admindevelopment is the increase in corporate restructures that have seen foreign investors diluting local shareholding structures as local companies seek to circumvent expensive debt through equity.
All these are strategies employed for the post-dollarisation era to adapt to the new realities of the US dollar environment. Pressure is now mounting, as customers are now less loyal and more demanding than in the past. They are less likely to buy from you because you are their company’s long-term supplier, but because your company is the obvious choice. The expression typically used is that customers increasingly have a “shop around” mentality.
New competitive landscape
The new competitive landscape is here. Economic power has been handed over by the producer to the consumer (Hammer and Champy 1993). Could we be heading to a customer victory business environment when the customer can specify their desired price, dictate terms of purchase transactions, delivery times, product and service specifications? If the customer is truly on the path of becoming the king of the competitive game, then you the manager need to identify and access new ways of successfully delivering customer value. Organisational flexibility is a natural response, a strategic option, in situations where anticipating future markets is nearly impossible.
The change by the company
But how do you as a company respond to this shop around customer choice mentality with inducements that are calculable and have a cash value? We have seen the proliferation of loyalty cards, accumulation points schemes for repeated purchases for a providers’ goods or services — buy one and get one for free, US$1 for US$2 on the informal market, frequent flyer schemes offered by airlines and airlines alliances. Could that be a sustainable solution to the customers’ ever-increasing demands?
Adding the plus factor
For most companies, the drive to raise quality could be the solution. Some customer-driven companies are now speaking of “getting closer to the customer”; some have coined it “know your customer” (KYC). Those that are very strong on this want to embark on supply and fit deals, to know exactly what the customer buying a machine tool wanted it for, making sure the customer made the right choice and even collaborating with these customers to raise their productivity.
Innovation is key
Innovation is the ability to generate a variety of successful new products and services in all aspects of the business-strategy, structure; processes are vital. But what is management of innovation — if an innovation is an idea of practice or object that is perceived as new by an individual or other unit of adoption (Schumpeter 1961) and management is defined as the judicious use of means to accomplish an end. Innovation management in a company would mean the way in which a broad array of means-accessible to the company’s manager’s are used in order to propose ideas, practices or objects perceived as new by customers willing to pay for them.
Speaking of innovation, I read with interest about an emerging travel and tourism trend — hotels that are investing in luxury tourism by pumping soothing or freshening scents into public spaces. Now I know that aromatherapy definitely enhances our body’s ability to relax and recover from stress. The article mentioned about the smells that retailers are using to stimulate buying responses in their customers.
Apparently, for some chains, the idea is to create a signature scent, to play to the powerful memory for smell by creating an air and odour of familiarity such that whenever you walk into one of its many lobbies round the world, your senses come alive. Others give their guests the luxury to choose their scent from a range of up to five available for pumping into their room. I have always been a big fan of the sauna but this for me spelt detoxifying!
In fact, Japanese technology giant NTT sometime back tested a prototype device that emits targeted fragrances from a mobile phone when travel applications are launched. I’m not sure exactly what this new trend will bring, but be aware that the travel and tourism industry is gearing itself up for future customers using much more experiential, mobile and social media to access repeat bookings and guest recommendations.
Adding service to service
The sameness of product and lack of control over key facilities poses a challenge for service enhancement. I recall speaking to one gentleman at a travel and tourism workshop who said that competition had moved from the sky to the ground especially with business travellers, with check in facilities, service between airports and hotels
In the same vein, airlines like to vie with each other in the provision of executive lounges and the abundance of IT provision for business travellers. In the West, the airline that is arguably the most different is Virgin Atlantic so that the plus in their long haul routes lie in an in flight beauty therapist with flatbeds, seven degrees off the horizontal; the “freedom menu” you can have during the flight.
Business environment
So, does this present business environment in Zimbabwe permit this customer response level? Companies are caught between pleasing the customer and the age of focus, core business and stick to the knitting and leveraging core competence type of environment. It is often difficult to increase market share if you operate in a mature market. This does not favour diversification at all, particularly unrelated diversification. But what do you do? Because you cannot afford an inactive — no change strategy no matter how hostile the environment is. Some companies are pursuing a discriminating middle course, going for “cognate customer groups” (Lawrence; 2002).
With cognate customer groups, a company can identify a new group that can be convinced that it needs an existing product/service, though this new group will be differentiated from the existing groups in some way. Another option could be to look at internal competencies and ask if there is something a bit more they can do which will bring another customer group within its ambit. Even if it is not the core activity; the company can expand horizontally to embrace new customer groups. The way things have changed is that clients no longer need to battle with numbers, what in the past used to be deliverables—the financial statement—is now coming 60 to 90 days after year-end. It loses a lot of its importance because our clients and their investors no longer care what happened 60 or 90 days ago; they are looking for something to affect the bottom line in the operations of the business today.
Change even radical change is arguably not enough in the era of hyper competition. What is essential is the capability for continuous change. Take for instance the mobile phone industry- such fast moving markets seriously challenge one of the most beloved concepts of traditional strategic management and the product life cycle.
The product life cycle is much shorter than before. Many products no longer reach the maturity stage, they are killed in full growth because the technology they are based upon is replaced by something new. Microsoft will tell you that their products change completely over three years. To be world class, innovation should be centre to strategy.
If a strategic planning is the managerial equivalent of jogging (Mintzberg 1994) i.e. not an efficient means to get anywhere but if practiced regularly will make you feel better, then today’s business leaders need to seriously analyse the role of strategy in their organisations. Is it just a planning tool with the objective of allocating resources and setting goals to benchmark against? Or is it also used as a lever for extracting the best — in context performance of employees and a means of channelling energy towards the accomplishment of goals and the creation of new competitive advantage.
Competitive advantage
Competition is now up, competitors have now made strategic geographical shifts to take advantage of the lower labour costs. There has been a huge investment in the Far East especially in China. I know of people that fly to China over the weekend to order, select and purchase urgent corporate branded gifts in China, yet in our own country it takes a minimum of two weeks. The question is- are we seriously being let down by most of our non-automated systems. Some developed countries like Japan have leveraged on Just in Time systems that emphasise on the need to have a faster and reliable delivery system to handle customers’ needs.
The sense of urgency that permeates business today is overwhelming. Competitive advantage is a short-lived asset and its potential must be exploited quickly and fully. Paradoxically, the need to move quickly has reduced the time available for analysis, it has become more necessary than ever to have better information in order to squeeze the last penny of profit from a product or investment.
Till next week, remember “Anyone can look for fashion in a boutique or history in a museum. The creative explorer looks for history in a hardware store and fashion in an airport.” — Robert Wieder.
Shelter Hamandishe-Chieza is a management consultant. She holds over a decade of management experience and is studying for a Management of Business Administration degree with a local university. She can be contacted at [email protected]
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