https://doi.org/10.37955/cs.v6i1.243
Received July 12, 2021 / Approved December 09, 2021 Pages: 116-128
eISSN: 2600-5743
Competitiveness strategies applied
by Ecuadorian SMEs exporting non-
traditional products during the
COVID-19 pandemic
Estrategias de competitividad aplicada por las Pymes
ecuatorianas exportadoras de productos no tradicionales
durante la pandemia del COVID-19
Angi Cortez Cruz
Master, Universidad de Guayaquil, angi.cortezcru@ug.edu.ec,
https://orcid.org/0000-0001-8558-5076
Jonathan Orbe Terán
Master, Universidad de Guayaquil, https://orcid.org/0000-
0003-4282-772X jonathan.orbet@ug.edu.ec
Tatiana Quishpe Casillas
Master, Universidad de Guayaquil, tatiana.quishpec@ug.edu.ec,
https://orcid.org/0000-0002-1289-5345
ABSTRACT
In Ecuador and the world in general, the Covid-19 pandemic forced
companies to reduce their economic-productive activity considerably,
whether they were large, medium or small, generating millions of
dollars in losses and economic, financial, social and family imbalance.
This effect led businessmen, entrepreneurs and micro-entrepreneurs
to venture into new markets and competitiveness strategies. The
objective of this work is to identify differentiation strategies that favor
Ecuadorian SMEs in terms of their participation in developed and
emerging countries, leading them to assume a leading role with their
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non-traditional products due to their quality, experience and
professionalism.
RESUMEN
Al Ecuador y al mundo en general la pandemia del Covid-19 obligó a
las empresas a reducir su actividad económica –productiva
considerablemente, sean éstas grandes medianas o pequeñas;
generando millonarias pérdidas y el desequilibrio económico,
financiero, social y familiar. Este efecto direcciono a los empresarios,
emprendedores y micro empresarios a incursionar en nuevos
mercados y estrategias de competitividad, plasmando como objetivo
en este trabajo identificar estrategias de diferenciación que favorezcan
a las pymes ecuatorianas en cuanto a su participación en países
desarrollados y emergentes que conduzcan a asumir un rol
protagónico con sus productos no tradicionales por la calidad de los
mismos, la experiencia y la profesionalidad.
Keywords/ Palabras clave
estrategias de diferenciación, pymes, operatividad, calidad,
adaptación
differentiation strategies, SMEs, operability, quality, adaptation
Introduction
We are facing a change of era and the option of continuing with the
same patterns is no longer viable, which leads us to transform the
current development paradigm into one that takes us along the path of
sustainable development, including a long-term vision. The gaps faced
are structural: on the one hand, low productivity and poor
infrastructure put new organizations at a disadvantage vis-à-vis their
potential competitors.(Aranda & Combariza, 2007).
Authors such as Andrews (1985), Ansoff (1976) and Steiner (1979)
ratified that under the pressure of the open system approach and the
dynamics of the environment, in the sixties of the last century strategic
planning appears, which is polarized against the traditional
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operational planning by that time, where studying the environment
and examining the internal is its objective to finally propose
managerial strategies; retaken these orientations with what was raised
by Kaplan and Norton (2000), who were the creators of the balanced
scorecard and strategic maps (2004). Currently, Calderón (2017)
considers this field as a mature area.(María Mendoza, 2018).
From the requirement of entrepreneurs, priority was given to
implement competitive strategies that help them to maintain that
advantage in their business. Ohmae (1983) stated that the key actors
of competitiveness were: the company, the customer and the
competitors (three C's model: company, competitor and
consumer).(Procel-Quiñonez, 2022)Porter (1980) launched his
competitive forces model of industry in which he added new
competitive actors including rivals and consumers, including a
classification of competitive strategies and established three
categories: differentiation (a strategy to create value); cost leadership
(aimed at reducing cost rather than adding value); and focus (whereby
companies concentrate on specific market niches).(Méndez Naya,
2017).
