My Pet!

Your low cost competitors will not just nibble at your low price segment, they want
to eat your lunch

Many industry leaders are faced with a sea of changes in the marketplace, particularly the
onslaught of many low cost competitors. They are minnows and will grow to become
sharks if they are not nipped in the bud. Examples abound on the proliferation of the
Chinese products in the world market.

The way to handle these manufacturers is to try to nip them in the bud. It is like war.
You must not allow your competitions to establish a beachhead. For once they succeed
in doing so, it will be so much harder to dislodge them. You want to knock them out in
the waters where they are most vulnerable. When customers try the low cost products
and they like them, it will be very difficult and expensive to entice them to switch back to
your products. If you cannot beat the low cost competitors in the price game everything
else being equal, then better to identify another premium niche.

Johnson and Johnson the health-care multi-national company also faces stiff competition
and a long wait for the next drug blockbuster. As part of its strategies to hold off
competition, it has gobbled up 34 companies in the past 5 years and will keep acquiring.
Johnson and Johnson also put existing drugs to new uses - epilepsy drug Topomax now
treats migraine. Workers are made to cross the divisional lines to develop products and
drug-delivery systems including treatments for stroke, diabetes and schizophrenia.

Teamwork between pharma and device divisions led to the billion-dollar coronary stent.
Cost-cutting on the 200-plus units, merger of the back-office operations and centralized
purchasing helped to save $1 billion in two years - funds that it will use in the
development of badly needed new pharmaceuticals.

On the other hand, Hoover, which makes vacuum cleaners since 1907, has shrunk its
unionised staff strength from 1,800 just over 1,500 in 1994. The Chinese competitors
have been selling cheap vacuum cleaners at $79. Hoovers with price tags of $200 and
higher cannot compete and was caught unaware. These Chinese low-end models already
have 40% of the market. Hoover tried layoffs, new vacuum-cleaner features etc, but to
no avail. On the other hand, the market leader Whirlpool is up 38% in sales revenues and
just boosted its 2004 profit outlook. Whirlpool no longer sells vacuum cleaners and
diversified into other household appliances.

As mentioned earlier, the Port Authority of Singapore (PSA) also lost its competitiveness
when Tanjong Pelepas in Malaysia stole away PSA’s number one and two customers
with cheaper pricing. The Singapore government has learnt this lesson and is responding
quickly to the threats of low cost budget airlines and regional air hubs. Airlines can also
bypass Singapore Changi Airport and fly directly from Australia to Europe or Middle
East to US avoiding stop over in Singapore. Singapore Airlines is introducing the budget
airline Tiger to compete in this sector as well as to boost its premier airline image through
the offers of new planes and non-stop direct flights to the US. Singapore Changi Airport
is building a terminal for budget airlines. The Singapore government came down hard on
the Singapore airline pilots to ensure that the national airline is not dragged down by
labour disputes. The airport terminals are also undergoing renovation and upgrading. The
jury is still out as to whether all these proactive measures can effectively maintain the
competitiveness of the air transportation and aviation industry in Singapore. However,
this is better than waiting for the low cost competitors to gobble your lunch right under
your noses.

Another case in point is the ball-point and fountain pen competition. Ball-point pens
were much cheaper, easier and less messy to use. The fountain pens were beaten face
down and lost almost all the market share to ball-point pens. Then somebody thought of
making the fountain pen a luxury item. The fountain pen was sold for US$ 400 and
positioned as a prestigious and luxurious item, similar to the jewel wear. The
manufacturers of fountain pens such as Parker, Sheaffer and Mont Blanc have then
comfortably locked into the high-end segment which the ball-point pens cannot penetrate.

