Confrontational Competition as a Major Challenge to Business Administration - Assignment Example

Confrontational Competition as a Major Challenge to Business Administration Introduction: The new millennium has begun an unsure phase in the fieldof learning in business administration. There are companies that are seriously considering going global, while there are other which want to go lean. Every business owner wishes to keep the focus on more revenue, and while this has its ups, creating more employment opportunities and better workspace environments are secondary factors which cannot be neglected at any cost. To cut the cake into half, market competition is the deciding factor that triggers new strategies, solutions, and decisions. Confrontational competition has been a neglected topic over the past couple of years, owing to the ghost of Recession that snatched away finances from many small businesses. However, the scene is a bit different now. The United States, along with many other leading economies of the world have realized that investing time and money in small businesses which have novelty and new ideas is going to be a great way to begin building the shattered economies and reviving economic stability in these countries. Therefore, most business administration courses today have a significant chunk of literature dedicated to small business management and its various problems. Talking of growing small businesses, it has been noticed that most tech start-ups that get going are eventually bought by major platforms like Yahoo, Google, Microsoft or Facebook. Therefore, when it comes to having an original technology released in the market, the run is either for funding (crowd/venture) or getting enough traction to be bought by the bigger franchisees. This is where companies that are lean and want to maximize their incoming revenues, face the toughest of competitions. When we say competition, it is natural that one might consider it to be similar to market competition as faced by big businesses. However, the situation is different when it comes to small businesses and lean companies. To begin with, lean companies focus on a niche audience and offer products, services and deals of limited variety. A direct result of this is that they face two situations when it comes to competition. Firstly, they may face no competition at all. Secondly, they may not face wide market competition but have to put up with more focused confrontational competition wherein a direct competitor that is equal in size and strength makes moves that directly affects sales of the lean company. Let us go into each situation separately. Small businesses operating with limited resources have to face hardly any competition when they have a unique idea in the market, and have competition placed remotely either geographically or economically. A massive provider of computer peripherals is not to be considered as competition to a start-up that has come with a Bluetooth design that catches public attention and is soon a trend in the target market, computer and mobile peripherals being the one in this case. In such cases, the small business operates like a mass production company, sets out to meet all market demands for the product and experiences huge profits. Here, the competition is negligible and almost nil, and while there are major players in the same field, the small business does not face their competitive wrath. After a certain amount of time, there is a saturation of the new product in the market and every probable customer has bought it. After this, the small company has only two paths open. Firstly, it can stop production of the original design and concentrate in research and development to come up with something new. Secondly, it can resort to lean production and start improvising on design at a later stage. What is confrontational competition? When companies adopt a lean production strategy, it gives local competition ample scope to grow. Notably, all local companies emulating a new technology start out as lean production companies to keep the investment profit balance in place. Their focus then becomes the run to take away customer base and market from the original lean company. Confrontational competition arises when there is enough number of lean companies in the market providing the same product or service. As a result, the chances of similar products of different makes flooding the market arise, and that is when confrontational competition comes forward. In confrontational competition, a company does not strive to stay up in the market by developing new designs or revolutionary products. Rather, they try to stay ahead of direct competition by transitional competitive approach to market domination (Daly & Wilson, 91). From manipulating sales numbers to seasonal deals, these companies take confrontational competition head first. The present article studies the different challenges of confrontational competition in the new millennium post-Recession and tries to find out which approach would be the best help in empowering companies with lean production. The study identifies each of these problems and analyses any literatures that has been found to discuss it. It then proposes solutions that can be used to negate the specific confrontational competition problem. Thirdly, the study predicts as to what the results of adopting the proposed solutions would be, what would be their long term impacts, and how the company would gain in the long run. The Problems of Confrontational Competition Any major businessman who feels he has it in him to man a drowning ship and sail