Be a master of the business game

rock, paper, or scissors with one of their hands.
The result is that rock crushes scissors; scissors cuts the paper, and paper covers rock.
In a two-person game, the player who makes dominating figure wins the game. When both make same figure, it is a draw and neither player wins.
The chess and poker game
OK, let’s bring it closer to a more mature game — one speaker left me convinced that business is indeed not like the game of chess, but of poker.
Chess is a game of intricacies where mathematical analysis rules the roost, at the end a lot of alternatives are at your disposal.
The beauty about it is that you cannot predict your opponent’s next move but all the pieces can easily be seen on the board.
Rarely do you encounter this in business. However poker, a game that has proved popular in the Western countries, is a game of incomplete information and probabilities.
A lot of skill is required in playing your cards and understanding your opponent.
One of the most important initial considerations is on choosing the table and tournament to participate in.
Like any business, it would be folly to get into a business you do not understand or when you are undercapitalised.
You should never hesitate to switch tables if you discover it’s too hard to win. Like a seasoned executive evaluating a business deal, good poker players are extremely selective about which hand they play and know when to take risks and when to sit back and let others play out the round.
When they lose a big hand they should have rightfully won, which happens to everyone, they are mature enough to avoid becoming emotionally involved.
Watch your opponent
Economists also have explanations of the business game. Say we have two companies, each offering the same type of service.
Both naturally want to increase profits and embark on price changes. If Company A increases prices, it might not be wise for Company B to follow suit and increase prices because they might incur heavier losses compared to the minimal profit realised if they had not increased their prices.
The secret is that in business, the success of your strategy is not only dependant on the choices you make but what the other competitor chooses to do.
Sometimes sticking to your old prices is a better option. Often those who act first have an advantage in a new market, they can saturate the market and make it difficult for other firms to enter.
Economies of scale are a huge plus for most industries. Consider a supermarket chain which generally by economies of scale has lower average costs than a single supermarket.
If a single supermarket attempts to compete with a supermarket chain by lowering its prices, there is a possibility of losses.
If you encounter such competition, it is wiser to either develop a market niche or in worst cases diversify into another industry.
Understandably so, there are some firms that use unorthodox methods to deal with competition.
One company in Harare embarked on a 50 percent price reduction for all their outlets.
How do you justify this kind of business conduct unless in my opinion and observation you are trying to recapitalise and find ways of solving a liquidity crisis? This behaviour can well be likened to a guerrilla attack type of marketing, which consists of waging small, intermittent attacks to harass and demoralise an opponent and eventually secure a permanent foothold in the market. In this case the challenger uses both conventional and unconventional means of attack.
This could be likened to firms that set low prices for their goods making entry of smaller players difficult if not impossible.
When the danger has disappeared, the company reverts to charging market prices.
As a company, you can’t always be reducing prices whenever there is a new entrant or a hint of one, it is not only costly for the company but the companies in the industry.
Finally, you also cannot afford to ignore the ones that give a hit and run entry. Always have methods to deal with these.
Quote of the Week
“Business is a game, played for fantastic stakes, and you’re in competition with experts. If you want to win, you have to learn to be a master of the game.” —¯ Sidney Sheldon, Master of the Game.
Till next week, May God richly bless you!!
Shelter Hamandishe-Chieza is a management consultant. She can be contacted at [email protected]