Porter's work on competitiveness moves to the nation level and
develops his diamond model (1990), concluding that the classification
of competitive strategies is incomplete as it relates to market coverage,
as it only includes the niche strategy(María Mendoza, 2018). In
general, they tend to apply different strategies and in recent years
those small and medium-sized companies offer their products in the
market knowing that they have superior rivals competing in the sector;
however, they are able to stand out significantly, thanks to qualities,
characteristics, technologies and other factors that make them
positively different from other brands offering similar products or
services.
With the COVID-19 pandemic, the market of large organizations was
considerably affected, including exporting organizations that reported
economic losses due to several factors such as: the termination of
contracts with customers, difficulties in internal transportation
causing delays in shipments and that the product does not reach
customers in optimal conditions; and, an increase in operating costs
due to the acquisition of biosecurity equipment to counteract the
pandemic.
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Statistics show that 99% of Latin American companies are MSMEs,
and contribute between 48% and 94% to the generation of
employment in these economies. For this reason, governments have
directed some efforts to strengthen this sector: a) creation of laws, b)
rules and regulations for guidance and protection, c) policies to
promote development, d) creation of networks and institutions for
integration and dissemination, e) creation of programs and funds for
financing, and f) assistance and training programs. (Villavicencio,
2013).
This gave way to small, medium-sized businessmen and entrepreneurs
who took advantage of the gap that large companies could not meet
the needs of the international market; and, it is when this sector
implements a series of effective differentiation strategies, providing
added value to their products , which is perceived and valued by
potential international customers; demonstrating that these
businesses are able to provide different solutions (quality, service and
customer service, brand experience, immediate deliveries, and other
solutions) that are implemented to encourage buyer loyalty in a
normal situation. (Hu Chan et al., 2021).
However, the SME sector faces doubly significant problems due to the
fact that these organizations find it difficult to generate economies of
scale, have little bargaining power, usually do not attract personnel
with the best qualifications due to salaries and job security, are very
vulnerable to changes in macroeconomic variables such as interest
rates, the administrative, financial and productive responsibility of the
company is centered on a single individual and may have crises in the
supply of their inputs... (Aranda & Combariza, 2007). (Aranda &
Combariza, 2007).
From the point of view of (Alvarado Diana, Baquero Roxana, 2021)the
entrepreneur innovates through the introduction of ideas or the
improvement of products and services, through the incorporation of
new technologies, optimal production processes, work practices or
ways of doing business; allowing the small and medium entrepreneur
to innovate with the implementation of new and useful ideas,
understood as the effective realization that achieves a change in the
system, in order to improve and perfect some aspect of its structure,
content or operation.
From Ecuador, exports of non-oil products between January-August
2020 amounted to USD 9,664 million, an increase of 8.00% compared
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to the same period of 2019 (Plaza, 2022). (Negocios, 2021)9,664
million, an increase of 8.00% compared to the same period in 2019.
Likewise, there was an increase in volume (+5.00%), broken down in
bananas (+19.00% compared to 2019), shrimp (-3.00%), canned fish
(-4.00%) and natural flowers (-6.00%); and as for the main export
destinations, three markets account for 64.00% of total Ecuadorian
non-oil exports: United States (+22.00%), the European Union trade
bloc (+10.00%) and China (+14.00%).(Oyarvide-Ramírez et al., 2021)
(Plaza, 2022).
However, despite these significant figures, the main impact during the
first semester of 2020 was the decrease in income (effect of the
pandemic), considering that the organizations were unable to send
their production to the client due to lack of transportation for
collection or export and the cancellation of contracts with their clients,
being the floriculture sector the one who declared losses of almost the
totality of the production.(Plaza, 2022).
The exporters that make up the associations of the Popular and
Solidarity Economy -EPS from now on- recognized different impacts,
including economic losses due to COVID-19 (Useche Aguirre et al.,
2021)These include economic losses due to COVID-19, the increase in
production costs, breach of contracts with customers, the difficulty of
product mobility and therefore product quality, non-compliance with
supplier partners, which represents problems with financing; and
finally, Ecuadorian exporters recognize that when placing their
products in international markets, the climate plays an important role.
(AEI, 2014).
