small variations, to cheese, oils, meat products, etc.

Finally there are the pure premium brands i.e. those that above the objective qualities: functional, aesthetic, sensory, etc., communicate that the user belongs to a select group of people, the “elite”. These brands can be clearly identified because the price is part of the prestigious communication meaning that a lower price would most likely result in a drop in sales of the product concerned. An example of such brands may be Lladró.

Naturally these brands cannot afford any shortcomings in quality or performance which must always be excellent, in very exacting demand requirements offset by a remarkable insensitivity to price. Opinion and trend makers are also very important here, but rather than specific individuals, usually in these cases they are social groups that make up the elite concept of the brand.

With this classification of the prestigious brands we have sought to emphasise their most important features both to better understand their interactions and their contribution to higher order brands (such as country brands). finally, we want to stress that in any case a “good brand” whether portraying usefulness, or from the trusted or prestigious groups has a stronger position in the market and generates more economic value per unit and therefore the competitiveness of the agent handling the brand is clearly favoured.

All these types of brands also share an edge in the market with regard to Internet compared to companies that do not have strong brands. confidence in the company is essential in the Internet business. Since in online transactions, in those where there is no personal contact, building trust with the customer is one of the key success factors and the consumer feels more comfortable making a transaction with a prestigious company with a recognised brand that ensures a good product or service and which responds to any complaints or claims. This should not be overlooked considering that currently there are more than 2,200 million people who use the Internet and the number of transactions that are conducted through this channel is growing exponentially.

Brands are key elements that drive differentiation strategies

Collective brands

This name refers to brands that encompass others and that do not belong in the strictest sense to any of the companies that handle the individual brands. There is a logical tendency in this type of brands to institutionalise their control through the creation of the appropriate bodies. for us there are two main levels of aggregation: the cluster and country.

As discussed in previous sections, there are economic activities, and therefore brands, which tend to be grouped into distinct geographical areas that we have called clusters; wine and its producing areas are a clear cut case, but fashion also as this usually creates clusters in certain cities and is known by the name of the city. Other activities are also naturally grouped into clusters and end up creating collective brands. Tourism is a very good example of this type of area or city brand. The case of Silicon Valley with technological products is a remarkable example of this phenomenon and it represents a very “rational” market. It has become a kind of designation of origin. This is a very technical example; other similar collective brands that are more traditional or historical – and very technological in their day – are the violins of Cremona or the swords of Toledo.

However, returning to the present and our environment, the management of these collective cluster brands presents peculiar problems: first it is not clear, at the outset, who is responsible for the collective brand, in any case, the opportune institution must be created and defined, giving it the budget and powers ceded by basic agents who are simply the companies and brands that form part of the collective. The rules must be defined starting with admission and exclusion, election and operation of its government bodies etc. It is clear that this field of cluster brands constitutes an interesting environment for the public administrations that previously “tended” to act through basing their interventions in budgetary contributions that sometimes could be major. (note that I use the word “tended” in the past tense for obvious reasons given the current situation.) This government intervention also seemed to be reinforced by a tendency, common in many companies, to think that public intervention does not mean a major loss of the desirable independence of the private initiative. We spare the reader the considerations that the new economic climate entails in this subject of public intervention in cluster group brands. Suffice to say that if the new situation leads to increased accountability for the private sector in the management of these collective brands, the end result will be, in our opinion, positive to achieve increased efficiency, more and better synergies, more support for individual brands and ultimately improve their overall competitiveness.

Country brands. This is a collective brand that goes far beyond those that we have spoken about so far. This is a kind of combination of all the images projected by a society to the outside world and does not simply consist of the sum of its brands.

Country brands can identify brands or at least associate certain countries with some features. for example, German products are often associated with aspects of technical quality, and Italians with design. This is obvious due to the fact that in these countries there are numerous companies that meet this technological or design quality with real products and services, as these countries are competitive in industries where these qualities are important. However, there is also a collective promotion effort backing this.

To take full advantage of the country brand, governments should design a brand strategy that is coherent with what the countries in the country do, and do well. It should promote that in which the country has, or can obtain, a comparative advantage relative to other countries either for having good production conditions (skilled labour, experience, tradition, access to natural resources, etc.), with a sophisticated demand that has been the driving force behind the development of those industries or sectors, to the existence of top class support institutions and large companies that compete among themselves and continuously innovate and improve.

The country brand cannot and should not be associated with a small group of companies. It must be supported by the business and reputation of brands in the country. As mentioned earlier the importance of the role of government in supporting and promoting the big Spanish brands is critical in terms of generating and promoting the country brand, which, if well managed, undoubtedly has a significant economic impact.


This paper has highlighted the direct and indirect influence that the brand has on the competitiveness of companies and therefore that of countries. Brands are a key element to enable differentiation strategies, which allow companies and the countries to which they belong, to achieve and maintain strong competitive positions, and this is even more relevant in the international arena, where companies face increased competition and need, more than ever, differentiation elements, such as the brand.

We have also highlighted the importance of companies with strong brands for boosting the competitiveness of countries, especially in times of economic crisis such as the current one, in which the companies act as a driver for the economy and play a key role in the recovery, not only owing to the business they generate and their ability to diversify income and risk, but also by causing a drag effect in related industries and companies.

A lot has been written on the influence that other factors, such as innovation or training, have on competitiveness. The recognition of this influence has been widely accepted, and the efforts that have been made by the government and private sectors to support these factors, either through direct or indirect assistance for innovation and training, in the creation of institutions devoted to this, etc. has been considerable. Why not also make efforts to support brands, when it is clear that they are also a key element for the competitiveness of companies and, ultimately, of the countries?

It is therefore essential that the conditions are created for these big brands to be generated, maintained and to allow them to compete in a global world, and it is the task of public and private bodies to collaborate to ensure that these brands continue to be drivers of growth and competitiveness.

Director of the International Centre for Competitiveness, IESE Emeritus professor of Financial Management, IESE / Research Associate of the International Centre for Competitiveness, IESE Professor of Strategy and Internatio- nal Business, Universidad Pontificia Comillas

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