it to shores will be able to handle confrontational competition even in the toughest of markets. While this is a great way to begin on a joy ride of lean production, the challenges that one faces in confrontational competition can be too taxing for him (Shah & Ward, 2003, 129). Here is a straight dive into the many challenges of playing long in lean production. Lack of funds: With the recent financial crackdown, governmental aid and security is known to have hit nil. Therefore, when a company running on lean production runs out of funds for production, maintenance and dispatch, there is little hope it has of surviving the competition. Bank aide is is not available in huge amounts and unless the company is real winner and has got noticed by a bigger franchise, hoping to get financial back up is impossible. Many small businesses have sold away to larger franchisees only for the need of finances. Not to forget, the competition gets fierce every time there is a chance of bankruptcy and the main players in the market ramp up their activities to get noted as a sustainable brand in the same field and attract venture capital funding or get bought by one of the bigger brands. This further kills the ailing company’s chances of recovery leading to complete shutdown or bankruptcy. Mid-term Crisis: Shipment of raw materials, shipment of finished products, new investments and different market demographics may lead to mid-term crisis for a company that has relied on lean production. The crisis usually comes around because of confrontational competition where a rival company’s move takes a toll on your sales and causes sudden blockage in profits. Other accidental factors like transport disaster or raw material cycle break may also impede in staying ahead of competition (Mehrabi et al, 407). Lay-offs: Employee lay-offs not only have a bad impression on the company but also leads to terminated employees joining competition companies and adding to their manpower resources. Also, your company’s strategy and plans are out in the market the very second there is a lay-off. As a result, you the lean production company you run may experience low sales as all deals and strategies are already in the competitor’s plan who then plans a bigger strategy to beat your market reputation (Shah & Ward, 144). Insurance: Lack of insurance is a big hassle in USA today. Much as we hate to admit it, countries all over the world relied on the stability of the US economy till the Recession struck and the loopholes in the financial sector of America brought reality to the world. Today, no company can hope to play safe in the market on the basis of insurance coverages that allow them to open new offices in fire prone buildings or install new equipment or untrained labor (Lewis, 959). It is a double trap on that end where the insurance is minimal and the cost of perfecting operations like labor training and office building maintenance is additional to business running. Market Volatility: Ultimately a great amount of risk comes from the market itself. There are pertinent questions that threaten companies that adopt a confrontational strategy like: what if a revolutionary new product comes up which has a better functionality than the one you sell? There could also be a definite trend in the market to get rid of certain products. Like for example, what is the market switched to tablets and iPads entirely and gave up on using desktops and notebooks? Computer peripherals that were created for desktops would completely lose market viability (Christopher, 41). Solution/Proposals As the saying goes, there is no problem without a solution. When it comes to confrontational competition, many solutions to problems mentioned above are yet to be discovered. However, the security of a company often relies on the manageable resources that drive the production of the company. These include raw material sources, human resource and financial resources. Although each of the solutions enlisted here are not direct solutions to each of the above mentioned problem, their use will lead to lateral solution to the problems that seem so strikingly difficult to overcome in confrontational competition. Branding: A major amount of investment goes in to branding a company and its products/services. While frequently changing your brand’s logo or tagline does give a dynamic finish to your company, the approach often takes away the seriousness and reliability of the brand when the logo or branding somehow misses to make the impact like its predecessors. However, it is important that a brand that has adopted confrontational competitive approach keep its branding as fresh and lively as is possible. Not to forget, the brand’s willingness to do new things, adopt new designs, and creatively improvise upon how it appears to buyers and critics, has a strongly positive influence on the market (Yan, 3). One must remember here that when a brand is planning to change design and other marketing elements through which the brand is to be familiarized to customers, it must undertake market research and check what colors or design works for its niche and target audience. Keeping in mind the brand’s previous reputation, the company must incorporate changes in its branding that add value to the brand and not take away seriousness from itself. HR Management: Clever human resource management can win many corporate wars, confrontational competition being one of the. This approach would require the lean production company to stay true to traditional HR practices while focusing on improving the workplace environment and keeping employees happy