With the associations, the entrepreneurs were strengthened, which in
the critical moments faced by humanity due to COVID 19, awakens a
wide interest. At present there are some critical points to solve to
achieve the expected effect, among these issues is the marked
inequality and inequity of the vast majority of countries, especially
sharpened in Latin America, as stated by (Quincaña 2020), that their
condition and daily needs, forces them to generate a positive impact
on the creation of enterprises, of course, but could also be considered
as an economic and social phenomenon that helps to solve difficulties
such as unemployment, low efficiency in productivity, technological
lags, modernization of the business fabric, among many others. (Ulloa-
Barre et al., 2021).
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According to Hevia and Neumeyer (2020), the Covid-19 had an impact
on the economies and occurs mainly by three ways: the first appears
as will have effect economic activity because of: a) the limitation in the
production of economic sectors, such as tourism that most countries
depend on or entertainment; b) and social distancing causes some
people to work from home or simply to stop working, which causes a
drop in production.(Heredia & Dini, 2021). The second way will have
an effect on trade; in which countries that export raw materials are
experiencing a fall in the prices of the products they export, and in turn
affect a percentage of the Gross Domestic Product (GDP) and public
revenues in governments. And the last path will have a global financial
crisis, which is produced by a worldwide liquidity disruption, with
massive movements in portfolios in search of liquidity and abandoning
riskier assets.(Hu Chan et al., 2021).
These actions induce the generation or stimulus for the creation of new
entrepreneurial initiatives, with a support for entrepreneurs who have
their projects in operation and have a good business plan, allowing
them to empower and strengthen this group as a relevant tool for
change, as well as for overcoming the economic, social and health
crisis, particularly in terms of job creation, of course, when the
situation so determines (Nicolás and Rubio, 2020).
Ecuadorian entrepreneurs have demonstrated through competitive
strategies the opportunity to place the best vegetables, fruits and
products in the most demanding markets of the first world, sustaining
their brand and fair trade, proposing as an objective in this research to
identify differentiation strategies that favor Ecuadorian SMEs in terms
of their participation in developed and emerging countries that lead to
assume a leading role with their non-traditional products due to their
quality, experience and professionalism.
Materials and Methods
The methodology used in this research work refers to the bibliographic
and documentary review that allowed the analysis, interpretation and
information related to the object of study, which is focused on small
and medium-sized businessmen, including entrepreneurs whose
economic activity is to produce and market non-traditional products
in international markets.
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This research resorted to thematic pages and web sites located in the
academic google search engine, articles of quartile two, three and four;
and information from exporting magazines of non-traditional
products that make an exhaustive follow-up of the contribution of
Ecuadorian products in the world; and in this context, the economic
and social repercussions that the COVID-19 pandemic has
considerably affected SMEs and entrepreneurs were studied; in
addition to the approach to the reality faced by Latin American
countries and Ecuador is no exception; for the interpretation of the
information, an exploratory and descriptive qualitative content
analysis was carried out. (Negocios, 2021).
In recent years, Ecuador has excelled in exporting products to the
American, European and Asian markets, prioritizing flowers, tropical
fruits, canned fish, wood, among others. As of November 2020, the
total trade balance recorded a surplus of USD 3,125 million. The non-
oil balance showed a surplus of USD 833 million.(Ministerio de
Producción, Comercio Exterior, 2021).
In the economic dynamics of recent years, it can be observed how non-
traditional products have gained space and recognition in the
international market; therefore, Ecuador has a unique opportunity to
diversify its exportable supply, which is declared in governmental and
public sources of national interest. (León, 2013). The exploratory
analysis of statistical data aims to organize, synthesize, describe and
visualize the information, fulfilling the purpose of conducting a
thorough review of secondary data prior to the application of any
statistical technique with the objective of an optimal interpretation of
the information collected.
The exploratory-descriptive analysis procedure consisted of a
consecutive review of the information obtained in the bibliographic
sources, as well as a series of investigations that the University of
Guayaquil is carrying out, framed in entrepreneurs, exports and the
scope that entrepreneurs have had in the international market; which
allows describing from an analytical perspective, the economic and
social impact that the pandemic has had on this group of
entrepreneurs who place their non-traditional products in
international markets.
An analysis of the data collected on exports from Ecuador to the
European and American markets allows the establishment of
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differentiation strategies based on an analysis of internal and external
factors, highlighting the objectives of sustainable development.
