Competition is considered as a compelling reason for organizations
to continuously reinvent themselves and be on their toes. While competition is
considered as a threat to their existence by most of the companies, the really
successful organizations view it as a challenge an opportunity that drives them
to continuously innovate, reinvent themselves, improve and grow over time
Emergence of new Competition for any product or service
could be seen as an endorsement of the attractiveness of the market and an
opportunity to grow the demand by investing together to educate the customers
and offer better and better features.
By staying competitive and through constructive approach,
smart organizations try to garner higher and higher share of the market.
In India, Hero Honda started offering a range of 100cc Bikes
in 1985, the two wheeler market was largely dominated by Bajaj Auto with its
traditional scooters. As the market for the 100cc bikes, which happened to be a
disruptive innovation at that time, with a far superior mileage to the existing
competition, Bajaj took little time
in responding to the challenge.
In 1986, Bajaj Auto launched a range of motorcycles and
fought fiercely with the fast emerging blue chip company, Hero Honda Ltd.. While
a number of other companies who got into the two wheeler market perished along
the way, Bajaj Auto managed to survive the competition and grew to an annual revenue
of over US$3.5 Billion as seen today.
Over the last decade, the
company has successfully changed its image from a scooter manufacturer to a
two-wheeler manufacturer. Its product range encompasses scooterettes, scooters
and motorcycles. Its real growth in numbers has come in the last four years
after successful introduction of a few models in the motorcycle segment
Together, Bajaj, TVS Motor and Hero Motors (formerly Hero
Honda) have grown the Indian market for 100cc Bikes to over US$10 Billion in
the past 28 years from almost nil levels.
Fierce competitive spirit in the market place leads to
continuous improvement of the features and improved value for money for the
consumer due to the efforts of the organizations to be the preferred vendor.
Rise of Bharti Airtel as a global organisation despite being
faced with disruptive price competition from Reliance communication during the
past 10 years is another classic example of a great organization .
While a number of organizations have perished being unable
to cope up with the competition, the successful companies display the following
traits:
A)
Monitoring competition- Continuously study the
competition and strive to keep ahead of them with distinctive and unique
selling propositions. Look for opportunities to learn and replicate/surpass in
the good features and avoid mistakes done by the competition. Monitoring the
competition will allow the company to study the response of others to similar
environment and hence will help in evolving the right response.
Various online and offline sources like
websites, news reports, annual reports, report by funds, advertisements for
products and people, patent applications, market surveys are used to monitor
the competition. Schemes, New product launches , Pricing movements Production reports, Demand and Inventory
reports are continuously monitored by
the market intelligence wings in successful organizations.
.
B)
Watch out & Respond to New developments- Look for
disruptive innovations or competition from alternate product/service- markets
that could evolve as an opportunity to compete it in or as potential
competitors. A number of times most dangerous competition stems from new
companies that have worked in stealth mode. Successful companies use brute
force to dominate such market, stifle growth of such companies or sometimes buy
out the competition.
For example, Nirma was a classic example in
the Indian scenario which as a new entrant into the detergent market gave tough
time to the market leader with disruptive innovation in product/pricing/packaging
w.r.t Hindustan lever’s Surf.
Very often innovation in the form institutional
disruption and country disruptions seep the companies off their feet if the
threats are not proactively handled.
C) Co-exisiting with competitor as
Partners –
Constructive approach to competition has helped companies evolve new
markets together with joint investments in setting uniform standards necessary
for productive use of resources, share
capital resources required for product development, distribution etc
while making operations more profitable and viable leading to a higher net
addition of economic value.
Apple Computer's decision to use Intel's processors and also 'Windows Operating System' in a dual mode in its personal computers in 2004-2005 lead to a dramatic growth in the sale of its PCs and gave a new growth curve to its business.
Apple Computer's decision to use Intel's processors and also 'Windows Operating System' in a dual mode in its personal computers in 2004-2005 lead to a dramatic growth in the sale of its PCs and gave a new growth curve to its business.
Mark Cataldo, Chairman of
the Board of the Open Mobile Alliance, a network of leading telecom companies in the
world announced "The Open Mobile Alliance is very pleased that our
organisations have come together to address this key technology area. By
cooperating, our organisations, OMA's service enablers and APIs will enrich the
support of multimedia services across the rapidly diversifying range of
devices."
This is a great example
of the cooperation among competitors to evolve industry standards. Similarly, the
cooperation between the Indian cellular companies to hare cell tower infrastructure
by forming joint venture companies is another classic example of co-opetition (cooperation
between competitors). Formation of CIBIL by financial services companies in
India is another classic case of competitors coming together to share
information to help in credit rating verification of their applicants to reduce
delinquancies and Non Performing Assets, thus improving their performance.
Today’s successful companies have
a clear constructive approach that enables them to leverage competiton for
business growth than be intimidated by them and be insecure. This is the
hallmark of thriving organisations.
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