Competition is prolific, generic and specific. So many companies produce products which compete with our products. Besides, there is specific competition when the same product competes with us, say one tea brand and another tea brand, and generic competition when tea competes with other beverages like cold drink. There is niche competition where similar products sell in different markets on different bases, say price or equality or service. Multinational competition is a fact of life in post WTO regime. Competition sets benchmarks for others to follow.
Innovations of next generation may be introduced by pioneers, thus unsettling the established organizations. Pioneers author their own rules. Technology influences competition. Distribution and inventory functions are upgraded to confer more benefits. CRM or customer relationship management has increased interactions between the customers and the companies. It raises the expectations of the customers of all companies.
Customer-driven businesses are the norm today. They decide what they want and organizations have to cater to them. They also decide when and how they want it and how they will pay for it.
Mass market assumed that customers are alike and are satisfied by a standard product. In mass market they had little choice. They had imperfect knowledge of the market. Now we realize that customers are not all cast in the same mould. They have varying needs and wants. We have to make products to satisfy these. Mass market is broken into many segments till we come to one single customer. Product innovations and competition changed the expectations of the customers. They demand more, knowing well that they will get it. Customer tracking has made companies more sensitive to what they want. The power has shifted from the producers to customers. Customers have better information thanks to Internet, communication facilities and advertising. Companies should shed their production oriented and mass market mentality. Each customer is a unique individual and he counts. Today, it is not a shortage but surfeit economy. People have high aspirations. They can afford to choose. Business is conducted on their terms. They do not like the organizations which are not ready to do so.
As we have observed, competitive scene and customers have changed. So also the there is a change in the very nature of change. Change has become a way of life. It is all pervasive and consistent. The rate at which change takes place has accelerated. Globalization means more of global level competition, with more of new products. Technological advances encourage innovations. Product Life Cycles (PLC) have shortened e.g. computers become obsolete in a matter of months. The new product development process must be hastened. Companies must be alert to changes taking place all around them. Maybe, our hands satisfy the customers. But still we may experience the decline in sales. Perhaps the way we fill our orders may be wrong. There may be a change in an altogether unexpected component in the environment, and that may affect us.
Companies must adapt to the three components – customers, competition and change. Organizations geared to mass produce, stability and growth are not accustomed to a changing environment which calls for quick responses and flexibility.
Some managements place the blame at the door of the factors beyond their control. But the environment is successfully managed by some companies, and they move ahead. These examples undermine the external factor argument.
Companies in the red think that a wrong product portfolio is responsible for their troubles. But product portfolio is not a fixed thing. Most products have a short life cycle and they will fade out. Products per se do not bring success. The processes which create these products bring long term success.
More change in corporate strategies is thought to be the remedy for sickness. There are mergers and acquisitions, changing the asset portfolio. But they should pay more attention to the operational processes – inventing, making, selling and servicing.
Management techniques by themselves also do not guarantee success – MBO, zero based budgeting (ZBB), quality circles (QCs) portfolio management etc. Automation also considered an essential element of success.
A company becomes successful only when its operations are better managed than those of others. We should know how to work better. How best to get the work done is a formula for success.
Order fulfillment, as per division of labor principle, becomes a task oriented job which is not relevant in today’s world. There should be someone to oversee the whole process. Many a cook spoils the broth. Task orientation makes it error prone. It is slow too. There is no element of customer service. Piece-meal approach wouldn’t make it better. The whole process must be redesigned. Companies must learn to organize work around process. Process fragmentation leads to many problems creativity and innovation spirit get killed. Hierarchy creates many problems. There are diseconomies of scale, seen in overheads in fragmented organizations. Putting disjointed pieces of task together takes its toll in terms of manpower and resources.
We thus have an organization operating in the current 21st century with its structure of developed in the beginning of the 20th century and work processes at the end of the 20th century. We need an alignment between an organization and its environment.