Results
According to bibliographic information, Ecuador presents a
heterogeneous behavior in its non-traditional exports; and as of June
2020 the growth figures are significant, since a growth rate of 4.92%
was recognized with respect to 2019, this considering the difficult time
of pandemic, as shown by the Central Bank of Ecuador.
Figure 1. Heterogeneous behavior of Ecuador's non-traditional
exports
Source: Central Bank of Ecuador. Customs declaration.
Analyzing the figures presented by the Central Bank of Ecuador,
between 2019 (a normal and potentially productive and exportable
year) vs. 2020 (a year with declared pandemic), it is explained that
exports of non-traditional products increased to 5,581 million USD
FOB, which represents a 17% increase. These encouraging figures led
this research to present through a matrix of external factors MEFE,
developed behind a simple SWOT matrix (weaknesses, threats,
strengths and opportunities), which will expose the opportunities and
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threats for SMEs to export their non-traditional products to Latin
American, American, European and Asian markets.
Table 1. SWOT MATRIX
WEAKNESSES
THREATS
• Difficulties in
internal
transportation
• Increase in
operating
costs.
• Scarce
financing
options.
• Payments to
members for
products
delivered, due
to
noncompliance
with contracts
and delays in
collections.
• Problems with
customs
procedures
and unloading
of containers at
destination
ports.
• Variation in climate and
proliferation of pests.
• Barriers to entry by competitors.
• Reduction in demand for luxury
products (toquilla straw hats).
• Limited accessibility to
international markets.
STRENGTHS
OPPORTUNITIES
• Resilience of
organizations
• Diversification
of non-
traditional
products.
• Development of new agricultural
products
• Insertion of SMEs in the Popular
and Solidarity Economy (EPS)
• Insertion of SMEs to certify Fair
Trade (FT) products.
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• Organic
consumption
and fair trade.
• Respect for the
environment.
• Change in market dynamics
From the matrix, the Critical Success Factor matrix is determined with
a rating and its rating respectively.
Table 2. Critical success factor matrix with a rating
Value
Rating
Weighted
rating
OPPORTUNITIES
0,20
0,60
0,15
0,45
0,15
0,45
0,20
0,80
THREATS
0,10
0,30
0,10
0,20
0,05
0,10
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0,05
0,10
Source: Own elaboration
According to this analysis, the opportunities are evaluated at a value
of 2.30 and the value of the threats is 0.70. This represents a favorable
external environment for small and medium-sized entrepreneurs who
must periodically reinforce their weaknesses and strengthen their
strengths to create a shield against the external environment.
Finally, according to the data presented by the Ecuadorian control
agencies, it is necessary to make a comparative analysis of the
entrepreneurship between Ecuador and neighboring countries that
export similar products in free competition.
Figure 2. Comparison of entrepreneurship between Ecuador, Chile
and Colombia.
Source: own elaboration.
52,70%
36,50%
35,70%
82,70%
51,40%
36,90%
26,60%
88,40%
44,90%
40,60%
25,20%
68,70%
44,40%
52,50%
31,70%
90,10%
0,00% 20,00% 40,00% 60,00% 80,00% 100,00%
. Hacer la diferencia
. Acumular riqueza
. Tradición Familiar
. Escacez del empleo
COLOMBIA CHILE BRAZIL ECUADOR
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Conclusions
The growth figures for exports of non-traditional products can be
considerably improved by changing the support strategies of
governmental entities. Ecuador cannot devalue since it does not have
its own currency, several foreign countries that do have the capacity to
do so, cheapen a large amount of their products, which negatively
affects the non-traditional exports of our country. This opportunity,
which is based on the EPS, is based on taking advantage of the
dynamics of the markets, emphasizing the prioritization of sustainable
development objectives and greater consumer awareness of organic
consumption, fair trade and respect for the environment.
It is demonstrated that small and medium Ecuadorian entrepreneurs
can compete with a variety of non-traditional and primary products in
foreign markets; this is due to the quality and variety of these products;
the treatment of planting and harvesting of their products and respect
for human resources involved in this economic activity; giving way to
scientific and bibliographic updates.
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