Today, both the fountain and ball-point pens co-exist each has its own market niches.
You need to be wary and be prepared to thwart off the moves of these low cost
competitors. This is why Howard H Stevenson in his book said: “Do lunch or Be
Lunch.”

http://www.corporateturnaroundexpert.com

Dr Mike Teng (DBA, MBA, BEng, FIMechE, FIEE, CEng, PEng, FCMI, FCIM, SMCS) is the author of the best-selling business book “Corporate Turnaround: Nursing a sick company back to health”, in 2002. In 2006, he authored another book entitled, “Corporate Wellness: 101 Principles in Turnaround and Transformation.” Dr Teng is widely recognized as a turnaround CEO in Asia by the news media. He has 27 years of experience in corporate responsibilities in the Asia Pacific region. Of these, he held Chief Executive Officer’s positions for 17 years in multi-national, local and publicly listed companies. He led in the successful turnaround of several troubled companies. He is currently the Managing Director of a business advisory firm, Corporate Turnaround Centre Pte Ltd, which assists companies on a fast track to financial performance. Dr Teng was the President of the Marketing Institute of Singapore (2000 - 2004), the national body representing some 5000 individual and corporate marketing professionals in Singapore

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People frequently seek coaching because they’re stuck. For some, the need is confidence-building, for others it’s behavior change or skill development. But sometimes, no matter how hard a person tries, their progress remains inexplicably stalled. The situation can be as frustrating to bosses, colleagues, and family members as it is to the individual.

Organizational psychologists Robert Kegan and Lisa Laskow Lahey developed the theory of a “competing commitment” to explain what they term “personal immunity to change.”1 The idea is that when people engage in behavior that thwarts their ability to achieve an outcome they genuinely want, the cause could be deeply held internal beliefs that act in opposition to the conscious desire. When these beliefs are uncovered, change is possible.

What follows is an adapted version of Kegan and Lahey’s process for identifying a competing commitment: Begin by naming something that you are committed to doing, having or achieving. Next, ask yourself what you are currently doing or not doing that prevents the change from happening. Third, reflect on what your action or inaction is suggesting that you might be more committed to (this is the competing commitment). Finally, identify the assumption that supports the competing commitment.

Here are two examples of how coaching clients worked with this technique.

Sharon had been unhappy in her line of work for several years. Although she knew she wanted a career in textile design, her efforts to change fields always stalled after two of three weeks of half-hearted activity. She had also recently interviewed for two jobs in her current field (which she didn’t like), and was planning to start a lengthy and expensive program to identify career interests (which she already knew).

When Sharon tried the competing commitment exercise, her answers looked like this: I am committed to working as a textile designer Instead of looking into what training is required, I’m applying for jobs that I know in my heart I don’t want My bigger commitment is to my current job, where I am comfortable My assumption is that even if I train for design, I am not creative enough and no one will hire me.

Meantime, David had talked for over a year about finding a partner in order to expand his business and take some of the pressure of “doing everything” off himself. However, despite identifying several highly qualified candidates who he felt enthusiastic about working with, negotiations always broke down at the eleventh hour, usually over insignificant details.

David identified his competing commitment as follows: I am committed to finding the right business partner I refuse to concede on small requests, and blow the deal at the last minute My bigger commitment is to staying independent I assume that having a partner means I’ll be answering to a boss, and won’t be able to call the shots.

It can take time to identify a competing commitment and its underlying assumption, so if you try this exercise don’t pressure yourself to answer all of the questions at once. After completing this process, the real work comes in changing deeply rooted assumptions, which also requires persistence and frequently the assistance of a coach or mentor.

The first step in challenging an assumption is to start noticing the times when you react based on a particular belief about yourself, other people, or situations. Then you can look at the ways in which your assumption is preventing you from getting the results you really want. See if you can figure out how it originated - people can spend their lives in obedience to false assumptions that started in childhood. Begin gathering “evidence to the contrary” that demonstrates how your assumption is not always true.

Then, design a “pilot program” to begin testing new ways of thinking or behaving. Choose no- or low-risk activities, like shadowing someone who’s successful with the job or skill you want, volunteering, informational interviewing, or taking a class or two. The key is to take action and do something different. The very act of taking a step toward a meaningful goal sends a powerful message to the subconscious that you’ve made a commitment to achieving your goal. In my practice I’ve seen it happen time and time again that people who commit to action seem to magically attract the people and situations that they need to move forward.

1 “The Real Reason People Won’t Change,” by Robert Kegan and Lisa Laskow Lahey, HRB Onpoint, © 2001 Harvard Business School Publishing Corp.

