Date- 21th May 2012
You have been assigned as a leader of a cross functional team of internal consultants to your CEO and the Board for your company.
Your company is faced with dwindling profit and constant chaos due to:
1. Intense competition from local competitors
2. New entrants from China/Vietnam with very low prices
3. Increasing inventory of great products which used to be fast moving
4. Lack of coordination with supply chain decisions and customer demand from CRM
5. Customers of least profit getting maximum attention and more profitable customers defecting
6. Sales Force placing unreasonable demands coupled with production interruption
7. Lack of ...view middle of the document...
Being cheaper than a competitor is not the only weapon. Being faced with a new competitor is providing free opportunity to assess the business and could even benefit from this unexpected challenge. So by treating this competition positively, first try to understand the scheme behind the entire product or service offered by the competitor, like
* What is their approach?
* What is their pricing?
* What is their advantage?
* What is their value?
* Do they have large investors?
Carry out a SWOT analysis of our business, with which our business strength, weaknesses & opportunities can be identified. Put emphasis on developing adequate strategies for dealing with threats and try to improve things where we aren’t so good at.
Following strategies need to implement to overcome impact of offshore competitors like China & Vietnam.
Primary Competitive Strategies: These offer a higher customer value often through a niche-focused strategy.
* Focus on specialty product or process like tight tolerance, difficult to manufacture & high quality products. Also focus on process based product manufacturing which involves specialized process capabilities.
* Emphasis on development of innovative product/process technologies, unique and often patented technologies that offer significant performance advantages versus alternatives available in the market.
* Target business where proximity to the customer provides a service advantage, based on logistics or design.
* Implement Value-added inventory management like JIT(just on time), kan ban, consigned inventory.
* Study of freight economics if the product is too bulky or expensive to ship.
* Focus on low volume/short run business which is not of interest to the Chinese and not worth setting up sourcing arrangements.
* Products with frequent modifications need close interaction with customer for intensive design/engineering.
* Improve customer relationships and loyalty; build up strong personal relationships and a strong service track record.
* Getting the support of employees is crucial. Let them know about our current concerns and get them to play a part in improving business. Ask for their ideas.
Supporting Competitive Strategies: These strategies reduce cost and risk, enhance capabilities, and help to strengthen the niche.
* Target the right customers, those who are less likely to go to offshore and may be less price- sensitive.
* Work to be cost competitive in manufacturing processes through Lean, automation and other investments to reduce costs.
* Consider cost reduction through production in low-cost countries via sourcing or joint ventures.
* Develop strategic partnerships with companies that offer complementary products as well as customers, suppliers, and even competitors.
* Become a global player through a worldwide presence or production system. Use partnerships and alliances off-shore to...