adminThey still produce what they want and not what the customer wants. They still assume that customers will continually have no choice but to buy from them.
Companies continue to shortchange customers in Zimbabwe as they either get poor quality goods or if the quality is right, the prices are manipulated/changed at the time of delivery for one reason or another.
For a long time Zimbabwean customers have been subjected to abuse because of the limited choices available to them. Customers return not because of having experienced good service but at times they go back because the supplier will be their last option.
If urgency is also factored in when appraising the suppliers’ performance, the mark these companies get is depressing to say the least. This implies that Zimbabwean companies are going to find it difficult to protect their markets from South African companies and other global competitors because their system of operation largely depends on monopolistic practices to survive in the long term.
However, monopolistic structures are not sustainable in the long run.
Even parastatals or quasi-governmental organisations which had legislative protection are finding it difficult to hold on to their markets.
Rufaro Marketing made headlines in our daily newspapers for failing to hold on to their opaque beer market after their monopoly was successfully challenged in courts by their competitors a few years ago.
The market which they thought was theirs forever is now gone. I doubt whether they have any advocates remaining anymore if at all they used to have one.
Though the conventional wisdom says only companies which meet customers’ needs and wants succeed, in the 21st century, only companies which produce goods that consistently meet the customers’ needs and wants and help to improve their (customers) living conditions succeed.
It is no longer good enough to produce a zero defect product for your customers. Companies are now supposed to create a better community for their products. In other words, quality alone no longer guarantees success in the market.
The level of competition has to be raised to include community involvement. Only those companies that do not produce shoddy goods and services plus help the community to succeed.
All managers and employees must share the belief in quality and community involvement. This must be the new religion at Zimbabwean companies.
The Funding Philosophy
Organisations can grow by using own resources, borrowings or merging/buying other entities. A company can forgo declaring dividends or declare small dividends in the short term and use resources conserved to grow.
Growth can come about through investing in research and development (by introducing new products or rejuvenating products that may have reached the maturity stage), making use of efficient and modern methods of production and ensuring that you are always ahead of the competition.
Each of the three methods of achieving growth listed above has its benefits and costs. Some organisations use internal resources because the shareholders do not want to dilute their shareholding.
However, the internal resources may not be enough to fund the required growth and the company may lose opportunities in the process.
Companies need to make full use of opportunities in their markets before competition moves in. Some organisations shun borrowings because of the fear of losing the business or security pledged should they default.
Buying existing businesses or merging may not yield the expected benefits mainly as a result of the conflicts that may arise between the cultures of the different businesses. Also buying an existing business could be through own resources or borrowings. Most companies use a hybrid of the three methods (i.e. internal resources or borrowings or buying existing businesses/merging) to achieve growth.
Benefits of sustainable growth
Sustainable growth is the measure of business success. Without sustainable growth it might be subjective to talk of business success.
Growth enables the business to kill competition by using retained income to purchases systems and processes that enable the company to erect barriers to entry that might be visible or invisible.
Individual limitations
Some companies can grow rapidly but the challenges come when the vision of the company changes to suit the changing circumstances.
I noticed the growth of one of the listed entities in the financial sector. The growth of the bank was driven and mainly focused on high networth corporates and individuals. However, the management changed focus to retail banking so that the bank could access cheaper deposits and to widen their customer base after realising that the market for merchant banking was saturated.
During conversion time some founder members had to be sacrificed in order to proceed with the new changes and new executive team was co-opted.
When asked why the managing director had sacrificed the original founders, he said, “In life people reach their ceilings, if they reach that point you should not be afraid to let them retire though it sounds brutal. If we continue hanging on to them we risk failure.”
This is similar to what happens to many soccer teams when they get promoted to the premier leagues.
The promoted team will look for new players especially those that can guarantee the team’s survival in the Premier League.
Soccer players that lead the team to promotion are sometimes overlooked in team selection. Management will instead opt to buy players with Premier League experience.
The players who will have led the team to promotion may not be good enough for the Premier League but very good for First Division competitions.
If the team retains the players who ensured promotion it may be relegated. The team will play in the lower division for one year and gain promotion into the Premier League again.
Most teams that succeed after promotion blend players with Premier League experience with the players who gained promotion.
In an insurance company I once worked for, there was the insurance agent who was the best seller and had been winning the chairman’s trophy for the past six consecutive years.
Management decided to recognise his hard work by promoting him to be the national manager in charge of the insurance agents. Premium income decreased drastically after his promotion.
Morale decreased among the insurance agents as the agent could not manage and motivate his subordinates. The competencies possessed by sales representatives might not be the correct fit for the requirements at sales management level.
Every individual has a ceiling to his/her performance.
It is the duty of senior management to identify the ceiling of each individual and continually audit the staffing levels to see whether the people who have reached their ceilings will not be detrimental to future growth.
Online Reporter