Barbara Bissonnette is a Certified Coach and principal of Forward Motion Coaching (http://www.ForwardMotion.info). Her guide, “The Personality of Business: Manage Your Style for Greater Success” is available at no charge through her Web site. As Vice President of Marketing & Sales for a privately held company, she gained first-hand experience in helping people deal with change through a corporate sale, merger, and acquisition. Today, she uses her expertise to help individuals see their situations in a new way, and create the outcomes they desire. In addition to coaching, she leads workshops on stress management, self-awareness and personality, emotional intelligence, and transition.

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The management mantra of the 1980s was product quality, and activities involving
Quality Control (QC) circles, Total Quality Management (TQM) and ISO 9000 were the
order of the day. Back then, consumers were willing to spend enormous sums for quality
products. However, product quality has significantly improved and today having a good
quality product is a mandatory requirement for the company’s effective participation and
survival in the marketplace.

Subsequently, the management slogan in the 1990s embraced technology as the cure-all.
Companies then tried to distinguish themselves from their competitors through the use of
technology, by offering better and more sophisticated features, use of the Internet and
communication systems. Huge sums were channelled into technology to build a better
mousetrap with more superior state-of-the-art features. Today, the world does not beat
down the door of the better mousetrap developer. The collapse of the high tech stocks on
Nasdaq in the early part of 2001 illustrates the vulnerability of technology.

The thrust in the new millennium is competition. Competition intensifies with the
emergence of a better range of products that are often of superior quality coupled with
attractive and affordable pricing. In such a scenario, many products become marginalized,
and like commodities, pricing becomes a key determinant in a shrinking market.

In today’s competitive environment, your margins for errors are also thinner. In the past,
three strikes or major mistakes and you are out, but today, one strike or major mistake
and you are history. Customers have many choices and they will switch their suppliers at
the turn of the dime if you make a major error in quality, delivery, etc.

Oftentimes, the elusive competition quietly sneaks in by the back door. You may have
been losing trickles of disgruntled customers and one day, you come to the sudden
realisation that even your major customers are gone.

PSA Corporation learnt too late to retain its number one customer, Maersk from
switching to Port of Tanjong Pelepas in Johore. After PSA Corporation rejected the
requests for better terms of AP Moller Group, parent of Maersk Sealand, the world’s
largest operator of container ships, the Copenhagen based company moved the operations
to Tanjong Pelepas and also took a stake in the port. This was a double whammy for
PSA Corporation as it not only lost its biggest customer, it has to compete against its
former ally. With the help of Maersk, Tanjong Pelepas is able to capture Evergreen, PSA
Corporation’s second largest customer. . PSA had tried to compete on efficiency and fast
turnaround of clients’ ships. But this could only justify for some price premium for up to
a point. Consequently, PSA Corporation has to downsize in order to stay competitive, a
tad too late as it has lost its top two customers within a short period.

Competition may lead to opening up new markets. For instance, with the advent of the
low budget airlines, more poor Indonesians are also able to travel overseas. This is the
market segment, which most major airlines such as Singapore Airlines will ever wish to
target. But one should never under estimate or take the competition for granted.

Competition is a silent and sudden killer like heart attack, it can creep up on you without
warning. However, just as an individual can prevent this disease by adopting a healthy
lifestyle, a company can stave off competition by remaining alert and adopting
appropriate strategies to combat it. When you are faced with increasing competition, you
may still survive, prosper and succeed, but it is no longer business as usual.

http://www.corporateturnaroundexpert.com

Dr Mike Teng (DBA, MBA, BEng, FIMechE, FIEE, CEng, PEng, FCMI, FCIM, SMCS) is the author of the best-selling business book “Corporate Turnaround: Nursing a sick company back to health”, in 2002. In 2006, he authored another book entitled, “Corporate Wellness: 101 Principles in Turnaround and Transformation.” Dr Teng is widely recognized as a turnaround CEO in Asia by the news media. He has 27 years of experience in corporate responsibilities in the Asia Pacific region. Of these, he held Chief Executive Officer’s positions for 17 years in multi-national, local and publicly listed companies. He led in the successful turnaround of several troubled companies. He is currently the Managing Director of a business advisory firm, Corporate Turnaround Centre Pte Ltd, which assists companies on a fast track to financial performance. Dr Teng was the President of the Marketing Institute of Singapore (2000 - 2004), the national body representing some 5000 individual and corporate marketing professionals in Singapore

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