After years of dominance by domestic firms in your industry, there are increasing signals of a competitive shift. Notably, there is an increasing incursion of southeast Asia firms, and they are producing both a high caliber and lower cost product line. What are the implications for your firm and its management – AND what do you recommend the firm do?
The implications of this development for our firm and its management is that we will have to find a way to compete with the incursion of low-cost, high-quality competitors from Southeast Asia. Presumably, we cannot compete with them on cost. Therefore, we will have to find some other way to differentiate our product from theirs.
Of course, the fact that we cannot offer lower prices than our competitors does not mean that we should not try to lower our prices. The smaller the gap between our prices and theirs, the more chance we have to compete. Therefore, our firm and its management will need to seek as many cost savings as we can find. We will have to try harder to be efficient in our operations and to motivate our workers to do as well as possible.
One thing that we can do is to pursue a strategy of differentiation. We will need to try to figure out a way to make our product distinctive. We have to get customers to feel that our product is in some way preferable to our competitors’ products even if theirs is just as good as ours in quality.
Another possibility is to focus on service and on being responsive to customer needs. Because our competitors are so far away, they will have a hard time being agile and responding if our customers need things in a hurry. Because they are from a different country, they may have a hard time understanding our customers and may not be able to give service that is as good as ours.
Finally, we might try to narrow our product range and try to become a niche player. There may be some way in which we can alter our product so that it is less appealing to a broad range of people who are willing to buy from our competition while, at the same time, making the product more appealing to a small niche who will then be loyal to us.
Without knowing exactly what our product is, it is hard to be more specific than this. These are some generic strategies that can be used when a company is faced with competition.