While large businesses have deeper pockets, stronger networks and adequate market share compared to upstarts; they always face a lurking threat by these smaller firms which are nimble, agile and innovative.Smaller companies, on the other hand, can be weighed down by lack of capital, sporadic flow of customers and ever-changing business environment.
To outweigh competition, market leaders go to a great extent to retain their share. They may leverage on their brand with loyalty and reward programmes, hold on to resources and become the “safe” choice, play on price or the can leverage on their huge capital access and become more cost efficient.
So how can a small and medium enterprise (SME) make it big and stay competitive? Let’s look at some of the more effective means to this end.
Innovate to disrupt
Probably the easiest to state but most challenging to achieve, this age-old remedy remains the most successful ways to stay ahead of the competition.
How? Being disruptive involves innovating to force others to alter their strategic course. Technology has some obvious advantages. Let’s look at Spotify, a music company that revolutionised the way people listened to music.
Rather than looking at a pay-per-download model, it learnt from past failures to create a valuable streaming proposition where, on a subscription basis, consumers had access to the entire music library.
Also, cannot miss Dropbox whose superior cloud computing services are the basis for a consumer-focused offering that works across multiple platforms on mobile and PCs, as compared to pen-drives and HDDs.
A company must leverage technology to remain innovative. This will not only improve its ability to scale its operations to a high level of efficiency, but also help it achieve long term sustainable growth.
For instance, in a highly competitive market, Appleand Samsunghave kept their rivals at bay by excelling at innovative practices not only in the product-technology mix but also in production, packaging, promotion and supply chain.
Choose how you want to compete
Every business can choose how it wants to compete. One can either be unaffected by what the competition does, or be extremely reactive and counter each of their moves.
A business can be in the game either to gain larger market share or to create an altogether new market. Hence, it is important to choose one’s strategy and be actively aware of how to implement it.
For instance, VC-backed entrepreneurs who transform their start-ups to SMEs predominantly look to create new markets, while mid-to-large-caps often focus on retaining or expanding their market share.
Build strong systems and processes, independent of the founders
A culture of open exchange, where employees are unafraid to voice ideas in their area of expertise needs to be built. This should be done in conjunction with a conscious effort to increase the quality of people.
It is also advisable to engage with industry experts and consultants who can actually bring about these processes that will help utilise resources, reduce costs and help the company focus on its core functions.
Collaborate; don’t clash
Partnering with someone unexpected outside of one’s industry, with synergies to the business can definitely reap rich rewards.
This step, to achieve mutual business benefits with non-competing partnerships, will ultimately bring additional value to the system. Alternatively, a business can create a new path when its competitors are fixated on one.
The Star Alliance, a group of almost 30 airlines from around the world, is a great example of collaboration -