The Influence of the Financial Concentration on Competitiveness of the Milk Processing Enterprises

Velichko Rodopski, Petar Borisov, Teodor Radev

Abstract: Under high competitive market conditions, firms achieve sustainable competitive advantages by using different competitive factors. One of these factors is the efficiency of the finance management. Large manufacturing enterprises that concentrate significant capital investments have the opportunity to carry out a larger set of strategic financial activities that enable them to achieve a competitive advantage by using the financial factor. In these enterprises, large financial capital is used to build barriers to new competitors in the industry. The purpose of this study is to determine the impact of the capital concentration on the milk processing competitiveness. The research is based on survey of the 55 milk-processing enterprises for the period covering 2012–2016. By statistical hypothesis we testing, the basic hypothesis explaining the dependency of the factors determining competitiveness. The conceptual thesis, which is verified for statistical reliability, is that the degree of concentration of capital in the dairy enterprise determines its competitiveness. The degree of concentration of capital in the milk processing is characterized by the sum of assets. The degree of competitiveness is determined with set of indicators which include – market share; profitability of assets and equity; return on investment. All these indicators are aggregated into a generalizing sum, which is called a competitiveness factor. The research shows that the factors of competitiveness in the milk processing sector are the amount of assets and equity. These two factors most significantly affect the competitiveness of enterprises. All other factors such as market share, net sales revenue and investment amount do not affect the level of competitiveness.

Keywords: competitive ability; equity concentration; finance; finance stability

Date published: 2018-11-21