and satisfied. However, an additional approach would be to focus on acquiring talent from competition and use their expertise and knowledge about the other company to drive targeted sales in the company (Collis & Montgomery, 30). Quality control: Focus on quality of products further finished to perfection using research and development will definitely have a positive impact on the sale ability of the product lines that a lean production company launches. To stay on the front of competition, one needs great customer feedback and positive reviews. Therefore, it becomes important to note only provide high quality products but also market the product on the basis of its quality. This is a sure winner in confrontational competition wherein, one firm tries to eat away at the loopholes of the other firm (Lewis, 2000, 962). When you maintain a reputation and record of high quality, and let the media and customer base know what standards you maintain in production, packaging and transport of finished goods, you are definitely going to be able to stay upmost on the minds of buyers when they have to make a choice between products from your company and those from your competition’s. Make sure your marketing familiarizes end users regarding the high quality you maintain at work. In case of providers of services, quality plays an even bigger role since it is noticed at every stage of service delivery. Flexible costing: Every brand in the competition fixes its cost price on the bases of market trends. Lean production companies find it hard to keep the costs low since the profit margin gets slashed by a huge degree in such cases. However, seasonal launch of product or service lines which are relatively cheaper than regular products/services is a clever option here. Although this may lead to higher popularity of the low cost alternative and the high cost alternative may have to be removed from the market altogether, the chances of the company incurring huge losses is minimized using this approach. Also, providing cost alternatives in product lines, with inferior and superior products showing similar performance is a great way to win customer’s hearts who often carry positive feedback to such deals to their friends and family, thereby giving you high market visibility (Shah & Ward, 134). Predictions: The use of the solutions enlisted above is going to help lean production businesses fight confrontational competition to a great degree. For example, clever human resource management and dynamic branding will help retain market interest in the brand so as to avoid mid-term crisis, market saturation, and sudden lack of funds (Lewis, 2000, 974). Quality control and flexible costing will help maintain sales at a steady rate thereby granting enough strength to withstand market volatility and avoid massive lay-offs and failed insurances. Thus, although not directly causing reduction in the problems, the solutions enlisted in this study are sure to help lean companies keep their business strong even in times of tough confrontational competition. Conclusion: When confrontational competition gets suffocating for a brand it needs to act quickly and redefine itself to the market. In order to avoid such dire situations, a brand must keep an eagle watch on its market presence and use one or more of the solutions like introduction of new branding, application of HR management tricks that draw talent from competition, and providing products of different cost price ranges to stay afloat when market volatility threatens to drown the ship. In short, the financial crisis witnessed in the past decade has shown us that while the big brands do survive and are able to create new employment opportunities even after the Recession, the small businesses hold the attention of venture capitalists and these big brands right now, as small businesses with lean production strategies are expected to be the providers of eighty percent employment opportunities in the coming decade. While confrontational competition sounds a good way to keep these companies alive, finding ways to survive its perils is the best way a company can serve its purpose of staying amongst the top providers of a product or service in the market. The present study has ventured to study confrontational competition in a way never studied previous to this. While the solutions are more generic than the problems, it is clear that business processes can be intertwined to collectively solve multiple problems at one go. With small businesses relying on limited budgets and target markets, this approach is more than feasible. References: Collis, David J., and Cynthia A. Montgomery. "Competing on Resources: Strategy in the 1990s." Knowledge and Strategy (1999): 25-40. Christopher, Martin. "The agile supply chain: competing in volatile markets."Industrial marketing management 29.1 (2000): 37-44. Daly, Martin, and Margo Wilson. "Killing the competition." Human Nature 1.1 (1990): 81-107. Lewis, Michael A. "Lean production and sustainable competitive advantage."International Journal of Operations & Production Management 20.8 (2000): 959-978. Mehrabi, Mostafa G., A. Galip Ulsoy, and Yoram Koren. "Reconfigurable manufacturing systems: key to future manufacturing." Journal of Intelligent Manufacturing 11.4 (2000): 403-419. Shah, Rachna, and Peter T. Ward. "Lean manufacturing: context, practice bundles, and performance." Journal of Operations Management 21.2 (2003): 129-149. Yan, W. A. N. G. "On Strategic Alliance: the Effective Way of Increasing Competitive Advantage of Logistic Enterprises [J]." China Business and Market8 (2003): 003. Read More